Setting up a business can be exciting, nerve-racking and exhilarating all at once. It can be stressful. It can be fun. And it’s usually not easy. But there are some steps you can take to ensure you have the best chance at success. Veteran business coach Maureen Pound walks us through these steps to explain how your new business can hit the ground running.
While choosing a name, designing a logo and talking to potential clients can be an enjoyable part of the set-up phase, there are some admin tasks that need to be done before you open the doors (literally or figuratively).
The first step is to decide on the business structure – sole trader, company, partnership or trust. Each structure comes with its own set of rules and regulations, and there can be tax implications.
You’ll also need an Australian Business Number (ABN) so the government and the community can identify the business as a legitimate entity.
When choosing a name, try to make it unique, yet still identify what the business does and how it can help people. Take this from someone who knows. Maureen stresses the importance of choosing a memorable name and uses removalist company Two Men and a Truck as an example.
“It stands out, it’s quirky, but it is still telling people the solution that the company is providing.”
It’s wise to check whether your preferred business name is already in use. Depending on the business structure you choose, you may need to register your business name. Also, investigate whether the website URL you want is available; you can do this through one of the many domain search sites online.
Starting a small business should be about solving someone’s problem. “Someone has to have a problem big enough that they are going to purchase a solution from you, whether it be a service or a product,” Maureen explains.
It’s worthwhile testing the waters before getting too carried away with a business idea to make sure it will be successful. And remember, your friends are not your target market. Maureen recommends finding an individual or group of people who are willing to hand over their hard-earned money for the product or service.
Consider running a focus group or survey among your intended target audience to get an insight into their reaction to your product or business idea.
So you’ve done your homework and you think you’re onto a winner. The next step is to create a business plan. And once it’s done, don’t just shove it in a drawer somewhere. It should be a fluid document that’s updated regularly.
The business planning model that Maureen recommends is RAMMM – result, audience, message, media and money. It’s about being very clear about the audience, what the business message is, how you’re going to reach your clients and what money is going to be put into the venture to reach the result.
Just as the business plan is fluid, your systems need to be, too. The business should be a well-oiled machine so customers get the same level of service or the same sort of product with each transaction. This means that as the business changes and adapts, so too do the systems and processes.
A business, especially a new one, is a work in progress. But, as Maureen says, progress is better than perfection. “Some people get really overwhelmed, very quickly. It’s important to focus on doing something each day.”
The best thing to do when it all seems too much is to get support – whether it’s talking to other small business owners about the ups and downs, or outsourcing where you can. “You’re not an expert at everything and you’re wasting your time trying to do everything. Can you get your head around most things? Yes. Is it the best use of your time when there is another expert out there who could help you with it? No.”
Maureen says one of the biggest mistakes people make when setting up a business is a lack of planning. “A lot of the time, people just want to do, without actually thinking things through and crunching the numbers.”
The planning stage should include some financial projections; start at your end goal, then work your way backwards to ensure you’re covering everything that needs to be done.
When doing the sums, remember that profit is not simply the amount of money you bring in. “Turnover is the amount of money you get, but profit is the turnover less the expenses,” Maureen explains. “And there are expenses that come up in business.”
The second common mistake that Maureen sees is the inability to market the business. “Many people are experts or passionate about a particular thing when they start a business. But they’re not the best at selling their services. You could be the best hairdresser in Australia, but not so great at selling yourself.”
In order to combat this, Maureen suggests getting support with your marketing, or at least in formulating the initial plan.
When measuring whether your new business has been successful, you’ll need to look at the original goal.
For some, it’s about money. “I know a guy who made $10 million a year but no profit,” Maureen explains. “It’s not just about the money [you bring] in, it’s about the margins. Because after a while, if you’re passionate about something and it doesn’t pay the bills, it’s really just a hobby.”
Ultimately, however, success is subjective – that’s why it’s vital to go back to the original objective. “I have a client who earns around $200,000 a year. She doesn’t have many expenses, she travels overseas, she has a very nice life,” Maureen says. “She’s a sole trader and she’s very happy. She plays golf every Friday morning with her dad. Is she successful? Yes! Is she making millions? No. But that’s success to her and she’s really happy.”
While every small business is different, when it comes to setting up for success, planning is key. And to be continually successful, it’s all about adapting and revising while still keeping your end goal and your audience front of mind.
Any advice provided in this content is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice we give you, having regard to your personal situation, before acting on our advice or purchasing any product.