So you want to start your own business?

So you have a business idea... you know it's brilliant... Or you yearn to be your own bosss... but where do you start?

What’s your motivation?The motives behind wanting to start your own business are important, while they might be optimistic and well intentioned - the reality can be quite different.

You may want to be your own boss yet the impact on your lifestyle and the commitment required from a business could leave you disheartened and scanning the job vacancy websites. Wanting to be financially independent through a profitable business has to be weighed up against the risk of losing everything you own. Perhaps you don’t want to work with others yet having your own business means working with more demanding people than ever - customers, suppliers and employees. Maybe you’re tired of paperwork and bureaucracy yet business ownership means a huge chunk of your time will be spent dealing with significant and unavoidable compliance. Maybe you hanker for creative freedom yet you’ll need to create a product or service that is wanted by a large enough market to make it viable.

Why you might fail

Venture into business with your eyes wide open and an awareness of the potential pitfalls. Ignorance is bliss – but only up to a point.

Many businesses fail because owners rely on advice from friends and family instead of the hard nosed, unbiased advice of experts that they really need.

Others simply get worn out. Starting a business from scratch takes an endless supply of energy, focus and determination. Owners usually work 60 hours a week, committing long hours and hard work to give their business a decent chance at survival. You have to be a self starter; you alone have to get your business off the ground as no one else will be checking up on you.

Others fold due to family pressure - their family and friends feel neglected, money is tight and stress levels rise.

Others haven’t done their research on their market and they over estimate potential customers and under estimate the competition.

Others don’t keep an eye on financial reports which are critical in the early stages as a scorecard to tell you how you’re doing against your initial forecasts.

Is your idea feasible?A great idea doesn’t ensure a successful business. There are lots of great ideas but it’s the business itself – the systems, the people, the structure - that deliver the idea that is the crucial factor.

Do your homework. Talk to people about your idea, ask what they think; would they use your product/service? How much would they pay? Carry out postal, phone or one to one surveys and interviews, or gather a focus group together for their feedback.

Most importantly, is your idea financially viable? New Zealand is a tiny marketplace; a business in the States can survive just selling golf ball shaped computer mice to the local market; we can’t.

Do your sums; calculate the return on your investment that you expect from your business, plus the income you need to cover your living expenses, plus tax and then calculate the profit you expect from your business. How many sales would you need to generate this level of income? Would you be able to find enough customers to generate these sales?

Create your business plan

There are heaps of business plan templates available from your bank, from your local biz Centre or from the internet to help you create a plan for your business.

A business plan usually covers an overview of your business, a marketing plan, an operations plan and a financial plan – and this plan becomes the ‘road map’ for your business, a reference to make sure you’re on track.

Getting assistanceAsking for help and advice is not a sign of weakness, but an important factor in the success of your business. The good news is there are lots of resources available. Important advisors include your accountant, solicitor and bank manager – many will offer a free first consultation so you can quiz them about their services.

Local business networks are invaluable sources of information and contacts eg. Her Business Networks, Chamber Networks, and BNI Chapters.

Create a picture Be very clear about what your business will look like; what hours will you work? How much money will you make? How many employees will you have? Where will your office be? How will you exit your business? What countries will you operate in? Have you got support from family and friends? What will a normal business day be like – how will you divide your time between people, information and things?

First steps

Although you may not be ready to open your business tomorrow you can be setting the scene today: read books about other entrepreneurs, support other small business owners, invest in your entrepreneurial self by attending courses, start putting money aside and get into the habit of doing something every day to further your dreams, like opening a business bank account or registering for GST.

If business ownership is your dream – then why not give it a go?

Fiona Powell

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