5 Things To Consider When Starting a New Business
The New Year is now almost here, and it’s this time of year that many people make a resolution to commit to changing their life for the better. Now, if you’ve been sitting on a business idea for some time but have let the fear of failure hold you back – chances are you will be one of the many nascent entrepreneurs cracking out your shell in the New Year.
This time of year has a wonderful energy that you can ride, like a wave, in terms of getting things done. We all know that come New Years day there will be an abundance of people jogging in the park, and similarly, behind closed doors, there will be an abundance of people working on their business plans – getting ready to launch into the new year.
In this article we’re going to look at 10 things to consider when starting a new business, some of which are about your goals and other are about the business process itself, such as the need to carry out due diligence uk and adequate market research.
As the New Year approaches, many people are starting to reflect on their dreams and consider taking action on things they have been putting off for many years. Whilst starting a business isn’t a New Year’s resolution in the conventional sense, it is certainly in the spirit of the energy and optimism the new year brings.
In this article, we’re going to take a look at some of the most important factors to consider if you are starting a business in the new year.
WHAT’S YOUR “WHY”?
The first question to consider is: what is your “why” in terms of what is the reason you are wanting to start a business? What feeling will this give you that you crave? How will this improve your life?
For many people, the idea of setting up a business represents the opportunity to make a lot of money, feel more independent, be their own boss, live life on their terms, and feel more alive as a result of being more in control of the outcomes they produce.
We all have basic emotional needs… for instance, the need for “certainty and stability”, “love and connection”, “variety” and “contribution”.
A business is a great way to meet these emotional needs – yet, you need to get really clear on what is your prime driver and motivation, as sometimes there is a better vehicle to get you to where you want to be.
It’s all about finding the best vehicle to get you from where you are to where you want to be – and it’s imperative you consider what vehicle is best for your particular goals.
For instance, let’s say that you want a life of “freedom” where you get to travel the world for six months each year, during winter.
You therefore, think about setting up a guest house that is seasonal, so you live and breathe the guesthouse, for the summer months, and then travel the world the rest of the time.
This doesn’t sound like a bad idea. However, if you were planning to open a retail shop or restaurant – it might not be such a good vehicle to meet your true desire of having the time and money freedom to travel the world.
You therefore want to ensure you are choosing the most optimal vehicle to get you where you want to be, and think outside the box on this one, for instance, if you wanted to travel the world – what you really need is “passive income”, which is income generated from activities that don’t require you to trade your time for money.
A good vehicle for this would be to own a number of properties and rent them out. In fact, going down the property development route might be a better vehicle to have the freedom to travel six month a year than the hassle and risk associated with running a guest house.
In summary, you want to get really clear on WHY you are wanting to start a business, and make sure it’s the right vehicle to take you where you want to be.
2. WHAT’S THE REALITY?
We often make assumptions that setting up a business is going to offer a particular lifestyle, and there’s a tendency to look at this through rose tinted glasses. This means that our expectations are often unrealistic, and what we expect to get as a result of setting up a business is often not aligned with the reality.
For instance, many people assume they will make a lot more money in owning a business rather than being an employee, yet, if we take the example of a small business owner such as a makeup artist, accountant, or consultant – we can see that the sole trader has gone from having the certainty and security of a monthly wage, which is consistent and secure, where all they have to do is perform their particular role.
In contrast, the makeup artist, accountant or consultant not only have to practice their trade, but they have to wear several different hats, and work MANY more hours on different aspects of the business in order to “get by” let alone thrive.
The stress, anxiety and financial strain put on your life, and the lives of your family, can take a toll on you. The notion of a “weekend” often goes out the window, as even though you might physically take the time off, it can be hard to switch your brain off – as you are often thinking about your business.
There are huge benefits to starting a business, however, on the basis that you will have the freedom and independence, as well as the wealth, you crave if you stick with it and turn your business into a success.
3. IS IT GOING TO FLY?
Perhaps, the most important question of all, is whether your business idea will fly – in the sense of, will your business idea work out or not.
This highlights the importance of market research and carrying out due diligence in terms of the business decisions you make. There’s an absolute need to prove the market, before investing heaps of cash into an idea, as imagine how painful it would be to spend tons of cash on a project that you “think” people want only to find out nobody actually wants to buy it.
4. WHAT DO YOU NEED TO LEARN?
The next factor comes down to what you need to learn in order to set up this business. A lot of people make mistakes when starting a business, and there’s nothing wrong with making mistakes – indeed, it’s how we all learn, yet, in business, mistakes can be expensive to the point you could lose a lot of money.
You therefore want to consider all the things you need to learn, before taking the plunge, as it’s better to avoid mistakes and “be prepared”, as the Scouts say, than blindly move forward.
The challenge many investors cite to new entrepreneurs is that they don’t know what they don’t know – and as a result, they aren’t always prepared for the challenges ahead. They are naive in their thinking and this naivety can cause huge problems, and huge problems can cause such significant financial loss that people find themselves close to bankruptcy.
You therefore want to write a list of all the things you need to learn and find ways to close those skill gaps.
5. WHAT DO YOU NEED TO LAUNCH?
The next question comes down to what you need to launch. In this sense, you want to consider what is the minimum you need to launch your business – as you don’t want to overspend on unnecessary items, such as fancy business cards, when a basic business card might do.
Today, for most businesses, a website is critical to their success.
It is the new “shop window” that positions the value proposition behind your idea so that people understand what it is you do and why you exist. It also provides a platform to contact you and do business with you. A website, in addition to a social media profile are at the core of most basic start-up strategies.
You then need to consider what you need in terms of space, for instance, can you work from home or do you need to hire premises. Will you need to hire staff? What tools, machinery or systems do you need in place?
When it comes to starting a business, many people start by working from home which is a great choice as the cost of premises can be very burdensome to start-ups and the last thing you want is a high fixed overhead that you are committed to. You want to remain as agile and flexible as possible in the early days.
The same is true of staff, some people feel the need to go out and employ staff in order to have a “proper business”, yet this often causes unnecessary financial and administrative burden… a better option is to outsource tasks to freelance contractors, as this way, you can retain control of your budget – and only pay for the work you actually need.
Paying for things on a task-by-task basis is a much more streamlined and efficient approach for the majority of start-ups, than paying a fixed monthly salary.