Starting your own business is a big decision and whilst it’s great to be independent and control your own destiny, there are no guarantees you that you will be successful.
Our best piece of advice when starting your own business is “start how you mean to go on”. That means, setting your goals, standards and processes in a scalable way. Like the latest Optus commercial says, “nobody starts a business to be small”.
In the very early stages of starting your business, you need to get the groundwork right before you even think about giving your day job the flick. Here are our top 10 tips for starting your own business.
1. Start something you’re already good at
It’s simple, if you start a business based on a skill or trade you are already good at, your chances of success greatly improve. Starting a business just because you see other people being successful and wanting your own slice of the pie, is not a good grounding to have.
To be successful in your own business you need to know everything there is to that skill and enjoy doing it. Not to mention your client base will want to see your experience and talent before they decide to deal with you.
If all goes well, you’ll be in your own business for a long time, so make sure you enjoy doing the work. You’ll need to spend your days, evenings and weekends in your business, so if you don’t love what you do, it will quickly become tiresome.
If you’re planning to start your own business in an industry you’ve never worked in before, go and work for someone else first. You’ll get training and find out if you like the work or are even good at it. It’s all part of risk mitigation before you start your own business.
2. Know your point of difference
Every business wants to be the purple cow in a sea of black and white, so you need identify how you stand out. It might be unique service offering, experience level or superior product. Essentially, if someone asked you “why should I use you over another service/product?”, you have to have a solid answer. If you promise to provide something quicker, smarter, better, then you had better make sure you actually do. Otherwise, people will find out very quickly that you aren’t what you promise to be.
Constantly ask yourself “why would a client choose me over others in the market?” and if you can’t list at least 10 good reasons, think twice about starting your own business.
3. Be original
Reviewing competitors in your business is part of your industry research and your SWOT analysis, but nobody likes a copy-cat. So when you’re starting out, don’t take the easy way out on replicate another business’s website, branding, company name or service offering etc.
You need to be original from the word go. What works for another business might not work for you and your business. It could also be a failure point that you didn’t even know about.
Take the time to do your research, and make sure your point of difference is reflected in your branding and business structure.
4. Plan, review, then plan again
We all know a business plan is the first step in starting your own business, but there is much more to consider outside of a business plan that will impact the success of failure of your business. For any new business, strategy and marketing are areas that need good planning. Whilst strategy can and should change on a regular basis, you need to make sure that you have that incorporated into your original business plan so that supports a change in strategy.
For example, if your original strategy was to source business through a referral stream, but then that referral stream is no longer available, you should have a back-up plan for that situation. Same goes with a marketing plan, if Facebook or social media isn’t providing as many opportunities as you thought it would, move to your back up option.
If you have your back up plans already detailed in your original business plan, you won’t need to make quick and un-researched decisions that could be detrimental to your operations.
5. Know what’s happening in your industry
If you’ve already been working in your industry for some time, this will be easy as you’ve had exposure, inside knowledge and lived the industry already. But for others taking the leap into an unknown industry, you need to do your due diligence and make sure that industry is going to provide stability for your own business.
For example, if you were planning to start a greyhound racing business in NSW, you might want to reconsider your business venture. Checking industry reviews and ASIC enquiries into industries will give you an insight into the industry and how potential changes may affect your business. The finance industry is one of those that is constantly under review. We saw changes to remuneration for Financial Planners a few years ago and now the Mortgage industry is under review. It’s worth keeping up to date with industry changes so you can make sure you’re going into an industry that will actually support you.
Also make sure that there are no restrictions for entry for your industry. For example to be a Mortgage Broker you need to have a good credit rating, no history of bankruptcy or a criminal record. You’ll also need to be a member of an industry association, which also have their own training, experience and insurance requirements.
6. Have an operational cost buffer
One of the biggest contributors to failure in a business is cash flow. We recommend giving your business a operational cost buffer of at least 12 months. So once you’ve done your business plan and expenses forecast (including your salary), you should have that total amount of cash in your bank account. Essentially, if your business didn’t make $1 during those first 12 months, you have enough cash to keep the business running.
It might mean that you need to wait longer to start your business, but it will provide you with comfort and a positive cash flow that can help set your business up for success. Paying bills on time or having cash to expand quickly can make all the difference.
12 months cash flow might seem a little extreme or off-putting, but if things do go well and you expand quickly, you’ve also got that buffer behind you.
Also, as your business grows and expenses increase, we recommend continuing the cash reserve so at any one time, you know you’ve got cash on hand to cover all the operational costs should your business not generate any income.
7. Manage your commitments
We all have grand plans of how our business will look from the outside. Nice office or retail shopfront, hi-tech systems, swish Apple laptops, 6 line phone system, printers with all the whistles and bells, but all these come at a cost, and usually a long term commitment.
When you’re starting up, getting the basics right is essential. But you need to work out what is crucial to the business operations and what is a ‘nice to have’. Business infrastructure and presence is a major cost to the business, so start small in the first 12 months.
Can the business be run from a home office, then expand once the revenue stream is stable? Or can you negotiate a shorter lease with options to make sure you don’t over extend yourself? And do you really need that printer that you have to commit to for 3 years? If you do, then make sure you have a plan to pay out all your commitments if things go bad.
8. Get the right finance for your business
We mentioned cash flow in tip number 6, but if your business needs some more substantial financial investment for equipment, land or expansion, it’s important that you secure the right finance for your business. Using a mortgage broker like Mint Equity can help you find the right loan and interest rate that keep your repayments to a minimum.
If you’re buying a franchise, there are only a few banks who provide franchise lending. Depending on the type of franchise you’re looking to purchase, the loan may be easier or harder to secure. We can help you with that too.
9. Get your support team ready
Often starting your own business means you’re going it alone. But regardless of the type of business, you’ll need a support team around you. You can’t be all things to all people, and you probably don’t have the expertise of a full team, just yet.
So work out what type of support you need. Is it legal, accounting, technology, marketing or administration? Then find people who can help support you through your first year of business. It’s likely you’ll need some legal and accounting support before you even start your business, so try and find someone who can support you now and as your business grows.
For more operational support, you need to know your weaknesses, then find someone who has strengths in these areas. If your business requires a lot of marketing in the first 6 months and you don’t know where to start, get an expert on board. Contractors or even agency support can help you get you off the ground. Just remember to put their costs into your business plan and factor that into your operational cash buffer.
10. Work hard, and we mean really hard
Don’t assume that just because you have a great idea or have relevant industry experience that will be enough for you to have a successful business. There is so much more you need to know before you step foot inside your own business. You can prepare for your business while you’re still earning an income from someone else as long as you’re prepared to devote your evenings and weekends.
Building knowledge of all aspects of your business is key. That might mean you need to take a small business course or volunteer your time to working in someone else’s business on weekends, just to get experience. If you plan to employee staff at some stage, start learning about employer tax requirements, employment agreements and set up HR policies so when you’re ready to hire you can do so in a professional and efficient way.
Either way, be ready to devote your personal time to your new business and make sure your family is comfortable with that too.
About the authors
Leigh and Zac Peteh started Mint Equity in 2014 after spending 2 years researching and preparing to start their mortgage broker business in Sydney and the Central Coast. At the time of entry, Zac had over 20 years of banking and credit experience. Leigh had previously run her own recruitment agency for 6 years, completed a Diploma of Business Management and worked in marketing, advertising and project management. Together they developed a solid business model and service offering that has seen their business grow from a home based operation to their brand new office in Somersby on the Central Coast.