I often meet many people trying to start their own business who come to me for some advice on budgeting and cash flow planning … but they usually come to me after they have input thousands of dollars into their business idea and have not made a single sale of their product or service.
Planning, Research, Costing
My first question to them is this: “did you do any planning, research, or costing before you started your business – did you also research the demand for your product or service?” … but as I go on I can see that the answer is NO.
They were simply too caught up in the idea of leaving the corporate world (usually) and becoming their own boss to actually think about the practicalities of running a business.
So here are my business planning tips that you should think about before putting any of your hard-earned cash into any business idea.
- What is your unique selling point?
This means how will you differentiate yourself from your competitors to make your customers choose you.
- Is there customer demand for your product/service?
If there is no demand, no matter how good you think the idea is, it won’t translate into a successful business. Doing some market research here will help you with this.
- Do you have a plan for how the business will run?
This includes thinking about the structure, location, website, staff – everything.
- Have you considered your price?
You need to think of this from two viewpoints. Firstly – what will customers be willing to pay. And secondly – what is your breakeven point. There is no use selling below break even as then you are not making any money. But pricing your product or service well above what customers are willing to pay, will mean you make very limited sales.
- Who is your target market – your ideal client?
Try to narrow this down as much as possible in order to then have a specific market to aim your advertising materials to.
- Can you make a profit?
Nobody goes into business with the intention of making a loss. No matter how much you love your work, if you are not making a profit you will soon start to resent your idea and concept – and your customers will soon realise this too.
- How much money do you think you will need to invest to launch your business?
This could include buying stock, storage, lease of office space, employee costs, a wage for yourself, advertising, website. Make the list as exhaustive as possible to give yourself the most realistic viewpoint. Then you need to consider how the business will be funded – loan, personal cash, crowd funding are all possibilities.
- What skills, experience and knowledge can you bring to the business?
If you are starting as a sole trader, you might have experience in one aspect of running a business such as retail, but no concept such as the financial side, marketing side, social media, administration – etc. My advice – either find a mentor, join a local networking/mastermind group or outsource what you can afford to those who specialise in those areas.
Business Planning is an essential part of starting a small business. This should be done before the business is officially started and it will help lay the foundations for the future success of your business.
What tips have you got for starting a small business? I’d love to hear your ideas in the comments.