Did you know that 6 out of 10 businesses in Australia fail within the first 18 months? A key reason for this is that many people get so excited they jump right into business without doing any planning or due diligence. In many cases their business fails and they wonder why!
So the first thing you should do before starting anything on your business is do some background work and research.
Important elements to consider:
- Are you passionate about the product/service you are offering?
- Do you have expertise and experience in your chosen business?
- What problem is your business solving and why will your products/services appeal to potential customers? As an example, my business (Small Biz Marketing HQ) has 2 target markets. Firstly, start up businesses with limited marketing knowledge that are not sure where to start with setting up their business. They typically need help, advice and support regarding branding, websites, social media, and marketing planning. My second target audience is established small businesses who need assistance with taking their business to the next level. They may have some marketing activities in place but most elements are adhoc and there is no plan and structure. They have sales and revenue targets they want to achieve but are not sure how to get there.
- Is there a market need for the product/service?
- Are there any barriers to entering the market? Even if there is a low barrier to entry it doesn’t mean you can’t be successful, it just means there will likely be more competitors and you need to differentiate yourself.
- Who is your target market? What is the estimated size of the market and what percentage of the market do you hope to reach? You don’t necessarily want to go for a market that has a huge market size – sometimes you are better off choosing a well defined niche. That way your marketing can be very specific as you truly understand the needs of your customers. You may have a few key markets (but when you are starting out it is usually easier if you can focus on one or two).
- What does your ideal customer look like? Where are they located? What is their family status? What is there job? What are their likes/dislikes, what media channels do they use (ie facebook, youtube, twitter etc)?
- What is the likely demand for your products or services? Is it a growing industry? For example if you are looking to start a an envelope printing business, I would say this is a declining industry as everything is going the way of digital. Do some google searches to determine if your business is a growing industry.
- Is there a lot of competition and how could you differentiate yourself from competitors? How will your product or service be sold? (ie shopfront. online, distributor etc)
- How will you source or create your product or offer your service? Are you an online store that will make and ship your own products, or are you a service based business where you provide expertise ie accountant, personal trainer, etc?
- Where will your business be run from (ie home, shop, office etc)?
- How will you price and position your product/service – will it be entry level, premium or something in between?
- What is your unique selling proposition (USP)?
- Are there any regulations you need to be following?
You will also need to speak to an accountant to discuss items such as:
- How much money do you need to start up and how will this be funded?
- How much will I need to make to cover living expenses?
- What are your sales forecast?
- Estimated costs?
- Cashflow analysis
- How much profit to do you expect to make?
So grab yourself a cuppa, set aside a couple of hours, and run through the list above in detail.
The great thing is many of these elements will form the basis of your business plan and once you have noted a lot of this down, it should give you confidence that your business idea is a good one (or if it’s not!)
Is this list valuable? I would love to hear how you go!