Starting A Small Business


Your Role in Starting a Small Business

The first step in starting a small business is to assess your own personal suitability. While being your own boss may seem very appealing, the truth is that no everyone is suited to running a business. Some of the things to consider include:

  • Your personal objectives: long-term goals, family commitments, financial rewards and obligations, time commitments
  • Personal qualities: personality, motivation, self discipline, decisiveness, self-confidence, interpersonal skills, organizational skills, communication skills
  • Business skills: general and/or specialized business knowledge and skills including computer literacy, commercial acumen, numeracy skills, sales and marketing skills
  • Risk profile: consider whether you are prepared to take on all the risks such as possible financial loss, business failure, relationship strain, legal liability

 

 

Your Business Idea

Starting a small business also requires a sound business concept. There are three broad types of business ideas:

 

  1. Established: mainstream business ideas usually cater for broad target markets. The ideas are also tried and tested and will often work well when set up in the right location.

 

  1. Specialized: this involves providing niche products and/or services to a select target group. While your potential market size may be smaller, one of the greatest advantages is limited competition.

 

  1. Original: entrepreneurs can also come up with a brand new invention or business model and take this concept to the market. There is a high degree of risk with a brand new business idea however if concepts are well researched, the rewards can be significant. Legal protection, such as trademarks/patents, should also be investigated to limit potential competition.

 

Conducting a Business Assessment

 

The next thing you need to do is to test your business idea by evaluating its likelihood for success. It’s important to know that because 60-75% of small businesses fail within the first three years, many lenders are often reluctant to provide business finance to individuals unless security and management ability can be demonstrated. One of the best ways to demonstrate your strengths in this area is to devote some time to producing a solid business plan. By assessing your business opportunity and documenting your research, you will have the majority of information on hand to write your business plan. Your may want to consider any or all of the following steps:

 

  • Conducting an environmental assessment
  • Choosing a business location
  • Deciding whether to buy an existing business or start one from scratch
  • Estimating start-up costs
  • Estimating your possible borrowing requirements
  • Investigating possible sources of business finance
  • Setting your key business goals
  • Developing monthly forecasts for at least the first year of business


Once you have completed your business plan, the next step is to familiarize yourself with the key components of effective small business management.