Things to consider before starting a business

Posted on July 29, 2014

So you’ve made the decision to start your own business. Congratulations!

Before you get started there are a few important things you need to consider.

Get your business off to a flying start with our top 5 planning tips, and help your business not only survive, but thrive.

Tip #1 – Decide if you’re ready to start your own business

Asking yourself if you’re ready may seem like an easy question, but there’s more to owning a business than just working for yourself.

As a business owner, you need good management skills, relevant industry experience, technical skills, a sound knowledge of finance and a long-term vision to grow and succeed.

It’s important to understand what’s involved in running a business and knowing whether you’re suited to owning a business.

Consider the following before starting a business:

your reasons for getting into business
will the business satisfy your needs
your level of skills
your business goals
the advantages and disadvantages of establishing your own business
time requirements and commitments.

Your business has a better chance of succeeding if there is a good match between your idea, and your skills, interests and motivations.

Before you get started, download our Starting your business checklist:

Read our Thinking of starting a business how-to guide for issues to consider when thinking of starting a business.

Tip #2 – Conduct market research into your business idea

Before you venture into your new business it’s important to conduct some market research to see if your idea is feasible.

You need to find out if there is a need for your product or service and who your competitors are, their strengths and weaknesses and how your business will differ from theirs.

Some questions to consider are:

what product or service you will provide?
is your idea feasible?
how will you protect your idea?
is there a market for your product or service?
what skills do you need?
who are your competitors?
what difference will you bring to the market?
do you have the financial capacity to own a business?

Putting the effort into researching your idea will help you determine whether you can turn your idea into a profitable business.

Read our Market research and statistics topic for information on assessing your market and competitors.

Tip #3 – Choose your type of business and business structure

Once you’ve established that your business idea has potential, you then need to decide what type of business to start, and whether you’ll open a brand new business or buy an already established business. Both options have their challenges and benefits.

The benefits of starting your own business include: You get to be your own boss, you have total creative control, you have flexible hours, it generates a new source of income and it can be rewarding to watch your business grow.

The challenges of starting your own business include: It can require a significant amount of time and money, you need to research the market place and you need to establish your contacts.

The benefits of buying an established business or franchise include: The business already has stock, there is an existing customer base, the business already has an established income stream, established suppliers and with franchises an established brand.

The challenges of buying an established business or franchise include: It can require a significant amount of money, you can inherit a poor public image from the previous owner, you may not have as much control, especially when purchasing a franchise and it may not be as flexible as with starting your own business.

Depending on what type of business you want to start, you may not need a physical business location. Home-based and online businesses are becoming increasingly popular and offer many advantages.

Aside from choosing what type of business to start, you also need to decide what type of business structure

you’ll need. Business structures include:

sole trader – an individual trading on their own
partnership – an association of people or entities running a business together, but not as a company
company – a legal entity separate from its shareholders
trust – an entity that holds property or income for the benefits of others.

There are advantages and disadvantages for each type of structure and it’s important to consider whether your activity is a business or a hobby.

Each structure can have different tax implications, so you may want to consult a professional business advisor, accountant or solicitor for advice.

The size and nature of your business, compliance requirements, insurance and establishment costs are common factors that may influence your choice of business structure.

Tip #4 – Write a business plan for your new business

Investing time and focus in creating a detailed, well-structured business plan will give you direction and help your business become a success.

Your business plan is essential for your business. It sets the direction for your business and keeps you on track once it’s up and running. You’ll also need a business plan for securing finance for your business.

Some important things to include in your business plan are:

executive summary – a one-page overview written after your business plan is finalised
introduction – explains the purpose and objectives of going into business
marketing analysis – looks at the industry you are entering and how you fit in
marketing plan – your marketing strategy
operations plan – how you’ll set up the business, i.e. structure, location, regulations
management plan – how you’ll manage your business
financial plan – how you’ll finance your business, costing and financial projections.

Once you’ve developed your business plan you need to regularly review it and keep it up to date.

Our free business planning iPad app, MyBizPlan, helps you to learn about your industry, set specific goals and timeframes for achieving them, maximise your resources and give you a competitive edge.

If you don’t have an iPad you can create your business plan by downloading a Word version of our Business plan template and guide.

Remember, if you fail to plan, you’re planning to fail!

Watch our Business plan video to find out how a business plan helped Albert become a lemonade magnate.

View the full list of our planning tools available to assist you in starting a business.

Tip #5 – Create a marketing plan for your new business

Good marketing helps your customers understand why your product or service is better than, or different from, your competition.

Developing a marketing plan is essential for the success of your business. Regardless of how good your product or service is, customers will not come to you, you’ll need to go out and find them.

A marketing plan should set clear, realistic and measureable objectives, include deadlines, provide a budget and allocate responsibilities.

Your marketing plan should include:

analysis of your current market
your business objectives
key strategies
steps to achieving your objectives
proposed budget
timing.

Read the original article here: http://www.theage.com.au/small-business/resources/things-to-consider-before-starting-a-business-20130209-2e4n8.html#ixzz38opUZ0Nb

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Things to consider before starting a business