Are you thinking of starting a business?
If so, there are a few considerations to bear in mind before ploughing ahead in order to give your business idea the best chance of success.
Create a business plan.
It is very easy during the initial enthusiasm of thinking of starting a business to jump in with your new idea and overlook the finer details that can help indicate the likelihood of success. Many think that business plans only need to be written when trying to raise finance, but the actual writing out of a business plan can help you define your business idea, assess it’s viability, define your goals and plan how you are going to achieve them. It will help you think about your competition and what you are going to do to stand out amongst them. It will help identify where you product or service will be placed in the market and what people are likely to pay for it. Most importantly it will help you plan your cash flow and how you are going to survive in the early days until you get it fully off the ground.
Beware of going ‘all in.’
There are many people who have used their credit cards to the max or re-mortgaged their homes to fund their business idea. For the rare few, this gamble paid off. But for many more, this led to tears and financial ruin. Think carefully before putting everything on the line for starting your business. Starting a business is stressful enough as it is without the additional worry each month that you may be on the verge of losing your home. Do your research, write your business plan and consider carefully how your business will be funded.
Test the waters before giving up the day job
To minimize the risk of failure, try testing your business idea out on a small scale before you throw in the towel on your day job. There are numerous small business owners who remained in their day job whilst building their own business slowly in the evenings and at weekends. Yes, it will take you longer, but the risks are far lower and you will still be able to earn a salary to pay the household bills each month. A word of warning though, do check there are no restrictions in your employment contract restricting you from carrying out work elsewhere.
Save for a rainy day.
Even the most successful of start-up businesses can be caught in an unexpected market downturn. And there is always the unexpected scenario or emergency that no one could have predicted. From the moment of thinking of starting a business, make sure you build up a financial buffer and continue when your sales are good so that you have something in reserve in case the lean times hit. If the unexpected does happen, you will still be responsible for the business bills. Having a cash buffer will take the pressure off if the bad times hit and could mean the difference between your business surviving or failing long term.
Too often I hear ‘it will never happen to me’ but every business is vulnerable to potential risks. It is so important to have a backup or disaster recovery plan in place and to protect yourself and your business from potential risks. Take some time to think about worst case scenarios and how you’d handle them. What if a fire or flood destroyed your office? What would happen if a customer or employee sued your business? What would happen if you were ill or injured and couldn’t work? Make sure you have insurance protection in place and put procedures in place to ensure your business could continue to run in the worst case scenario.
Start with the end in mind.
Start with the end in mind. Many start up business owners think it crazy to be thinking about selling their business before it is fully up and running, but by planning what will ultimately happen with the business in the future, will help you plan and set goals to achieve along the way. Without an end plan in place, a business can drift along and go off track and not be as successful as it could be with a clear exit plan in place. Remember, one day you will either want to hand over the reins or sell on and have a nice lump sum in place for your retirement.
Seek professional advice.
If you’re serious about starting your own business and making it a success, find yourself a mentor or advisor to give you expert advice. An experienced business advisor can be there to help you develop your business plan and launch your new career. They can be an invaluable sounding board and their experience and independent perspective can help you steer clear of the numerous start up mistakes so many make.
So if you are thinking of starting a business follow the steps above to help you make it a success.