Before you start a business or enterprise
Are you thinking about establishing or purchasing a small
business as the next step in your working life? Here are
some issues you need to think about.
What’s great about owning
a small business?
Just imagine:
- identifying a product or service that people want
- doing what you love to do
- doing something useful, or for which there’s a clear
need
- creating something new
- improving people’s quality of life or work.
Imagine doing any one of these, and being paid for it.
Imagine getting full credit, both monetarily and in client
satisfaction, for your great business idea.
The wonderful thing about small business is that
enterprise-ready ideas are all around you. Consider these
activities as business opportunities:
- cleaning
- mowing lawns
- washing cars
- walking dogs or washing pets
- looking after younger children
- umpiring sports matches
- teaching people to swim
- organising discos, dances or school excursions
- finding information on the Internet
- designing and producing greeting cards
- printing brochures for local churches or associations
- baking biscuits
- translating for people who don’t speak much English
- reading for blind or elderly people
- lending books, toys or bikes.
People are prepared to pay you for these things for all
sorts of reasons:
- They don’t have the know-how.
- They physically can’t do it by themselves and need
assistance.
- They don’t know where to find the information they
need.
- They don’t have the necessary equipment, such as the
sound system or the computer.
- They want to use something, but don’t want to commit to
buying it.
- They’re very busy.
- The job has to be done and there is nobody else to do
it.
What’s not so great about
owning a small business?
When you start a small business you face lots of
challenges.
It’s important that you understand all the
responsibilities you’ll have, and as many of the
foreseeable challenges as you can. On the other hand,
it’s also important to recognise the rewards of working
for yourself and providing a quality product or a needed
service to your customers and the community.
The most challenging things about operating a small
business, particularly at the start, are:
- risking your money, or that of your investors
- working long hours
- being available (and pleasant) to clients
- staying physically fit, healthy and energetic
- dealing with cash-flow, production and other
operational problems
- dealing with interpersonal conflicts
- keeping up with your industry or field and responding
appropriately to the way it changes
- making business-critical decisions.
All these challenges boil down to one big challenge:
taking responsibility. As a small business owner, you’re
the person who is accountable for the way the business
operates.
Are you suited to
self-employment?
Starting and running a business, or any form of
self-employment, requires a range of skills and
attitudes. It can be very demanding.
When you work for yourself, you are responsible for:
- coming up with ideas and solutions for problems
- planning all the tasks that need to be done
- hiring workers and organising work for them
- making the products or delivering services
- meeting deadlines
- finding customers and assessing their needs
accurately
- keeping records
- making sure there is money to pay the bills and to
pay yourself and others who work for you.
Ask yourself the following questions. Your answers may
confirm that you are ready to go into business on your
own, or they may alert you to some skill areas that you
need to develop.
Personal
characteristics
- Do you need other people around you to motivate you,
or can you effectively schedule and complete work on your
own?
- When unexpected events occur, can you still think
creatively and solve problems?
- Business life doesn’t always go well. Can you cope
with the stress that often goes with responsibilities and
deadlines?
- If you face knock-backs, are you resilient enough to
absorb them, and then to go back out there and keep
selling your product or service?
Reason for going into
business
A lot of people like the idea of being self-employed. But
sometimes this attraction is based on incorrect
perceptions. Are your reasons any of the following?
- ‘I want to be my own boss.’ When you start your own
business, certainly you’ll be your own boss. But this means
that you’ll be responsible for every aspect of the
business. Do you really want that much responsibility?
- ‘I want to work fewer hours.’ Many people think that in
their own business they’ll be able to control their own
working hours, and that this means they’ll be able to work
less. This is rarely true. Most business owner-operators
work at least 50 hours a week.
- ‘There’s a gap in the market that my product / service
can fill.’ If your industry knowledge has led you to this
conclusion, and you’ve done some market research that
confirms your belief, you probably have a good reason to
consider going into business.
Previous experience
- Have you ever worked for a small business? If you’ve
only worked in large organisations, you may need to find
out what’s involved in small business operations.
- Do you have much industry knowledge in the field you’re
considering?
- Have you previously been employed only in one area of
business operations (e.g. computing, administration,
production, marketing), or have you had experience in
several or all areas? When you run your own business,
sometimes you need to be ‘the entrepreneur’, sometimes ‘the
technical person’ and sometimes ‘the accounts department’.
Can you make the switch when required?
Management and
communication skills
- Do you have managerial skills? Most successful
entrepreneurs have a good balance of entrepreneurial and
management qualities.
- Do you have leadership and communication skills? Can
you effectively instruct other people, such as staff and
suppliers, in what you want done?
- Can you coordinate several business functions—sales
and marketing, production, clerical and accounting? Even
if you’re not actually carrying out all these functions,
you need to coordinate them all: human resources,
superannuation, insurance, marketing, bookkeeping,
everything!
Financial management
- What is your financial history? Have you ever been
declared bankrupt? It certainly affects your credibility
with both customers and suppliers if you have.
- What about your current financial situation? Is there
enough money behind you to start a business? You should
consider obtaining financial advice.
- What do you know about bookkeeping and accounting?
This is one of the most important areas of running a
business, and it’s often neglected. If you’re not up to
date with all your financial details, it’s easy to get
into debt before you realise.
Knowledge
- Do you know about other industries, particularly the
industries and economic factors that will influence your
business?
- Do you have a good knowledge of the stock market,
consumer patterns and industry trends?
Personal life
- Do you have a partner? Does your income need to
support both of you? Does your partner work? Will they be
working with you in the business, or will they be working
a whole different job? Do their working hours affect your
ability to run a business?
- Do you have children, or commitments to children?
It’s not always convenient in business to structure your
schedule around commitments such as picking up children,
child care and school holidays.
- What are your recreational commitments? Do you belong
to any clubs or have sporting commitments that will
affect your ability to be present for the business?
Long-term goals
Where do you think you’ll move on to, beyond this business
venture?
- Will your business idea be ‘for sale’ in a few years to
fund a different enterprise, or your retirement?
- Are you likely to want to move to somewhere else? If
so, will your business have the capacity to move with you,
or can it really only work in the place where you
established it?
When you’ve thought about all this, you should do some
research about small business ownership. Start with these
links:
Links on these pages lead to many different sources of
information relevant to starting and running a small
business: