Tips to consider before starting up a new business

 

SheDream.com

Money Tips
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Many people in today’s society dream of being their own boss and have their own business. Some toy with the idea for years before they finally do it, whilst others never take the plunge and continue to simply think about it.

If you are amongst those people who are considering whether or not to start their own business, the tips below might be useful to help you make a decision. 

1) Identify the reasons why you wish to start your own business 

Some individuals are fed up of routine office work and taking orders all day long. Some others are fed up to work hard and see their bosses get richer whilst they are on a low salary compared to the contribution they give to a business and would like to rip the financial benefits of their hard work. Others still wish to start something that is creative, or that gives them more flexibility with their working hours and work location (many people wish to work from home or near their homes so that they don’t have to spend hours commuting to and from work every day).

There are many reasons why people want to set up their own business. But there is a key question that everyone should ask themselves: how hard are you prepared to work to make your business successful?

Setting up and running a business is a time consuming task that requires complete dedication and focus. If you think that starting up your business will give you an easier life than say, office work, then you may have to rethink this assumption.

Just to give you an example, most workers in today’s job market receive paid annual leave, paid sick leave, maternity (and in some instances paternity) leave, some receive health insurance and some also join good pension schemes. What will happen to these benefits if you start your own business?

The rewards of starting up your own business can be great, but you may need to think carefully as to whether or not you have the attributes and right sort of personality to cope with going it alone and face all the ups and downs for a new business to get established.

2) Company Structure

You will need to decide what business structure you will trade under (sole trader, limited company or partnership) and what obligations and responsibilities you will have as the owner of a new business.

3) Skills

This goes without saying. You really need to be honest with yourself and identify your strengths and weaknesses. You may even want to consider asking friends, family and colleagues for their opinion and views. If you find out that you lack some of the skills that will be necessary to make your business a success, then you will have to think whether you can learn those skills in a reasonable timeframe or whether you will be better either hiring people with those skills or simply seek professional advice as and when needed. 

4) Funding

All businesses take some time to establish themselves. This means that your income may be relatively limited to begin with. You will therefore need to be conservative with your funding estimates and either save enough money to keep you going while the business goes through its initial stages, or present your bank manager with a well thought out business plan and request sufficient start up funds. Also, don’t forget that it is unlikely that banks will provide you with 100% of the funding to start up your business and that you may have to find some of the initial funds elsewhere (e.g. your savings; loan from family etc). 

5) Competition

Never underestimate it. Thoroughly research the competitors in your chosen industry. Indentify any weaknesses they may have and try to ensure your product or service is a cut above theirs. Competition is a very healthy thing, but you need to do constant research and never be complacent.

6) Marketplace

Make sure that there is a market for your product or service and that it is not already provided by other businesses. A startup business really must ensure that the market for buyers or users is strong in the area he intends to set up. The consequences of not doing your research properly in terms of competition, market forces and location of business could indeed be very serious.  

7) Business Plan

Never underestimate how helpful this stage can be. Even if you never consult the plan again, it is amazing how many thoughts and ideas can evolve if you put all your thoughts down on paper in a structured format. Not only will you require a well thought-out plan when seeking funding or new business partners, but a decent plan will help you focus on your goals and ensure you are less likely to stray from your real priorities. Some tips for writing a business plan are given here.

8) Staff

As your business expands, you may well need to hire people to manage certain aspects of your operation. You need to ensure they have the right skills for the job. Above all, you need to be able to trust and get on with the people you work with - this simply cannot be underestimated.

9) Seek Professional Advice

When running your business, a few words with a trusted adviser (accountant, lawyer, business adviser) can make the difference between success and failure. Before hiring a professional, you should speak with several in order to choose the one that is best for you, which does NOT necessarily mean the cheapest. 

10) Biggest causes of failure

The biggest causes of failure for starting up new businesses are - not doing the ground work thoroughly, setting your sights too high, not researching your market properly, hiring the wrong staff and not putting enough funds aside for contingency. Keep an eye on these potential pitfalls at all times!