For an entrepreneur, there is almost nothing more exciting than starting a new business. You start thinking about being your own boss and the profit you are going to make. Before you commence operations, do some background research so you know what is required to make your small business a success.
Is There Demand for Your Product or Service?
Once you have a product or service to sell, you need to know if there is sufficient consumer demand. If other businesses are not offering the products or services you are selling, it may be an indication there is limited interest for what you intend to offer customers. For example, if you plan to start an accounting business that targets electricians only, and there are no other businesses servicing that niche, your focus could be too narrow. Hold a focus group with your target market to find out if there is adequate demand.
Starting a Small Business Carries Risk
There will be risks that you need to accept before you start a small business. You may find it difficult to make a profit initially, which could come as a shock after being accustomed to a secure income. You could be required to work long hours as you are establishing your business, which may reduce the amount of time you can spend with family and friends. For example, if you plan to sell products, you may need to spend considerable time with suppliers to ensure that it meets your standards for quality. It may be beneficial to start your small business while you are employed full time to gauge if there is sufficient demand for your products and services before committing further resources.
Know Your Financial and Legal Requirements
You should know how much starting capital your business will require. It is prudent to underestimate revenue and overestimate expenses, as these can vary substantially when you are starting out. Know your tax responsibilities; be aware of the tax you will be required to pay and what items you can and can’t claim at tax time. Understand the regulations your small business will be subject to.
Be aware of necessary licences, certifications or paperwork that is required to conduct your business. For example, if you are going to open a small financial planning business, ensure you have the licences that will be required before you provide financial advice to clients.
Are you Suitable to Run a Small Business?
Before starting a business, you need to know if you are suited to being self-employed. You should be organized, capable of multitasking and have a track record of managing your finances. Although you can outsource many business functions, it helps if you have a natural inclination toward doing them. You should be inspired by new ideas and enjoy solving consumer problems. A passion for your business’s products and services helps push through the challenging times. For example, if you are an architect and must work long hours to secure a client, you won’t mind if you have a strong passion for architecture. Having a can-do attitude is a must.