If you were going to write a book on the 10 things everybody should know before they set up a small business, what would they be?
A: 1. Identify your business or market opportunity.
2. Research the size of the opportunity.
3. Validate the market problem/pain that your product or service is solving.
4. Objectively ask yourself if you have the right personality to start and run a small business before you give up the security of your day job.
5. Develop a business plan to get a better understanding of your industry structure, competitive landscape and the capital requirements of starting a small business.
6. Find your funding source/s - or do you intend using the frugal bootstrapping method?
7. Identify what skill sets are needed to successfully run and grow the business and secure the right team to support you.
8. Choose the right business structure as the choice will impact on your business liability; fund-ability as well as tax implications. Get advice whether you should form the popular limited liability company, sole proprietorship or form a corporation.
9. Ensure you set up solid housekeeping, paperwork and regulations. Depending on your company structure you may need to register your business with the regulatory authorities, or obtain an employer identification number, IRD number etc. Take advice from an accountant for this.
10. Starting a business is no easy endeavour. Take your time carefully and find the right business for you.
- Noel Brown is a business strategist at Creative HQ, Wellington's entrepreneurship and startup incubator. CreativeHQ.co.nz
A: 1. Validate (test) your customer value proposition with some market research before overinvesting. This is the No 1 way to take risk out of your business. Check out www.foolproofbook.com.
2. Competition: Understand and talk to the competition.
3. Focus: Constantly limit your distractions - do a few things really well. Pick a market that you can make an impact in and make money on.
4. Marketing: Invest in getting a customer-centric message to attract customers and to focus your business on what's important to your customers - not you. Make sure your web site uses your customers' language not yours.
5. Business Model: Make sure you can make money off your venture. Do not abdicate financial responsibility to your accountant. Have effective financial reporting systems and get good advice but recognise it's your money, own the numbers. Demand value from your accountant.
6. People: Get at least one other person to go into business with you - one-person ventures seldom survive. Get a shareholders' agreement. Employ the best people you can afford and look after them
7. Advisory Board: Establish an advisory board as soon as possible, preferably two outside advisors so you can get the benefit of good debate and challenge. If you are not happy with the help you are getting fire them - don't get locked into contracts by franchised help.
8. Simple IT Systems: Use cloud-based IT solutions that do not have high maintenance costs (office 365, Xero, dropbox as a start, get your own web domain (eg mycompany.co.nz)) If it costs lots, it's the wrong solution.
9. Tax: Make provisions for paying tax - the Inland Revenue Department is not a force to play with.
10. Fun: Enjoy what you do; running a business is the toughest job out there. If you do not enjoy it, go work for some one else.
- Mark Robotham is an SME business adviser. Website: growthmanagement.co.nz
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