How to start your own small business

So, you’re thinking about starting up your own small business?
 

Excited by the prospect of making money by doing something that you love? Perhaps you’ve been feeling frustrated in your current job, and are convinced that running your own business will provide you with the satisfaction you seek?
 
Or maybe the entrepreneur in you can see an opportunity, a problem that no-one else is offering a solution for?

Well here’s a few of the most essential things you need to know about starting your own business ....
  

• Consider both the upside and the downside  

Yes, running your own business can be very rewarding. It offers you the freedom to be your own boss, the autonomy to make your own decisions and the satisfaction of building something that you are proud of. There are many people who make a lot of money successfully running their own business – they end up making more money than if they were working for someone else. Not only are they doing what they love, but they are able to eventually enjoy a lifestyle that would otherwise not have been possible.

But you can't close your eyes to the potential downside. There are just as many people in small business who do not succeed and end up walking away disillusioned, disheartened and having lost money. Sometimes it’s because they’ve gone into business with strong technical skills (ie. they’re a great plumber, a great chef, or a great mechanic) but completely inadequate commercial skills necessary for running a profitable business.

• Common pitfalls

One of the most common reasons for small business failure is a lack of preparation ….. people suffering from a romanticised view that it will be an easy path to riches. They neglect to undertake proper market research, ignore the risks, over-estimate demand and jump too quickly into over-capitalising their business. They get excited by their idea and can become impetuous in their actions. They spend too much money too quickly – for example over-committing to leasing premises or purchasing equipment, instead of trialling their idea and putting their toe in the water first.

• Be prepared for hard work

Talk to anyone who has been running their own small business for a while, and they will all say that the first 18 months is hard slog. There are long hours and more than a few sleepless nights.  It will draw upon all your reserves of stamina, self-belief and determination to succeed in building a customer base and proving that you can consistently deliver on your promises.

If you find after 18 months that your business is providing you with a reasonable standard of living and that your revenue is comfortably exceeding your costs – then chances are that you have indeed found the ingredients for achieving sustainable business success and business growth

The point here is to make sure that you are seeing the thorns as well as the roses when thinking about going into business for the first time. Recognise that it will take hard work, but if you’re doing what you’re really passionate about then you won’t begrudge it.

• Assess the viability of your idea

Invest some time and thought in preliminary market research. This is a crucial step in helping you determine the viability of your idea. Finding answers to questions such as

-        How do I know there is sufficient demand for my product or service?

-        What is the level of competition ….. is demand greater than existing supply, or is it a crowded market and there are more suppliers than demand?

-        How would I be able to differentiate my business from competitors – by doing it better, doing it cheaper or doing it differently in some way?

-        What would be all of the costs associated with developing and delivering the service / product – and what would I be charging? ….. How many sales would be necessary to cover costs? ….. How long would it likely take before the business was generating that volume of sales? …. Do I have a sufficient reserve of funds to cover any shortfall – or would I need a bank loan?

-        What are the risks? ….. what would be the impact and the likelihood of things going wrong? ……  is there anything I can do that would mitigate these risks

-          Are there any government grants for which my business could be eligible?

Nothing is ever risk-free. What’s important however is that you’re aware of the risks and that you judge you can comfortably live with them if you can’t find a way to manage them.

• You’ve got to feel ready for running your own business

There’s no point taking on a level of stress that will end up damaging your health or undermining your ability to apply yourself positively to building a solid business.

Maybe the time is not yet right for you to go down this path …….. Not for now doesn’t mean never. Timing is crucial and you’ve got to feel ready for the challenge within yourself.

You’ll probably never be completely free of doubts, but you’ve got to have a level of confidence, self-belief and drive that will outweigh the doubts.

 

• Can you test the water first?

Before you leave the security of your current job, you might just want to see if you can first test the water with your idea and try it out on a low-risk, part-time basis. 

Maybe your idea is writing e-books, or selling perfume online, or setting up your own handyman business. See if you can trial it in the evenings or on the weekends, so you can confirm there will be sufficient demand for your service or product, to make it financially viable for you to embark on doing it full-time (However, even if you are trading only on a part time basis you will still need to register a business name and obtain an ABN)

But once you’ve carefully completed your research and assessed the relative risk versus reward, and if you remain confident in the viability of your idea, then now becomes the time for bold action and taking the steps necessary to start your business.

• Choosing a business structure

You may benefit from gaining expert professional advice in selecting the business structure that is best suited to your situation. The options that are most common for a small business structure are as follows, but each structure carries with it potential advantages and disadvantages

i)            Sole trader: an individual trading on their own

ii)           Partnership: an association of people or entities running a business together, but not as a company

iii)          Trust: an entity that holds property or income for the benefit of others

iv)          Company: a legal entity separate from its shareholders

• Choosing a business name

The choice of a name for your business is one that you may be stuck with for a long time, so again it’s worth investing some thought to get it right. Although admittedly you can always later change your business name, this can have quite a disruptive impact on your brand. A name change can also end up incurring significant costs, through things like needing to have stationary reprinted and registrations updated……. So what do you need to consider?

Many business owners will advise you to look for a name that is easy to spell, easy to remember and gives potential customers an indication of what you do. Some small businesses will combine their family name in their business name – for example Thompsons Plumbing, Ashman Accounting, or Taylors Gardening Services ….. Others combine the area or region they service, such as Bayside Motors, Sydney Renovations or Eastside Landscaping

And then you have other businesses that go for short, quirky original names like Apple, Google, Innovate

You’ll probably have a few different ideas for names, so get some feedback from other people and test their reaction to each of the names as part of your decision making process. Your choice of business name will also be connected to how you want to position yourself in the market you are targeting and the type of image you want to project to your target market. For example, do you want to be seen as steady, reliable and safe – or is it more fresh, innovative and vibrant? What will hold appeal for your target audience?

Once you have selected a preferred business name, it can be wise to also check on the availability of the name to register as a domain name for your website. Although your domain name does not have to be the same as your business name, I believe this helps to strengthen your brand in the marketplace.

• Registering your business name in Australia

In Australia, you can check availability and register your business name online with Australian Securities & Investment Commission (ASIC). You will also need to apply for an ABN with the Australian Taxation Office. You will require an ABN if your business will be charging Goods & Services Tax (GST) and the ABN should appear on all of your invoices. An ABN is required before you can complete registration of your business name.

If this all seems a little complicated, get a couple of quotes from local Tax Agents as to what they would charge to complete it for you online. It's a fairly quick process to obtain an ABN for people familiar with navigating their way around the ATO procedures

Note that registering a business name is not the same as registering a company name. If you decide to set up your business as a company structure, the current ASIC fee for registering your company name at time of writing is $433. A company name has Pty. Ltd. at the end of it.

To register as a company, you can either attempt to do it yourself through the ASIC online portal (but it is somewhat complicated) or there are other commercial online services that help to simplify the process and charge less than $100 in addition to the ASIC fee. This compares to some accountants who will charge up to $1,800 to handle your company registration process.

If you do not decide to set up as a company structure, then the initial cost of registering a business name with ASIC at time of writing is $30.

There are subsequent annual renewal fees to maintain registration of your name as well.

And you may want to consider seeking to register the name as a trade mark to protect your business name. However there are strict eligibility requirements for gaining a trade mark and you might want to consult with an IP (intellectual property) lawyer. It is a common misconception that registration of a business name or domain name gives you exclusive use of the name. It doesn’t – only a trade mark registration can offer you protection of your name and logo.

• Your business plan

Developing your business plan will provide you with an important sense of direction. If you would like some guidance in how to prepare one, visit free business plan template.

This is where you establish written goals for each of the major components of your business, and set out some actions, time-lines and strategies for achieving your goals. The level of detail in your plan will be determined by whether you are writing it for yourself, or in support of an application for a government grant or bank loan (these will typically require a greater level of detail).

At its simplest level, your business plan defines the objectives of your business, the target market, your sales and revenue goals and projected major operating costs for the year (this becomes your budget). It incorporates how you will market your business and differentiate yourself from your competition, including any major advertising and promotional strategies. Your business plan answers the basic questions of who will buy from you, why they should buy from you (and not your competitors) and how you will efficiently deliver to your customers what they have bought from you.

Your business plan is something that you should continue to keep in your line of sight, because it will provide you with focus and help you to judge priorities during the year 

• In closing

I started my own small business more than twenty years ago. Although there have been many challenges along the way and with the benefit of hindsight, many things that I would have handled differently, let me say that I have no regrets about going into business.

I’ve found running my own business provided me with a level of satisfaction, freedom and independence that working in the corporate world never equalled. It’s not suited to everyone, and only you can judge whether it will be right for you. Anyhow, hope you've found some useful tips here on how to start your own small business

Related articles include - Setting up an online business and Small business tips

Video : Registering your business name

In the following short video clip, the speaker explains some of the early steps in selecting and registering your business name. By the way, there are many different suppliers for seeking to register a business domain name - as well as the company that they are promoting in the video

 

Copyright 2013. Brian Carroll is the founder of Performance Development - a corporate training company based in Melbourne that delivers management training and leadership development services.

How To Run a Business

Perhaps you’re thinking of starting up a small business? Or maybe you’re already running a business and looking for some tips on how you can run it more effectively?    

Here’s five core lessons that I’ve learned from over 20 years of running a corporate consulting business …….

1.   Before starting up a business, make sure you’ve got the right temperament for it

You’ve got to be able to work independently and be a self-starter. If you are the sort of person who wants to be told what to do, then chances are that small business is not for you. You require persistence and you’ve got to have mental toughness, because there will always be ups and downs in running a business and you need to maintain faith in yourself and your business model.

2.   Don’t lose sight of your bigger picture

It’s all too easy to get side-tracked when you run a business and get caught up in relative trivia without even realising it at the time.  Your business plan provides your business with the overall direction that you need. Every year, you set goals in all of the major areas of your business – sales and marketing, finances, equipment and technology, and training (for yourself and for your employees if you have them).

Setting these bigger picture goals for the business is all well and good. But what determines whether these goals will be accomplished are the actions you take on a daily basis. So set some daily goals for yourself and keep a checklist of tasks you need to accomplish …… And if the list is getting too big, step back and identify the top priorities and ensure that these items get done before doing anything else. Forward thinking and planning, combined with self-discipline and healthy routines are essential to maintaining a sense of control and focus in your business

 

So thinking about how to run a business effectively cannot be considered in isolation from regularly reviewing your own personal efficiency. Wisely manage your own time each day and keep your bigger picture goals in line of sight - so that you ensure how you plan your day will move you closer towards these goals.

3.   Listen to your customers

If you’re running a small business or home based business, then it’s your ability to build close and loyal relationships with your customers that is one of the potential edges you have when competing with the bigger guys.  

Sure, being friendly is part of it ….. But more important is understanding the needs of your customers and how they are using your product or service. Listening to them and learning more about the problems they have and the pressures they experience can give you more ideas for innovating new products and services that provide solutions to their problems. Existing customers are often an untapped pool of additional sales and more business – but you’ve got to listen and ask questions to discover these hidden opportunities

 

4.   Internet marketing lets you compete against the big guys

You may run a small business or a home based business, but on the internet highway you don’t need to have a huge advertising budget to succeed in winning traffic to your website. It is worth investing in a professional looking website that is constructed with search engine optimisation (seo) in mind – there’s no point having a website unless you can get your website found by Google. And this means appearing on the first page of Google results for search enquiries with your keywords.

 

Alternatively, if you’re not competing effectively in the organic, free search results, then consider trialling an Adwords campaign and paying for your website to appear in the advertised section of search results (the column on the right hand side in Google). But monitor carefully the number of enquiries your Adwords campaign generates in order to assess whether it is worth the cost as you move forward.

Another key element in your internet marketing campaign should involve the selected use of social media to help raise the profile of your business.  Whether it is Facebook, Twitter on LinkedIn – try to find ways of engaging potential customers into your business. Again be careful that you don’t invest too much time into social media unless you find it is generating a reasonable return in enquiries from potential customers.

Regardless of whether your business services simply a local market, or whether you target a wider national or even international market, the internet has helped to level the playing field for small businesses and home based businesses so they can more readily compete against much larger organisations. You don't need a huge advertising or marketing budget, but you do need to be willing to invest some time in learning how to get your website found by Google

5.   Increasing your profits

When you’re running a business, you can increase your profits broadly speaking in one of three different ways ……. Either    

i)            Increase your revenue by increasing the volume of your sales. …. This sometimes can be achieved by more effective internet marketing, and improving your search engine ranking. For example, undertaking some SEO to your website might result in lifting your website organic (unpaid) ranking for your keywords from number 9 to appearing number 4 on the search results page – which of itself could increase the volume of enquiries by as much as 20% in some cases. Of course, you still need to work at converting the enquiry into a sale

ii)           Increase the price of your product or service ……. But this needs to be considered carefully, with a close eye on the prices of your competition – there’s no point pricing yourself out of the market (unless you really do own a niche space)

iii)          Reduce operating costs in running your business ….. This doesn’t have to mean becoming a penny-pincher, but simply becoming more prudent with your expenditure. It could be as simple as sometimes questioning whether you need to really purchase that new leather chair for the office. Or maybe scanning the marketplace again to make sure that your suppliers are really providing you with the best deals that they can

Also intrinsic to running a profitable business is managing your cash flow. It’s all too easy to find yourself in a situation where your monthly expenses and the bills that are due outweigh the cash flowing into the business. And this stress is not being caused by inadequate sales revenue, but more because of a problem with late payments from customers.

6.   Before you hire staff …..

There comes a time when some small business owners become confident they’ve found the formula for business success. They see such a steady growth in their business, and they realise they can’t handle it all themselves and so they start looking at hiring staff. But staff recruitment and staff management are a whole new set of skills – so make sure you get some good advice and training to help you before taking this step. Recruiting the wrong employee can do considerable damage to your business brand – and managing them poorly can mean they won’t be as productive as they could be. For some quick and simple recruitment advice, read Hiring Tips for Small Business and for staff management tips be sure to have a look at Management Skills Development

So in closing, if you’re thinking about how to run a business effectively, don’t be afraid to ask for help and guidance from other people who have succeeded in business themselves. Maybe your local community has a Rotary club or some other network of business people that you can join with. And check out the Australian government website for possible eligibility to access government grants and funding to support the launch or expansion of your small business enterprise.

Copyright 2013. Brian Carroll is the founder of Performance Development - a corporate training company based in Melbourne that delivers management training and leadership development programs.

Small Business - What sort of negotiator are you?

Negotiation is an every-day skill     

Negotiation is a skill that you likely apply almost every day throughout the different parts of your life. Whether you do so consciously or effectively is quite another question however.

For example, at home you might negotiate with your spouse, partner or flatmate about the division of chores around the house. Or perhaps you might at times negotiate about which restaurant you will go to for dinner, or which movie you'll go and see together. Or where you might go on your next holiday.

In running your small business, you might negotiate with a customer over when their work will be completed . Or you might seek to negotiate with one of your suppliers over a bigger price discount for a volume order. Or you might be required to negotiate with one of your employees over when they can take their annual leave.

So,what do we mean when we refer to  negotiation? ....... Well, one definition is that "negotiation is a process of communication in which 2 or more parties seek to resolve their differences and come to an agreement"

Are you a combative or collaborative negotiator?

Different people  adopt very different methods in the way they approach negotiation.

There are some people who view negotiation as a competition which they want to win - whatever the cost. They are simply concerned with their own goals and requirements - and show little genuine interest in the needs and concerns of the other party. They will readily apply pressure and threats, and seek to push you into a deal that offers far more advantages to them. You can recognise this type because they often seem to do more talking than listening. The combative negotiator has their focus on achieving their own outcomes, and care very little for the relationship. They often adopt a "take it or leave it" approach when they feel they've got the upper hand.

Most people are reluctant to willingly interact with the combative negotiator. It is an aggressive style that tends to trigger defensiveness in others

And yet there are other people who approach negotiation in a much more co-operative manner. They want to find a solution that is regarded as a fair one by both themselves and the other party. They can be readily recognised by .....

1. the careful way in which they listen to the other person,
2. the insightful questions they ask in an attempt to uncover the interests and underlying motivation of the other party
3. the emphasis they place on the common goals and interests that are shared with the other person
4. their lack of fear and the lateral thinking they apply to generate and explore options

The collaborative negotiator is still seeking an outcome that will meet their needs and priorities - but at the same time have a regard for the future relationship with the other party. They place a value upon the goodwill factor and are open to considering all ideas that offer a win-win opportunity.

Negotiation is about give and takeOne of the keys to effective negotiation is knowing when to be flexible and be willing to move on an issue, rather than maintaining a rigid position. However moving doesn't mean you have to concede and give-in - instead it means seeing if concessions can be reciprocated. In other words, seeking a "quid pro quo" from the other party in exchange for your concession. The language that is used here becomes "I will agree to ...... if you are willing to ...."

So you might say to your spouse that you're prepared to accept their choice of restaurant if they're willing to go later to the movie of your choice.

Or when managing your small business, you might say to your customer who is seeking a discount, that you could agree to it if they increase the volume of their order. Or you offer your supplier better payment terms if they can deliver more quickly. Or you indicate to your employee who is seeking a pay-rise that if they are able to generate a certain sustainable level of increase in sales then you could agree to their request.

An agreement will occur when each party feels they are gaining something that they perceive to be of greater value than what they are being asked to give.

But what if you're not comfortable with negotiation?
If  you view negotiation as "haggling" and not something that you feel particularly comfortable with, then what can you do? Well, for a start look for low-risk opportunities to practice, Opportunities that will allow you to experiment, to try out some different behaviours and to push your comfort zone.

And just as important can be changing the way you view negotiation. A negative perspective to negotiation may be contributing to your unease. It does not need to be an argument, nor does there need to be conflict. Instead, view negotiation as a discussion in which options and possibilities are explored. Both parties can benefit when this is handled in a positive manner.

Really, there is never any harm as a consumer in asking the question, "Can you do any better for cash?" ..... Or to ask another person "What would it take for you to agree to .....?"

• In closing

Improving your negotiating effectiveness can offer many potential benefits to your small business. Better outcomes can be achieved when you are dealing with your customers, suppliers and employees.

Copyright 2013. Brian Carroll is the founder of Performance Development - a corporate training company based in Melbourne that delivers management courses, leadership training and interview coaching

PR Tips for Small Business - How to write good copy

Do you ever worry that you may be spending a lot of time writing something that no one is going to read?
 

When you’re running a business, you appreciate that time is money. Hence any significant business activity needs to offer you a return, to justify its continuity.    

 

It is generally recognised that writing blog posts and submitting newspaper articles has the potential to raise the profile of your business and generate interest in what you have to offer. However this is only true when the content has been well written – and not many of us can claim to understand the essential keys to writing good copy   

 

I recently spoke with Wendy McWilliams from WMC Public Relations about how to write copy that will engage readers and generate a response, if that is the desired outcome. Wendy brings more than twenty years of experience to PR, particularly supporting SMEs with their promotion and publicity. She offered some great tips on content writing relevant to all of us running a small business

 

Q: Wendy, do you need special skills to write articles that people will actually read?

 

Not really, but you need to be mindful of who you are writing for and who will be reading the article. And whether it is a technical article or one that is general in nature, there are some tips that can be used across all types of writing.

 

Q: So if you are writing a blog or a feature article for a trade magazine, you can apply the same principles?

 

Yes, you just need to write in different style. For example a blog can be a lighter style, whereas an article for a magazine would usually be more formal.

 

The first tip is to create a catchy heading and introduction. You want to capture the reader's attention so they actually click on the link or stay on the page and continue reading. If you aren't sure what works, look at the articles that attracted you or emails you received that prompted you to click on them for more information. What worked with you and what didn’t? Also, check the metro daily papers and see how they intro a story. Practice trying to make it as punchy and attention-grabbing as you can.

 

After people have read your intro they want to know more, so it’s important to then include all of the factual information. The who, what, when, where, why and how.

Another tip to good copy-writing is to add a human interest element. Depending upon your subject, you might consider how people have been affected. Be specific, not general when talking about how they have benefited.

 

Q: Any advice for the small business owner who wants to tell their story?

 

For a small business success story it's a good idea to include some background information about how you or your company came to be where they are and what influences or mentors you’ve had in the past. What initially motivated you to start the business and what it is you find most satisfying about the business now.

 

What or whom do you attribute your success to? What ups and downs have you had along the way? Obviously, you must make it real and honest – but try and include something that differentiates your business story to that of others.

 

I would also suggest you try and keep a news angle to the story. This is particularly important if you are pitching a story to the media, for example your local press..

 

Q: What about structuring your content – any tips?

 

You should try and keep the content of the article in a logical order; chronological is usually the best structure so that readers are guided through your story in a seamless way.

 

And I would suggest that you include advice or tips on how others can benefit from your learning and experience. It's like a bonus for them reading the article.

 

Q: Any final words?

There is an art to writing interesting articles and it does take a while before you become competent with it. What you write needs to be succinct and not contain waffle. Just put yourself in the readers' position and from that perspective, it's easier to write what you would like to read.

And one final piece of advice when writing your copy. Don't make spelling, typographical or grammatical mistakes, as this is one of the biggest turn-offs for most readers. It can definitely undermine the impact of your message and detract from your own credibility. So try to get it proof-read by someone else before you publish the blog post or submit your article.

And for some other great advice on PR, take a look at our post PR Tips for Small Business

Copyright 2012. Brian Carroll is the founder of Performance Development - a corporate training company based in Melbourne that delivers management courses, leadership training and interview coaching