Tips for setting up a small business
There is no question that starting up a business is a bold move that requires everything from vision and passion to plain hard slog. And perhaps most importantly knowledge, which as we know, is power.
This month, we offer some tips to help people thinking about setting up their own business.
Thorough research before starting ensures you’re making the best informed decisions possible and reducing the risk of failure. More importantly, it usually means you will be ready to put mitigation tactics into your business or personal life to protect your future – such as insurance policies, buy-sell agreements, use of Trusts for asset protection, etc.
Why are you doing this?
It seems fairly obvious, but making a thorough analysis of the reasons for starting a business is a process that’s often overlooked. Sit down and define your reasons and specific goals, and then objectively assess whether or not your business plan is able to deliver on these goals.
Know who your market is, how your product or service will meet the needs of this market, and what your point of difference is from other competitors operating in the market – both nationally and locally. Remember that marketing is about the four Ps – Product (or service), Price, Place and Promotion.
Know your strengths and weaknesses.
As a start-up business, you need to be able to leverage off your strengths and bring people into your business to fill the gap where weaknesses lie. Work with some friends on a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to ensure you’re well-positioned to plug gaps and leverage advantages.
Understand that a start-up venture will require you to work twice as long and hard, for half the pay – certainly over the short to medium term – to build a great business.
Before you get in, think about how you will get out. Work with professional advisors to develop an exit scenario that could include a strategy to cover any worst-case scenario, or simply a plan to ultimately sell or remove yourself from the day-to-day operations.
Finance & structure.
Consider the capital structure and funding of working capital very carefully. Too many businesses fail from being under-capitalised. The structure you choose – whether it is a trust, company, partnership or sole operator – will provide different tax and legal benefits, depending on the nature of your business. It pays to get advice on this matter.
One of the best ways to learn is from those who’ve already trodden the path. So seek advice from those who already in business and doing it well. Join your local Chamber of Commerce and local business discussion groups and networks.
Be willing to invest in a business advisor to ensure you’re making smart decisions from the outset. You need a trusted business partner, so choose based on both their skills and a good personality/values fit.
Plan, perform, measure.
Set realistic goals for your business for the first three years and measure your performance against these goals.
Commitment and resilience.
Finally, remember that successful entrepreneurs are all extremely persistent. They have good reasons to believe in their offering, and they find ways to navigate through obstacles.