Most people dream of starting their own business but are intimidated by how difficult it is to get going. It isn’t for everyone but those who are interested in making it out on their own should read this guide.
If you have an entrepreneurial heart but do not want to go through the extremely hard yards of setting everything up from scratch, buying an existing business may be the right move for you.
A common misunderstanding is that there is a huge upfront cost when buying an existing business but the truth is that there can be huge upfront costs associated with starting them too.
1. Evaluate yourself objectively
Not everyone is an IT engineer who can code on command and build the next Facebook. Everyone has their limits, strengths and weaknesses. Your might have insider knowledge in a certain industry or maybe you have amazing culinary skills. The best thing to do prior to starting any long term business venture is to take a good long hard look at yourself objectively. By learning about yourself, you might find out that you have skills to operate a photography business on the side!
Ask yourself the following questions:
- Is the salary from your day job worth leaving to start a business?
- Is there something that you’re passionate about? (Can you start a side business out of this passion?)
- What are your valuable transferable skills?
- What is your risk appetite? (Assess your financials)
- Are you after a lifestyle business or make millions?
- Are you ready to start working by yourself?
- Do you have connections to potential clients?
2. Think of a business idea
Never put pressure on yourself to come up with a business. Think of businesses as projects that you do for fun (and money of course). If you force a bad idea, you will just waste your time. There are a million good ideas but you need to find the best one. That is the challenge but it truly is one of the best pieces of advice any entrepreneur can receive.
Do not cross the line where you have a conflict of interest at work if you intend to run a business on the side that is similar to your day job and be respectful of your current employers.
Important considerations when assessing a business idea:
- How will you get clients? (if your business is client facing)
- Is there a cost barrier to start your business?
- Can you see yourself doing this after work hours?
- Is there a cost effective way to get clients?
- Is it possible to do this type of work outside work hours?
3. Research your business idea
You want to make sure that your business is financially viable and makes business sense. There are a few considerations before jumping in.
It is important to be realist when researching your business idea. If you are not technically savvy, it would be wise to avoid trying to start the next Facebook as the likelihood of failure would be extremely high.
Find out the answers to the following questions:
- What will you need to set up business? (Equipment, tools, software, hardware, compliance, etc.)
- What will the start up costs be?
- How will you acquire customers?
- What will your overhead costs be? (Rent, utilities, etc)
- Who are your competitors?
- What is the market size of your target demographic?
- Is the financial risk of this business venture too high for your appetite?
- What is the risk/reward? (low risk, high reward is optimal)
- Could this business be operated as a side business?
4. Formulate a roadmap
Okay, so you think your business idea is solid. You know how you will fund the business venture and have a good idea on how you will acquire customers. It is a good idea now to formulate a informal plan to pave the way to starting your business. Write it all down on a word document as this is the best to make your ideas more concrete.
This is where you strategise what direction you will take with this business. Depending on the business, you could run it as a side business until the business income grows to a level you’re comfortable with. If you don’t have the capital, this is when you work out how you will obtain the capital necessary to making this business work.
Please consider the following things when writing down your plan:
- Business structure set up/costs
- Domain name, trademark, trading names
- Website, social media accounts
- Equipment, tools, software, hardware
- Plant, office, shop, property lease
- What is the market size of your target demographic?
5. Get feedback
Before reaching out for feedback, make sure you have thought about business thoroughly and have a viable plan. Do not proceed to ask friends and families about a thought bubble. When in doubt, refer to the questions you answered while doing research as well as your plan. If you cannot overcome the questions above you should think of another business idea and/or do more research. Eg. if you won’t be able to afford the start up costs, then it is probably something out of your reach.
Contrary to common belief, it is better to get feedback from your most business savy friends and families that you believe will tell your the hard truth. Do not be defensive if your idea is shot down. The aim here is to receive genuine constructive criticism from people who deep down want you to succeed.
Another way you can get constructive feedback is to develop what is known as an MVP or minimum viable product. If you’re trying to secure clients for online marketing, you can create a website and pitch small businesses. Performing this exercise can help you determine if your business idea is worthwhile to pursue.
6. Commit to idea
If you are confident that you can successfully execute this idea, commit and begin executing it. Start executing your road-map by knocking off the tasks one by one. If you still work full time, do these tasks in your time off work. If you have the capital and can afford to commit full time straight away, then hand in your notice to leave your work. Once you’ve started your company, all that’s left is to grow your business. Starting your business is actually the easy part.