Making the decision to start your own business is one of the most exciting things you can do however it may be easy to get caught up in the enthusiasm and forget or miss some important steps on the path to launch. According to the Australian Bureau of Statistics, one in two small businesses close within two years. With this fact in mind, we explore nine steps should you take to ensure you’re as prepared as you can be to achieve success.
Understand your ‘why’
The journey to starting your own business is one that needs to be considered in detail before setting out. Owning a business is not for everyone. It will be challenging. There will be uncertainties. It may put you under financial strain. You will work long hours. There is no easy path. On the flip side, you have control over your future, you make the rules, you are your own boss and if success is achieved, then the financial rewards can be very satisfying. With the possibilities in mind, you need to be resolute about why you want to start your own business and start the journey informed and prepared.
Determine your target market
Do you know who is going to buy what you are selling? It may sound rudimentary, but if you’re clear about who you’re your ideal customer is, where they’re located, how much they’re willing to pay and how many of them there are, then this helps you to make further business decisions. For example, what will your logos and branding look like, what sort of packaging is appropriate, will you sell online, in store or both, how should you set your pricing, where will you be located and so on. This may involve some form of market research, product testing, sampling etc to learn all the information you can about your potential audience before setting out.
Research your competitors and competitive landscape
Take the time to learn as much as you can about your competition before you start your own business. Visit their business, talk to their staff, trial their product or service and test their systems e.g. payment, delivery, returns and exchanges and so on. Determine what they do well, not so well and areas for improvement. Understand their marketing channels, target audience and branding and find the opportunities to do things differently from or better than them. This process is considered essential.
Establish your Unique Selling Proposition (USP)
Your USP is a unique benefit that your service, product or brand offers that makes you distinct from your competitors. This is often a product feature that forms the focus of all marketing and sales activity. It informs consumers about what makes your product or service better or different from that of your competitors and ultimately drives them to make a purchase.
Determine your pricing
One of the biggest mistakes that new businesses make is not charging enough – an easy strategy is to price the product below that of the competition and market it as the cheapest available. The downside of this is that your audience may perceive your offer as cheap or poor quality. Do your sums and work out a price that allows you to position your offer on the best quality and value. You also need to ensure your pricing allows for the opportunity to make a good future profit.
Write your business and marketing plans
A solid business plan is a key step when starting your own business. The business plan sets out the goals that you wish to achieve and the strategies and action plan to achieve them. This process helps to ensure you’ve considered the many aspects of running a business, outlined your goals and actions and may also help you identify any potential weaknesses or unrealistic expectations.
A business plan with financial projections and budgets can help you source funding from a lender or investor. It will also give you a framework to run your business by outlining priorities and how to achieve them.
A marketing plan gives you a systematic approach to develop your marketing strategies. A strong and considered marketing plan will factor in many areas of the business. This means that the strategies work together with the business plan to complement each other.
A marketing plan can consist of these elements:
- analysis of your current market
- key marketing strategies in your business
- steps to achieving your business objectives
- proposed budget, and
- scheduling of the marketing activities being undertaken.
Set up your admin and accounting systems
An accounting system is a must for almost all small businesses, and a little extra effort before launch may save any headaches at tax time. It should also keep you compliant with any applicable government regulations and requirements. Another important step is opening a specific business bank account separate from your personal accounts for:
- Better cash flow management
- Reconciling your BAS and tax returns
- Presenting your business as more professional.
Source the appropriate insurances
Just as there are statutory rules and regulations that need to be adhered to, your insurance needs to be firmly in place before you open your doors. If it isn’t, there are many risks that you open yourself up to including your business, your income and your commercial risk.
The individual types of business insurance vary and usually protect things like business assets, customers, employees, business owners and your earnings. See below for a list of insurances that are compulsory for Australian businesses:
- Workers’ compensation – workers’ compensation insurance is mandatory if you have employees.
- Public liability insurance – public liability insurance covers you for third party death or injury. Certain types of companies must take out public liability insurance.
- Third party personal injury insurance – if you own a motor vehicle, you must pay for third party personal injury insurance.
Some industries have insurance requirements before a business can operate. We recommend you consult with an insurance specialist or financial adviser for the most accurate advice for your circumstances.
Seek out a mentor and advice
It is wise to consider the advice of a good mentor in the early stages of setting up a business. Having a mentor to talk to, ask for professional advice and sharing their experiences, can help to avoid making mistakes. They are usually a person who has considerable successful business experience who can share their wisdom at no cost.
Ensure you have a great accountant, lawyer and marketing adviser to help develop your business and marketing plans and possibly a graphic designer, website developer, IT services and so on. It does depend on the type of business you are planning to open. Investing in the right advice before you start your business can set you up and put you on the path to success.
While this list in not exhaustive, it should get you on the track and have you taking the right steps. There are many resources available to new businesses, including the Australia Government Starting a Business Guide. Arabon is also able to provide advice to small business owners who may need a helping hand to get you going in the right direction. Visit our website or contact us on 1300 ARABON.