If you’re preparing to start a business, there are a few things you should consider before you make the leap.
Starting your own business can be an exciting prospect. You can be your own boss, manage your own time and set your own goals. You’re responsible for your own success and while this can be a satisfying outcome, it can also be a daunting concept.
Develop a clear plan
Robert Gerrish, director of online small business network Flying Solo says too many people start their own business with insufficient planning. “They assume it’s going to be easy. When you first step out on your own, you don’t have the support structure you had when you were working for someone else. If you need to send mail, you might have to queue up in the post office yourself. My advice is that people need to think about the mechanics of working for themselves, particularly how they’re going to manage their time.â€
It’s also important to develop a financial plan. It can take months for many small businesses to make a profit and for your invoices to be paid, so calculate that you have enough savings to put into your business and to cover your living expenses until you start to make money.
Research and network
It’s essential to have a good knowledge of your chosen industry before you start your business. You may have spent years working as an accountant, for example, but you’ve had little exposure to the industry as a small business owner. Research can include valuable insights from other small business owners, so look out for networking opportunities, join online forums or seek out a mentor.
You’ll also need to plan how to attract customers and who your customers will be. Have you identified a niche in a crowded market or will you be competing with many others? And how will you set yourself apart? “You need to think beyond your core skill,â€ says Gerrish. “You might be great at designing, for example, but what kind of marketer will you be for your business? What kind of manager and what kind of finance manager will you be?â€
Assess your skills by writing a list of your strengths and weaknesses this can help you identify areas where you may require additional training or to work out who you should engage for advice, such as finance professionals, lawyers or marketing and IT consultants.
Set your priorities
Flying Solo research indicates that the four greatest challenges faced by small business owners are:
- not enough money or clients
- feeling overwhelmed because of wearing too many hats in the business
- ineffective time management
- not having the right business model.
“One thing often leads to the other,â€ says Gerrish. “People may not have enough money and clients because they are overwhelmed by trying to do everything they are too busy working in the business and not spending enough time working on the business. When you’re working for someone else, there’s someone creating the strategic direction from the top. When you are running your own business, you are that person.â€
Define your own success
As a small business owner, you must create your own success. But what does success look like for you? Making a lot of money? Job satisfaction? Striking the right balance between work and home life?
“You must have a clear picture of what you want to get from your business and this must sit above your actual business plan,â€ says Gerrish. “Where do you want your business to be not just in terms of revenue, but how you want to be living and spending your time? You need to have this in mind and how you can achieve it otherwise you’ll be a mouse on a wheel, going through the motions.â€
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.