Many of us dream of owning our own business – no boss to answer to, hours to suit us and holidays whenever we like. You have a great idea and want to start a business. The first question to ask is - do you have what it takes to make it a success?
Every year, more new small businesses fail than succeed. But that shouldn’t stop you – test your idea and yourself by answering these questions.
Do you have what it takes?
Running your own business can mean long, unpredictable days, with little respite until you start to make a profit. Reaching that milestone can take years.
You’ll need to be:
How good is your business idea?
It helps to evaluate your idea so you can decide if you are ready to join the ranks of the self-employed. Many people are able to come up with new ideas, but there’s a crucial difference between a good idea and a commercial idea. Often the most successful ideas are the simple ones, like identifying a gap in the market that can be filled with a new product or service, or adapting and improving an existing business idea.
Take the time to evaluate your idea before you leave your job, borrow money and put your family life on the line.
What problem or need does your business solve or fill?
Is your idea for a business going to solve a problem — or tap into an unfilled need — for the public or other businesses? If your answer is no, scrap it and start again. If your answer is yes, think about the scale of this problem or need. If it’s minor, you are going to struggle to make sales. You need to solve what’s giving people a major headache, or provide something they can’t get elsewhere.
Defining your business
Before you start researching your market, you need to work out what your business does — its purpose — and if it’s unique.
First, define the product or service you’re offering then ask:
The answer to these questions informs the start of your research into your market and competition. There are free tools you can use to build a detailed picture of your market and competition — the more detailed the better. The results can also be useful to show potential investors or financial institutions that you’re a good business to invest in.
Researching your market
Think about your customers. Are they other businesses (referred to as businesses-to-business or B2B), or members of the public (business-to-consumer or B2C)?Knowing who’ll buy your products or services — and why — is crucial for your planning. This applies to domestic and overseas markets.
You need to:
Find your customers by:
How much market information is available can depend on the industry you’re in e.g. trade associations often provide members with up-to-date data for their specific markets.
Banks also produce research that you can access freely — though it’s often general information about the economy and small businesses.
How to research your competitors
Find out what advantages competitors have over the business you’re planning, and examine their pricing and marketing strategies.
Try to find out:
Will people buy from you?
Unless you’re going to sell something no one has thought of before, you’ll be competing against other businesses. Your products or services must stand out from the rest. What is it that is different about your business?
Some things you may want to consider that make your products or services stand out from the crowd could be:
Remember, customers can buy just about anything online from around the world, so offering something that’s “unique” isn’t easy for New Zealand companies. You could focus on what’s unique about your business such as guaranteeing you’re the cheapest supplier or the brand consumers trust most. All these features help to build your brand and should feed into your marketing and sales plans.
You should also consider creating personas or avatars — fictionalised profiles of the people you most want to sell to — as you shape up your idea.
Numbers gameYou need realistic estimates of future income and costs to work out when you’ll be in profit. If the numbers show you won’t make profits for some time — even years — do you have funds to carry you through?
How to develop your USP
Finding a point of difference and refining it into a profit-making business requires work. Take these steps as a starting point:
The next step is to start planning how to turn your USP into a viable business.
Who are your rivals?
Some markets are more crowded and harder to break into than others. For example, if your area is flooded with cafes, what makes you think yours will be a success?
Remember, you’ll need a unique selling point to make you stand out from the rest.
What should go into creating a business plan?
There isn’t a one-size-fits-all formula to create a business plan. But there are some key things you should consider.
Implementing your business plan
Reviewing your business plan
Starting your own business is challenging, risky and rewarding. You'll learn a lot about yourself as a person - your strengths, your fears and areas of resistance, your ability to learn, adapt and grow, your levels of tolerance and perseverance. The biggest reward is who you become during the process. I wouldn't have it any other way.
Awhimai Reynolds is a Leadership Development Consultant and Business Coach.
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