In the year from June 2013 to June 2014, there were 20,496 new businesses in Australia, according to the Australian Bureau of Statistics. This number represented a 1 per cent increase in the overall amount of actively trading businesses in the country, and while that increase was in part due to a decrease in business exit rates, it was also due to many new businesses starting up.
Every one of those new start-ups was founded by an idea. Someone, somewhere, had the skills and the drive to make a new business happen. So how do you know if you’ve got what it takes to start your own business?
If you can tick off these 10 signs, you may be well placed to become one of the new companies in the ABS’ report next year.
1. You know the risks
Even though no one would willingly part with the considerable time, money and effort that a small business requires to get off the ground, you have to be aware that losing it all is a possibility.
While the rumour is that many small businesses don’t survive the first few years is untrue, there are some who don’t survive these early years. According to a report on Australian small businesses by the treasury, 78 per cent of young firms are still operational after the first 36 months. Of those that did terminate in that time, further interviews with the founders revealed that 76 per cent recorded no financial loss.
2. You have a USP
Even if you’re looking to enter the market with a product that is largely the same as other current services, you need to be able to differentiate yourself. This is your USP – your unique selling point. Will you be the most innovative, the most affordable, the most friendly, or the easiest to use? Whatever it is, you’ll need to base marketing efforts around this point in order to stand out from the crowd and bring in vital sales.
3. You are organised
No matter how great you are at creating a top quality product or service, being disorganised can and will hold you back from bringing those skills to the market. Consider how you’ve fared for deadlines and high-stress situations in the workplace in the past and be honest with yourself about how well you would manage organising everything from the GST receipts to the creation of a company website.
4. You have the funds or means to get the funds
There are many ways to keep your costs low while starting a business, but almost no way to run a new company on nothing. You’ll need capital to invest in the early days or at least a method of gaining capital from other investors or lenders.
In the latest report on corporate insolvencies by the Australian Securities and Investments Commission, the number one reason for the failure of the company was sighted as inadequate cash flow, or high cash use, with 41 per cent of reports nominating this cause.
5. You’ve done basic research
Coming up with a great idea for a new business is always an exciting moment for an entrepreneur. However, if you’re the only one who thinks the idea is a good one, you will likely run into problems when you’re trying to market it.
Talk to friends and colleagues and spend some time online researching the area to see if there really is a need or a desire for your product or service. You can do a quick and easy anonymous survey throughout your networks using polling software for honest answers on whether or not anyone would really purchase what you have to offer.
6. You can write the business plan
Every company needs a business plan to organise all the details of the business into one tidy document. It will cover your financial position, including funds, future funds, expenditures and product prices. It will have details about the current market that your product or service will fit into, including any research you have already done. And most importantly, a business plan will include your company concept. You will need to do an analysis of your strengths and weaknesses, make a plan for the future, and consider your customer.
7. You know the right people
Friends, colleagues and acquaintances can be an extremely helpful resource when starting a new business. You can go to them for advice and work such as setting up the website, creating the business plan or even designing a logo. With a pool of talented, helpful people around you, you know you’ll have relevant, useful help when you need it, and you may even be able to organise such services at a discounted rate.
8. You are creative
Creativity is one of the most valuable assets in your repertoire, and if you mean to start your own business, you will be using those creative skills around the clock.
You’ll have to come up with new ways to make sales, you’ll need to be creative to work on your tight budget, you’ll run into countless problems every day that take new ideas to fix.
9. You want independence
One of the main reasons entrepreneurs start up a new business is because they are tired of working for others. Even when you’ve had great managers and bosses in the past, this desire to strike out on your own, make your own decisions, pick your own hours, accept only the clients you want, and essentially call all the shots, is telling of someone who is made for running their own business.
Your independence will ensure everything runs the way you plan it to, but it will mean you have the responsibility of it running that way, and that you will have to bear the weight of any failures as well. If you’re ready for that kind of independence, you may be ready to start your company.
10. You won’t give up easily
J.K. Rowling, author of one of the world’s best-selling book series, famously was rejected by a dozen publishing houses before being accepted by Bloomsbury. There are countless tales of successful men and women who didn’t give up and finally made it big, and every one of them is relevant when you’re thinking of starting a business.
You will encounter numerous hurdles, but the more you jump, the further you’ll go.