Simple Business Guide #1 - 10 questions to answer when starting your own business
If you are thinking of starting your own business, then one thing I would recommend you do is write a business plan. Writing a business plan will help you get everything clear in your mind and detail exactly what you want to do and how you are going to do it. A good place to start is to answer these 10 simple questions:
1. What do you want to achieve?
People start their own business for a variety of reasons; some spot a gap in the market where they could provide goods or services to fill the gap; some create new markets or products or services which didn't really exist before; some think they can just improve on something that already exists; some just want to be their own boss. But whatever drives you, you need to think about what you want to achieve and where you want the business to go before you start. Do you want it to just be a business providing you with a reasonable income, or do you want to grow it into something much bigger. Having the vision for your business set-out at an early stage will really help you make the right decisions later on.
2. Who will do the work?
Do you really have all the skills you need to run the business on your own? If not then you will either have to employ some staff, or you can look at outsourcing. Employing staff brings its own challenges and of course adds cost to your business, but should bring you a valuable extra pair of hands. Outsourcing is common for things like IT and Legal support, but is becoming increasingly common for other business functions such as Finance and Human Resources (HR). Either way, don't make the mistake a lot of small business owners do by trying to do everything yourself - surround yourself with good people who can do certain tasks better than you can, so that you can focus on what you do best. Find yourself a good lawyer and a good accountant to provide you with expert advice. Recruit some good staff as soon as you need and can afford them. And most of all don't be afraid to ask for help - there is so much available if you just ask.
3. Where will you be based?
Question 2 will partially answer this question, as, if you need staff, then working from home may not be practical - would you really want other people using your home as an office? This question is also driven by what product or service you will be offering. Often the cheapest and easiest option for service type businesses is to be based from home, but there are cheap options for office space if you need that. Serviced offices where you just rent a small space in a bigger office are springing up all over the place, and they allow you to rent more space as and when you need it, instead of taking on a big offiec straight away. These have the added advantage of providing things like a receptionist, meeting rooms, office furniture etc, so help keep the initial investment down. Alternatively do you need a high street shop or other retail unit? Or do you need some kind of warehouse or other industrial unit?
4. What will you sell/provide?
One great piece of advice when deciding what you will sell is to stick to what you know and what you are good at. Just because you always fancied owning a restaurant doesn't mean you can actually run one successfully and profitably. You are much more likely to succeed if you are doing something you know about already. If you don't, then learn. Read as much as you can on the subject, take some courses - learning is never wasted.
5. Who will you sell to?
Sounds simple but this will impact many of the other decisions you need to make. Will you sell to other businesses or to consumers? Will you sell locally, nationally or internationally? Research your target market well as you need to be sure there are enough potential customers in your target area.
6. Who else does what you will do?
Knowing your competition is very important. If there is already a very strong company doing what you want do, then how can you make yourself different from them? Will you offer a better product? Or a better price? Or a better service? Unless it's a new market, you will inevitably be trying to take business away from someone else - what will their reaction be? Don't be afraid of them, but expect the unexpected.
7. How will you sell and market your products/services?
Will you sell in a shop, or online, or mail order? If you are selling a product from a shop then as long as the shop is in the right place, it should generate some business, but will it be enough? How else will you go about raising awareness of your product or service? The Internet is the place to be nowadays. Invest in a good website and spend some money on what's called Search Engine Optimisation (SEO). This is how you can ensure that your website gets found by the right customers through search engines like Google. Again, there is plenty of help available for this. Look at Google Adwords as well as a good and relatively cheap way of getting your site listed in searches. Other advertising methods still work as well - direct mail, directories, trade magazines, newspapers, radio, TV (if you have a huge budget!). And don't forget word-of-mouth. Tell all your family and friends what you are planning on doing - not only will they often be a good source of advice, but they will often tell their friends and contacts which can lead to new business as well. In short - don't be shy about blowing your own trumpet.
8. Where will you buy your products?
Is yours a product which is readily available or is it very specialised? Will you have to make it yourself or can you find a company who will make it for you? Remember, the more complex or difficult a product is to make, the harder it is for other companies to compete with you. Don't forget about the cash you will need if you are planning to sell products. Holding stock can be very expensive so make sure you have plans in place to finance this, especially as the business starts to grow. Many businesses fail because they simply run out of cash as they expand. Also think about lead times - you don't want to run out of stock if you are waiting for your supplier to make it for you and then lose sales. This is a key area, especially for retail and manufacturing businesses.
9. When will you sell?
Is your product or service seasonal or can it be sold all year round? Will you just sell during the business week or weekends as well? The Internet can help here, as your "shop" can be open all the time online, even if it isn't physically open. Again, don't spread yourself too thin - take on help as soon as you can afford to do so.
10. How will you know that your business is a success?
The final question basically takes us full circle back to question one. At what point will you be satisfied that the business is achieving what you set out to achieve? And more importantly, what's next? Have you thought about what you want to do with your business? Will you just stop when you reach your goals? Or will you take a back seat and let the business continue without you? Or will you sell it? This is called your Exit Strategy, and thinking about this early on will help you set the goals you want to achieve.
Conclusion
Hopefully once you have answered these 10 questions you will have a much clearer picture of what you want to do, how you are going to do it, and what help you will need along the way. Remember, all businesses start somewhere, and all businesses start small. One of my previous employers, Dell, the computer company, was started just over 25 years ago by Michael Dell in his university dorm room, with $1,000 he borrowed from his family - now it is one of the biggest companies in the world, employing nearly 100,000 people. Your business may not grow that big, but you will never know unless you try. Good luck!
Our next guide is on different business structures and should help you decide which structure is best for your new business.
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