More people are wanting to start their own business, redundancies, the desire for greater flexibility in working hours, the increased satisfaction of working for yourself, have all contributed to the increase in business start ups. These fledgling businesses will eventually grow into the small/medium sized businesses which it is hoped will begin to revive the economy and provide much needed employment. However a word of caution needs to be voiced to the new business starters, the facts are that many businesses fail in the first year of trading and whilst the reasons are many and varied one of the main factors is that they did not have a clear vision of what they wanted from the business and they did not do their homework on the fundamentals, customers, the market they were entering, selling price of goods/service etc. So whilst the thought of having your own business and the rewards and freedom it offers are quite tempting a degree of caution should be noted as a great deal of homework needs to be carried out prior to actually starting the business.
Items to consider:-
What do you want from your business.
Do you want to build a business over many years, expanding whenever possible, looking to employ additional staff etc. or are you looking for a business which will provide a certain level of income with no desire to grow beyond that level envisaged, or are you the serial entrepreneur who will start the business and then look to sell it at some stage before moving on to the next project.
What product/service will your business provide.
Many people want to start a business but do not know what they are going to do, there are obvious advantages to offering a product or service in a market in which you have some knowledge of, or have previously worked in. Another option is to look to purchase a franchise which offers the opportunity to buy a business which is based on an existing business model and you will be allowed to run that business in a certain geographical area. The golden rule when deciding what product or service to offer is "make something that people want to buy", this may seem obvious but many people start a business selling a product they like but ultimately the business fails because enough people do not want to buy it.
Other information you need to know.
Quite simply the more information you can find at this stage the more informed your decision will be on starting the business, as much information as possible should be obtained on the following:-
- customers
- competitors
- product
- cost of production
- selling price
- the product market
The work undertaken at this stage could prevent poor decisions being made and as a result save considerable time and money. Another golden rule to consider at this point refers to the proposed selling price of the product, "the selling price is not the cost of production plus profit margin, it is simply the price people are willing to pay for the product". Consideration should also be given as to what the products unique selling point will be, what will make people buy this product rather than a competitors product.
The points outlined above are not intended to be exhaustive and some additional considerations may need to be addressed once the background work is undertaken, the important issue is that this work is done prior to starting the business, so that the decision to start is based on sound judgement and a clear vision.
Jack Biggs
Thinking of starting your own business, then click on the link below now for information and advice.
