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So you want to give your boss the flick and start out on your own – but are you REALLY business ready?
There
are two aspects of being ready – are you mentally ready and is your business ready?
Are YOU Ready?
Starting your own business is a big decision and it is something that is going to take a lot of your time, resources and
energy. So ask yourself the following questions to see whether you are really ready to take the plunge into business ownership:
- Are you prepared to work 80+ hour weeks to get your business established? Is your family prepared for this?
- Are
you excited, enthusiastic and energetic when planning your business? Does it scare you a little?
- Do you have the skills
necessary for your business? Do you have an understanding of business requirements – financing, legal, HR, etc?
- Do
you have enough capital behind you to support your business start-up?
- Are you prepared for your business to fail?
What happens if you out all your capital into this venture and it doesn’t come through – what is your fall back
plan?
- Have you got a good support base – partner? Family? Does your partner have a job to help support the family
while your business gets established?
If you answered “YES” to most of the above questions, then you’re
probably business ready. But is your business idea up to it?
Is your business idea ready?
So maybe YOU’RE ready to go out on your own, but what about your business idea? - What's your product or
service? What's different about your products or service that enough people will buy it?
- What does it cost to
make/provide the product or service? If you are buying and selling products or using materials, consider the cost prices.
If the main resource is your own time then attach a cost to your labour that reflects your available time for the work and
the wage you need to draw.
- How much do you need to sell the the product or service for? Small businesses need a healthy
profit margin - doubling the cost is good if the market will accept it. A mark-up of less than 50% is cause for concern unless
you are selling products in relatively high volumes or values.
- What price will the product/service sell for? Price
your products/services according to what the market will pay. Take into account your competitors and what they charge and
their relative quality. Service businesses that use only the person's time are often very attractive and profitable because
there is no added complication of buying and holding stock.
- Who will buy the product/service? Identify your customers
and market. Do you know this for sure? Confirm that a big enough market exists for your idea. Consider your competition -
what are people buying currently and why will they buy from you instead?
- How much do you need to sell in a year? And
how many customers do you need?
- How will people know about the service/product? What advertising/marketing is necessary
– and how much will this cost. There is usually a cost for generating new customers, especially in the early stages
of a new enterprise.
- Does all this add up? Does all this provide a cash surplus at the end of a year? If so then
it's probably a good business model.
These basic questions represent the typical 'table napkin' business
proposition that is the start of most businesses. But it is just the START.
If you determine that you and your
business idea are ready to fly, then you need to do a lot more planning and preparation including doing a full market assessment,
competition analysis and business plan and budget.
And please get professional business development, accounting
and legal advice before embarking on any business venture. Good Luck!
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