Starting a business? Three key things you need to consider before you start
Article by Tracy Johnson
Small Business Administration statistics suggest about 20 percent of business start-ups fail within the first year of operation.
If you’re starting a business now or in the near future, it’s worth heeding the message behind these statistics.
But, while the figures should sound alarming, most new business start-ups make the same common mistakes in the research, planning, and management stages of their business venture.
This means that even dynamic, independent and successful professionals who take the first steps to starting their own businesses, with great dreams and lofty ambitions, can fail.
In working with startup businesses over the past 20 years, I’ve come to notice the main trends that lead to business success or failure.
I’d like to start with three areas to focus on early on, when you first consider starting a business. Aim to get these right in the early stages for a greater chance of success…
Passion: do you love what you’re doing?
Yes, a business should fill a real need in the marketplace. But, if you’re thinking about starting a new business, you may be looking at 10, 20, 30 years or more in the field. So make sure it’s something you love being involved in and that you’re passionate about.
Most successful business owners achieve success because they’re passionate about their business.
Think about your favourite café. It’s your favourite outlet not only because the coffee’s great but because the business is run with a passion to produce quality outcomes for customers.
Go into business for the right reasons. Research suggests that successful businesses are built from the following:
- A desire to seek independence
- An opportunity to harness your own creativity
- The ability to develop or provide a better service offering
- A desire to introduce a new product that will redefine your marketplace
Going into business to make lots of money can be a viable medium to long term goal but it’s passion that will fuel your drive during the early stages of development. That’s when cashflow can be challenging and things may get tough.
Research: how well do you know your marketplace?
When starting a business, if you want your product or service to be successful, research is critical.
Invest the time to determine the potential demand and opportunity that exists for your business idea.
Understand key metrics, such as your selling price points, that is, what the market will pay for your offering; what the costs associated with delivering this offering are; and what your profit and return will be, based on the capital and time invested.
It is also critical to consider your main competitors and what the potential barriers for entry and exit into the marketplace are.
A plan: have you mapped out the road to success?
No business plans for failure; but many businesses don’t plan for success either.
Has a successful General ever won a battle without a good strategic plan for success? All new start-ups should begin with a high-level business plan.
This is critical for helping you strategically focus your time and resources during the early stages of your business development. Businesses that follow a strategic plan in the first 12 to 18 months are more likely to advance to the next stage in their development.
Your plan should consider the following:
- How will you market your business offering?
- Who is your target market?
- What capital investment will be required during the initial stages of your business?
- Where will your business be based?
- What are your achievable revenue targets?
- What are the expected labour and overhead costs?
- What are your target profits?
You now understand the three key aspects of starting a new business to consider before you start out.
In my next article, I will discuss four other key areas of your business that you’ll want to focus on as you get up and running.
If you’re starting a new business and would like to discuss this further, please call me on 0407 037 713 or email me: firstname.lastname@example.org.