logo

iframe block

Home Features Steps to starting a small business
Steps to starting a small business
Written by Greg Soffe   

where to from hereSo you have bitten the bullet and decided to start a small business? well congratulations, I wish you the best of luck. But where to now?
In this article I'll go over a few steps you can take to ensure that you start your new business in a way that will help you to create the most productive startup you can.

Being that you are here reading this article you have ether made the decision to start a small business or are at least looking into the possibility of taking steps to starting a small business!


Step 1:

Do you have a business idea? Do you know what you want to do in your new business? Get a business idea!
Business ideas are usually perceived as the most difficult thing to come across. you get the typical comments like 'I Just want that one idea that will make me a million' or 'Why didn't I think of that' the truth is that we have great ideas for business every day, we just never capitalise on them. If you don't have an idea for a business, that will be the first thing you need. If you are stuck, have a read of our article on the subject it has a lot of handy tips on getting a good business idea, Ideas for business.

Step 2:

Market research / Where is the money coming from? You need to look thoroughly into your market to ensure that although you perceive there to be a market for your chosen business, you are out to test that it actually exists. Interview your potential customers, take surveys, perform blind testing and talk with industry players, talk with suppliers, get statistics from the government. Remember that you are doing this to verify you can feed your family, your cat, yourself. So try to avoid tests that can lead you in to a false sense of security in your market.

Do not go to the mall and hand out free samples of your product and then ask people if they like it or not. this will give you false findings, as people always like free stuff. All it will serve to do is give you a false sense of security in your new business idea. Save this sort of approach for when you have your doors open. eg. So you liked that? here's how to order more!

Step 3:

Plan your business. I can't really stress this enough but ensure that you have every little part of your business planned. Make sure you include a budget for the first year and a three year cash flow forecast. If you are planning to borrow startup funds then this will make your bank manager very happy. If you don't know how to plan a business there are plenty of self help sites on the Internet with free business plan templates, that will give you a great outline on how to develop your business plan.

Remember that your business plan should be a living document, adjust it when your environment or needs change.

Step 4:

Think finance! Where are you getting the money to start your business? the amount of money you need will depend on your type of business and your business plan. Finding that money is the hard part.

Hopefully you have the money to start the business yourself as no one will trust you with their money more than you will. It also forces you to work that little bit harder because it's all your money to loose.

Most people instantly think that venture capital funds are the first place to look, but be weary of this as they will not even look at you unless you have a great new idea and a very sound and well planned business model. Also they will usually want to own a large part of your new startup.

Consider asking friends and family for angel money or loans to start your business, they will usually have the cheapest interest rate and will be really proud of you when you succeed.

Or you could simply get a loan for the money. But beware you will be personally liable for any loan payments and interest should the business fail. The upshot of this is that with you wearing all the risk you also reap all the reward, after the loan is paid off whats left is all yours.

You could even try a zero cash startup. speaking from experience, this is a lot of hard work but it can be done. you can start searching the Internet for free stuff to help you get started and conscript friends and family for help along the way. but be prepared to spend a bit of time working in the weekend. Try our free business resources section for a start.

Step 5:

make your first sales (what the ????). That's right make your first sales before you open your doors, get the preorders in. why?

  • Because you need to be able to prove your market exists.
  • You need to prove your business model.
  • You need to prove your business plan.
  • For your business to be a success it should be cash flow positive (earning money) from day one of opening it's doors.


 

Like it? Share it...