How to start a new business

27 Mar Our Top 4 tips to Starting a New Business

Our top 4 tips to Starting a New Business

G’day, Ben Fewtrell here from ActionCOACH in Sydney.

So you’re thinking of starting a business. Well I’ve got some tips to help you get off on the right start.

Starting a business can be a daunting task. But really, if you’ve got that entrepreneurial spirit, you’ve got that little flare in your mind and you really want to start a business, it’s important that you get started off on the right foot.

There’s statistics out there that say 80% of small business fail in the first 5 years and the last thing you want to be is one of those that fail. So there’s a few things that I think are vital to succeeding in business.

Business is not easy

I think the first thing to understand is that starting a business is no easy task. Sure you can jump online and you can register a business name, you can have a great idea, but the reality is there is a lot more that needs to go behind your thought process before you’re going be successful in your business, rather than be one of those statistics mentioned earlier.

So, what are some of the things you need to think about?

#1: Not something you like

The first thing I’ve got up here is it is no good starting a business because you like to do something. That’s not the right reason to start a business. Just because you like something doesn’t mean it’s going to work. Just because you love something in particular does not mean that you are going to be able to sell it to the general public.

So what you’ve got to find is something that the marketplace likes, or that the marketplace loves. Sometimes people come to me and say, “I’ve got this great new idea, no one’s ever done it before, it’s going to be brilliant.” And I go, “Well do you want to take that risk?” If you’ve got an idea that no one else has thought of and it’s not in the marketplace, how do you know someone’s going to buy it from you? I’d rather start a business in something that the marketplace already has, and just do it better than everybody else. I really think that’s the best way to succeed.

Go and start a business in stationary supply and do a better job than every other stationary supply company. You look at some of these big ones like the Bunnings for example. They said, you know what, we’re going to go into the hardware industry, and how would’ve thought that was a good idea? How many hardware stores were there where local guys, where local hardware stores had a relationship with you as a customer.

It didn’t matter! Why? Because Bunnings said we’re going to be bigger and we’re going to be better. We’re going to have cheaper prices, we’re going to have more availability, we’re going to be able to bring more to the marketplace than any of those small players can. They said we’re going to do it better than anybody else!

So, you can say to yourself, “Okay, if I’m thinking about starting in a market, is the market already established, and am I going to just get my slice of the pie.” Because if you’re thinking about it… if it’s a ten million dollar a year industry, what slice of the pie do you want to get. If it’s a one billion dollar a year industry, what slice of the pie do you want to get. The other thing is to make sure it’s not over-saturated. Because maybe it’s too competitive…

A classic example is you’ve seen someone start this 24/7 gym. These 24/7 gyms where people can access and workout anytime of the day or night. Now there’s one out there called Anytime Fitness. I’m seeing these gyms pop up absolutely everywhere, and they’re easy to start, they’re being franchised. But eventually, we’re going to reach saturation where people aren’t going to want more gyms and you can only have so many gyms.

So you need to think about it and go, “okay, well, that idea’s being done, but can I do it better than everybody else?” Maybe you can. And then you know, you’re going to wipe out the competition. So think about it. Don’t just do something because you love it, but do something because the marketplace loves it or because the marketplace has a need to buy that product or service.

#2: Do your research

What research have you done about what it is that you want to offer? What is your target market? How much are they willing to pay? How often are they willing to buy it? Is it a product that has repeat purchases, or is it a one-off sale?

I really am a great believer that the best businesses are those that have reoccurring transaction. So, you know, you put somebody on a monthly plan, or they have to buy the product from you every month because it needs to be replenished, or something needs to be serviced every three months or whatever. Have some way of once you’ve got a customer, keeping them coming back and buying you on a regular basis.

Work out what the competition out there is doing. Work out what the challenges are with that industry. Do your research on how and what is the product? Have you got to manufacture it, have you got to import it. If you’re going to warehouse it. What’s that going to look like? How much is it going to cost me to insure it? What is the insurances I need? How am I going to find people to deliver this?

You need to do your research, need to think that, okay, if I’m going to start this business, what are all the resources that I’m going to need, and how am I going to obtain those resources. What finances will I need? What people will I need? What systems will I need, and what’s my plan moving forward?

#3: Read, meet and learn

The next thing is to read, meet and learn. Now the reason I put that up there is that I’m a great believer that you are only as good as the last book you’ve read, the last person you met, or the last learning that you did. So you’ve got to make sure you’re continually updating your knowledge so you’re equipped in the right way to run your business.

Running a business, as I said before, is no easy feat. It is about understanding all of the intricacies. There’s lots of intricacies in running a business, and unless you’re reading a lot of different books on how to build business or be a great leader or build a great team or build systems or market a business or meeting other high level business owners, or business owners that have just started a business, go and talk to them. Go and buy them coffee. Say, “Hey, you’ve started a business. Tell me about how you did that. What were the challenges that you faced? What advice do you have for someone new and starting a business?” Go and meet some people and learn as much as you can before you jump into this.

I think it’s very important that before you go starting a business you do as much learning and research as you can.

#4: Plan

You’ve probably heard of the saying that “if you fail to plan, you plan to fail.” Nothing rings truer when you’re starting a new business. You need to understand what it is you’re trying to achieve, and what’s your roll out plan.

Have some milestones of what it is that you want to achieve and by when. Know what it is that your turnover needs to be, your profitability, your pricing structure and your marketing plan. Have a plan ready to go so you’re not just shooting, like playing darts in the dark, you’re actually working towards a plan and knowing what it is you expect to achieve.

Because you know what? Sometimes when you start a new business, you have to also know when to pull the pin. You know I’ve bought, built and sold many businesses, I’ve started businesses from scratch and three months later I’ve pulled the pin on them because they just weren’t working. And that’s okay but you need to know when to do that. So don’t get too emotionally attached to it. Know that it is a commercial thing that you’re starting, and if it hasn’t got legs, then pull the pin. If you don’t think you’ve got what it takes, you don’t have the resources or you haven’t learned enough yet to successfully run it, don’t be afraid to pull back. There’s no shame there either.

The Wrap Up

So there you go. If you’re thinking about starting a business hopefully that’s helped you get a bit clearer on some of the things that you need to do. Make sure you hit the “subscribe” button so that you don’t miss out on any of the videos, and of course I’ve got a stack of other videos here about running a business successfully, so make sure you tune in for those too.

Cheers,
Ben Fewtrell