Have you had enough of working for someone else and decided to start your own business?
Have you just started a new business and it’s in its infancy?
In either case, you may be asking yourself the question “well, here I am, what next?”
Let’s go through a logical number of things you should do when you have decided to start your own business, or even if you have already started but are a bit overwhelmed in those early days.
By the way, I’ve written a free report and checklist about starting your own business which you can get from here.
The first thing you should do when you have decided to start your own business is to take a long hard look at yourself.
I don’t want to put you off, make sure you hear me now, but I do want you to be realistic about this!
I have to be honest and say that some people are not cut out to be a business owner.
There’s no disgrace in that! Goodness knows that I know not everyone is cut out to be a singer. Or a dancer. I have dismally failed at both! I know I cannot sing or dance so I do not even try!
What I have seen, and I do not want to happen to you, is where excellent, well-qualified people have started a business, and then found that they simply didn’t have the temperament to be a business owner.
Sometimes, they have entered a partnership and being happy to be the technical expert, they have worked in the business and allowed the partner to work on the business. This may have worked well in some instances because they made a good combination. In other circumstances, I’ve seen the partnership dissolve as arguments start about who really is the boss and who deserves more reward.
At other times, I have seen good people buckle under pressure – that inevitably comes from time to time, especially in the early years of building a business – and lose a lot of money.
As you consider whether or not owning your business is for you, and you decide it is, make sure you understand the reason why you want to own your own business.
Your purpose in owning your own business – your “Why” – is going to be the most important driving force to keep you going when times are tough. Here’s a short video on how important it is to know your “Why”.
Make sure you take some time to ask people what it takes to be in business.
Doing this with enough people and you may get a lot of varied answers. Don’t get overwhelmed, just take their opinions as suggestions about what might happen to you, and recognise that you should be prepared for a number of things.
Don’t panic over it – just be aware because being forewarned is being forearmed.
Start to note the different types of skills that you will either need to learn or develop, and what you may have to buy in by contracting or hiring people.
Unfortunately, being in business is not just about knowing your stuff about your stuff.
A mechanic cannot run a business just by being a good mechanic. A baker cannot run a bakery just by being a good baker. A lawyer cannot run a law practice just by knowing the law.
As a small business owner, you do have to be Jack of all trades and also be the master of some! Even if you don’t have to be a total expert at some of the skills, you do need to understand enough so that you can recognise what the people you hire are producing for you.
All small business owners need to understand some level of how to keep the books and an understanding of what a Profit & Loss Account and a Balance Sheet is telling them. All small business owners need to be aware of how they should hire people, what to ask at an interview and what to look for. All small business owners need to know when they need a lawyer to look at a document – even if they don’t fully understand the document they need to recognise the point where they need help.
And the list goes on.
The next thing you should do is check the feasibility of your business idea.
You may be thinking of opening a conventional business, not inventing something, so you may say that you don’t need to check the feasibility.
After all, there’s plenty of mechanics (or bakers, or lawyers) so obviously there’s a demand.
But the feasibility of your business is more than just that it has been proven by others. Often that can show you it is not feasible and you need to tweak your idea.
Many years ago a client of mine decided to open a travel agency.
Their idea was to offer a different experience, a boutique agency that catered for business travellers and gave them options on business travel and accommodation as well as personal service wherever they were.
It sounded like a good idea.
Until I research how many there were (not substantial numbers but enough to worry), how big they were (size isn’t everything but does signify more buying power and therefore better deals), and where they were – in CBD’s next to office buildings and businesses.
All of a sudden the apparent demand for another travel agency like this was not looking so good.
Your business idea may also not be feasible because of barriers to entry.
Barriers to entry are tangible or intangible factors that make it hard for someone in that industry to start something new.
A simple barrier to entry may be the capital required to start a business in an industry.
For example, to start an old school printing business takes significant capital equipment in type=-setting and printing machinery. The cost may be well out of your reach.
Other barriers to entry could be licensing restrictions or intellectual property rights, or the need to qualify – not everyone can open a dentist’s practice because they buy a pair of pliers!
These early considerations should be treated by you as test-hurdles.
Can you get over them?
If you can’t, it may be better for you to fulfil your goals in another way.
Once you’ve jumped those test-hurdles, there are still a number of steps to take before you hang up your shingle.
Treat each of these as a test – get over them and you are really prepared to succeed.
First, develop your business model.
Before the heat starts, work out how your business works.
To do this you need to consider:-
- Your value proposition – what you are delivering and what value is perceived by the customer, what makes you different?
- Your customer segments – who are they and what are their needs and wants?
- Your channels of “touch” – the many times in their journey that you will “touch” your customers and how you will distribute your value proposition at those points, through messaging, delivery, satisfaction and so on.
- Your customer relationships – how you get new customers, how you keep customers, and how you keep growing the sales from customers.
- Your key activities – what must you do well so that all the above works?
- Your key resources – what resources do you need to sustain your key activities and allow all the above to happen?
- Your key partners – who you rely on to make all the above work?
- Your cost structure – understanding the financial implications of how the above work together, and what financial changes will take place as you change different elements.
- Your revenue streams – how do you make income and profit from each customer segment?
You really should work out how these elements in your business will work together so that you know what your business is supposed to look like and work, before it starts working, or falling apart!
Second, do some planning.
Plan for the start of the business – what type of legal entity should you operate the business in?
Get legal advice for this because there are tax and other consequences if you choose the wrong structure for what you want to do.
Of course, you need to prepare your business plan and your marketing plan.
Businesses that start without a plan get into a mess quickly. Without a plan you cannot make decisions consistently – each decision is based on different factors and they don’t consolidate into a single strategic direction for your business.
Businesses without a plan really plan to fail.
Your business plan will provide your cohesive direction, and a tailored number of steps you should take to get there. Your business plan will include forecasts about capital investments, income and expenditure so that you set financial targets and measurements.
Your marketing plan focuses on the customers you want to reach and how to get to them. Without a marketing plan, all you are doing is hoping for the best.
Third, start to find your supporters.
In your business journey, you will need expert advice as well as moral support.
Make sure you identify now, whether through your won knowledge or through referral a good accountant and business adviser, a good lawyer and a good business mentor. You may also need an insurance broker, a real estate agent, a web designer and a marketing or advertising agency.
If you identify them now (you don’t have to pay them anything yet!) you will not waste time when you need their advice.
Fourth, register all your tax and legal registrations.
Get a Tax File Number and other tax registrations. Incorporate your company of that is the right structure. Register your website domain name.
While you are doing this, don’t forget to get your legal documents checked out – being leases, supplier agreements, employment agreements and so on.
Set up your insurances and all your internal systems including accounting software and systems.
Finally, have a go and open your doors!
Congratulations if you have got this far!
It may seem like a lot to do and it may seem like a lot of technical and legal stuff you really don’t want to get involved in – but guess what? You have to understand that it is done even if you get someone else to do it for you!
Being in business is not like managing people when you work for someone else. In such a case it’s not a matter of life or death, you can make it up.
At the end of the day in your own business, it is a matter of your financial life and death to make sure the right things get done right.
Now don’t get overwhelmed, you can take things one at a time.
You can request a download here.
As well, if you want to read more, or watch training videos on starting, building and growing your business, get over to my website at teikoh.com where I have loads of useful and free tips and tools on how you can do this.
I hope you find it useful, and good luck!