When I was 9 years of age, I set up my first business. I didn’t have a corporate structure in place, nor did I know anything about the regulations of running a business. What I did know was that there was a gap in the school market where the canteen didn’t sell the type of lollies that I wanted (actually, no lollies at all) while my mother was more than happy to buy them in bulk so that I could enjoy them (or sell them to my friends). You may be in a similar situation – you have an idea, you can see a gap in the market, or you have a set of skills you believe that the market will want to buy. However, an idea does not make a business. So, where do you start when you want to set up and start your own business?
Well, first things first, you just need get your head right. Business is hard. It’s not all long lunches, parties, flexible working hours and lots of money – quite the opposite. It’s uncertainty, hard word, long hours and making – at times – enormous sacrifices. But, if you play your cards right, it’s one hell of a ride with some significant potential rewards.
This article is going to be divided into two pieces – the first one is about planning our your business ideas, the second will be about the legal structure, contracts, banking, all the practical things. I might do a third article about really interesting ways that you can spend your millions, but it will depend on my mood 🙂
Everyone talks about business plans – when I was 9 I had no idea what they were. When I set up my first grown-up company when I was 24, I didn’t think that it was relevant to me. I mean, why would I need to write down what was in my head? I know what’s in my head, right? Well, now that I have three grey hairs (middle age rapidly approaching my wife keeps telling me), I have a slightly different opinion. Write it down. Yes, actually write a business plan. If you google business plans, you’ll get a lot of hits and a lot of templates. The rationale for writing it down is that it helps you get your s**t in order – the mind can be a pretty cluttered space so when you start writing things down you have the chance to make sure they make sense. If it doesn’t, well, it’s going to need work. How long should a business plan be? As long as you want it, but I usually recommend 2-4 pages. Keep it short – bullet points. You’ll find that getting the ideas down on paper will help you to free up some space in your head and some new or complimentary ideas will flow through as a result.
Part of the planning process is a budget and again this can be simple or complex, it depends on you. You should do a personal budget as well as you and your business are very tighly linked, especially in the early days. You would be surprised (or not) about how much effect personal financial pressure can put on your business. For some people, it’s a great driver, but for many, it’s the distraction that could ruin your business. I’m fortunate with our company that I can say no to any deal or contract that I don’t think is in the bests interests of all the key stakeholders. But personal financial pressure can cloud your judgement and potentially make you compromise on your ideals or even ethics. You’ve picked a direction for your business, be aware of your personal and business financial position and hurdles before setting out so that you can make sure you’re on top of them all. Making sure you take of these will make it less likely that you’ll regret your decision to start your own business.
There is so much that I can write about product, marketing, positioning, networking, sales etc etc – it’s almost endless. Suffice to say, you need to be on top of all of that. Think about your product, who’s going to want it? Why will they buy yours rather than someone else’s? What’s special about it? If it’s something that’s new and ground breaking – fantastic. But the thing about new products or services is that no-one knows that they exist. There isn’t an existing market for it at the moment, so how will people know that they need it? How are you going to price it – is it a premium product? If so, why? Are you going to undercut the market? If it’s a more intimate service, such as consulting, how are you going to find the contacts and meet the people for you to consult to? Google “how to price your product/service for the market” – there is heaps of info there.
From a marketing and positioning perspective, just a few golden rules:
- while people love an underdog, start-ups and having a go, people feel really uncomfortable parting with their money with businesses and brands don’t look professional. Make sure that you have:
- Your own website that is well designed. It costs very little to buy an excellent template, don’t cut corners
- Don’t use a Gmail, Hotmail or other free email address. You can have your email hosted for $6 per month with Microsoft or attach it to your webhost. There is no excuse not to have [email protected]
- If possible, register a business name (more on this in part two), and with this, a business named bank account
- Get proper business cards – don’t get cheap crappy one unless you’re in the business of being cheap and crappy
Focus on the prize which is a successful, strong growing business which is adding value to your life. Making the choice to start your own business is a big one. In part two, I’m going to talk about business structures (sole trader, companies, trusts etc.), how to get funding, tax and legal and whatever else comes to mind.
If you’ve got an idea and you’re not sure where to start, feel free to reach out for a hand.