Starting a small business is a big decision. It’s an exciting prospect, and one that can reap serious rewards for those who do it well. But committing to entrepreneurship also brings a steep learning curve and more than a little risk, particularly for those who haven’t done it before. Half-hearted approaches are rarely rewarded.
According to the University of Technology Sydney, an estimated one in three small businesses fail in their first year of operation, and half by the end of their second year. If you are to beat those odds, you might benefit from a few tips for starting a business that will see you build it in the right way.
Let’s take a look at 10 small business tips that will help you to do just that.
1. Address hurdles before you come to them
A harsh truth: In starting a small business you have a lot to lose, and no guarantee of gains. This fact sees many potential business owners falling at the very first step. They see hurdles (real or imagined), and make excuses for not going ahead with their idea. It’s why so many people have dreams of entrepreneurship, but so few follow through.
Starting a small business is far less scary when you know what you’re getting into. Our first business tip is to write down why you might be hesitant to start your business, and address those excuses one by one. Arming yourself with solutions to future problems will not only increase your confidence, it’ll also make your life far easier when the issues actually arise.
2. Find a problem to solve or a need to address
The most successful businesses solve a problem or address a need. It’s far easier to build a customer base when you’re offering a solution to an issue or filling a gap in the market.
There are plenty of successful small businesses that don’t really offer a solution to a problem – by selling things like art, food, flowers or jewellery, you’re simply adding something nice to a customer’s life, and that’s fantastic. But if you actively reduce a pain point, you’ll find that your business will be easier to establish, and far more scalable.
3. Find a business mentor
Countless other people have undertaken the journey you’re about to embark on, and they’ve made mistakes so that you don’t have to. A good mentor can be invaluable to a new business owner, and you might be surprised at how willing people are to offer guidance.
Consult your personal network. Attend industry events. Hit people up on LinkedIn. For those struggling to find a personal mentor by these means, consider purchasing a training course offered by an industry leader.
4. Start your business simple
If you already have an idea – and for those who don’t, inspiration can be found here – you just need to form it into the shape of a business. But in doing so many new business owners fall down the rabbit hole, turning their idea into something super elaborate and needlessly complex.
Our fourth small business tip: there are perks to narrowing your focus and starting small. You should aim to create a product or service that is simple, relevant and of the highest quality. Cut the unnecessary bells and whistles that increase cost and water down the core of your offering.
5. Measure market demand
Does everyone else like your idea as much as you do? A lot of new business owners assume that a product or service will be a success simply because they themselves would buy it. But you should never assume that there’s a market; you instead need to quantify demand.
Conduct research by investigating market trends and conducting surveys. Try to identify potential customers, and take the opportunity to speak to them about their needs, wants and budget.
6. Know your budget
Unless you have a spare million lying around, your budget will more than likely be your greatest constraint in starting a business. That isn’t a bad thing – a limited budget can help to ensure that every cent is spent wisely.
You need to know exactly how much you’re willing to invest in a new venture. Some businesses will enjoy a stream of revenue almost instantly, while others will be slower to generate a return, so you need to plan around an appropriate time frame. You should also budget your time – how many hours a week are you willing to commit to this new venture in order to get it off the ground?
7. Consider day-to-day operations
It can be easy to get caught up in creating and selling a cool new product or service, but the realities of business are far less glamorous. Stock must be received and dispatched, accounts reconciled, bills paid, and customer support offered. Before you start your new venture, make sure you understand and plan for its day-to-day operation.
8. Create a website
An online presence is now critical to the success of any business, so no matter what yours looks like, from selling modern software solutions to homemade arts and crafts, you’ll need a website. Happily, creating your own online store couldn’t be easier!
9. Research competitors
Even if you create the most unique and inimitable product or service on earth, you’ll still have competitors – things that your potential customers are currently using to satisfy that need. Researching your competitors allows you to find your points of difference, and learn the most effective ways that they sell to their customers.
Be aware too that this is a process that doesn’t have a finish line – the competition will react to your (hopefully) successful entry into the market, so you need to monitor their activity on an ongoing basis, and adjust your strategy when and where necessary.
10. See mistakes as opportunities to learn
Perhaps the main difference between business owners who succeed and those who fail is that successful types don’t fixate on or get demoralised by mistakes and setbacks – they instead see them as an important part of the process, because they’re an opportunity to learn. Nor do the successful tend to blame bad luck, the economy or other people for their mistakes.
If the path to a goal appears to be blocked, the most successful business owners will find an alternate path, or will shift the goalposts.
11. Don’t quit your day job… yet
Successfully launching a new business is a step-by-step process. In most cases it will take some time to earn the sort of sufficient and steady income you need to survive.
It’s wise to keep your day job, at least until you’re more certain of the success of your new venture. Spend any available time outside your nine-to-five working on your company, and as the business builds, you can slowly begin to transition from employee to business owner.