How to start a Business -
According to Buddha “there is more than one path to
enlightenment”. So too is there more than one path to successfully starting
a business. While there are numerous paths to business success and
numerous ways to travel on each path there is at least a number of common steps
that you can tread to aid you in your quest for life success through small
While I will discuss a number of steps in order, it
is worth noting that in practice, the order typically does not flow out as
neatly as explained. You will find you commence one step only to find that you
need information from a latter step to help you complete your current step.
For instance the step of undertaking your financial
feasibility you do a number of times, as you find more information and as your
idea becomes clearer. You may conduct a ball park start up financial
feasibility assessment using the
business start up calculator today.
This may give you some indication of how feasible your business idea is, and it
will only take you a few minutes to do a ball park calculation.
As you progress with your business idea you will have more
information about expenses and maybe more information about your customers. So
you will return to the business start up calculator and redo your feasibility
assessment. This time your business start up assessment will be a little more
accurate than was your first attempt.
Again the step of establishing your vision is one you are
likely to keep refining as you find out more about your market place, your
skills and develop your understanding of what you really want to do.
Establishing the vision for your business is quite
significant. About a decade ago FJ Story surveyed America’s 100 fastest growing
companies to discover their distinguishing attributes. He reported 17 lessons
from this study and the number one lesson of these was “ all of the people
involved in growing their own businesses have a crystal clear vision as to where
they want to get in the long term”. This lesson highlights the importance of
goal setting for business success.
Is your idea financial feasible? As a starting point
you should undertake a basic financial feasibility
assessment to provide you with a sense of how it works and some ball
park indication as to the feasibility of your idea. You should also join
the Business Startup Club and obtain a free
initial assessment of your idea.
Avoiding the Traps
Historically there are a number of traps that are typically
the cause of the demise of those business start ups that don't make it. As
you can identify these traps you can prepare yourself to deal with them and
learn how to avoid them. These traps can be thought of as the "lack ofs".
Lack of money, experience, planning and a distribution system.
How do you rate for each of these traps.
Money: The rule of thumb is that you need
access to sufficient money not only to get your business started but also to
survive for 6 months without any sales. If this is a hobby that you are
turning into a business while you continue with another job this figure could be
zero. However if your totally livelihood will be wrapped up in the
business this may be a significant amount of money. Clearing in this case
a detailed cashflow plan will be needed. We should understand that the
rule of thumb states access to sufficient funds. So it doesn't mean you
actually need that money sitting in a bank account. You could for instance
have a loan facility to provide your funds.
Experience: There are two levels of experience
Experience in the industry - Experience in the industry is
essential to know the rules of thumb, the industry norms, the key contacts and
to understand how things work. If you don't have the experience in the
industry consider how you could acquire it. This may involve obtaining a
mentor, joining an industry association, working short term in the industry,
reading industry publications or using industry specific
start up guides.
Experience in management - Are you capable of handling your
administrative and planning load? For instance can you read your financial
statements, can your prepare your budgets. Do you rate well with your
ability to deal with people, whether that be staff, contractors, customers,
suppliers. How do your negotiation skills rate. Are you good at
seeing the opportunities in the market place and adapting your team to take
advantage of them.
A Plan: The chances of success of your business will
be increased when you have developed a good business plan. The degree of
effort you put into your business plan in some sense will depend upon how
crucial the success of the business is. If you are investing significant
dollars or giving up a job you are likely to need to put real effort into your
business plan before you start. However if it will initially only be a
part time business you may find it effective to have a basic plan and develop
the plan as you develop the business. At the very least your plan will be
a checklist of the action you need to carry out. View an example start
Distribution System: Originally this was referred to
as location but as we have moved more into the digital age physical location has
become less significant for most businesses. How much thought have your
given to your distribution system? For instance you may distribute by sell
goods from a shop front where people come into your shop and purchase, you may
also distribute by going to your clients premises and providing a service.
Alternatively you may operate an online business where your clients download
your product from the net. How well thought out is your distribution