For most people the most effective way to earn money to pay the bills and feed their family is to set up a local business. It is hard work, but usually if you persist you will be successful and be able to make money. Even if you are not you will learn a lot and be able to use your new skills to get a better day job. As a result, you should still be able to fulfil your goal of being able to cover your bills.
Small business startup checklist
However, before you start a new company there are a few things you need to consider. Taking the time to do a little research greatly improves your chances of business success. To help you to do this we have decided to put together a series of articles that cover the basics. This first one is really just a summary of the most important considerations. Over the coming few weeks we will publish new articles that cover each of the following points in more detail.
Is there enough demand for your services?
Naturally, there is no point in offering a service for which there is no demand. If you do that all of the time and effort you have put into setting up your new company will have gone to waste. Worse you can find that you have wasted a lot of funds on buying equipment and getting training that you cannot actually use. Therefore, you really need to properly assess the demand for your new business idea.
How many other firms in your area already offer the service?
If there is enough demand it is very important to check to see how many other firms are offering something similar. In some cases, you will have strong competition, which usually means it is wise to offer a different product or service. For any startup business, checking competition levels is an essential step.
Is it likely to be profitable?
While you are checking out your potential competition it makes sense to get a feel for how much your competitors charge. Doing this will help you to answer the question of whether you can make sufficient money by running the style of business you are planning.
In some cases, economies of scale mean that you simply cannot hope to compete with those firms that are already established in your area. However, in other cases, being a small and nimble company will give you a potential advantage over the larger, already established, firms.
Calculating the potential profitability of your new business venture is not something you should skip over. Those entrepreneurs who do simply end up wasting a lot of time on setting up a company that is not sustainable in the long-term.
What are the startup costs and ongoing overheads?
Part of assessing how profitable your company could be is understanding the costs of running the type of business you are planning to startup. Jotting down the cost of buying equipment, getting the necessary licences and training will give you a good idea of how much you need in the way of funds to start your business. Understanding your ongoing overheads will help you to work out roughly how many customers you would need to break even and make a profit.
What are the legal requirements of running your new business?
In most sectors you will be required to adhere to certain standards and regulations. It is important to have a good idea of what they are before you start. That way you will not suddenly be faced with a big bill to for example put your staff through mandatory food safety training. It will also help you to avoid being fined by the authorities, or worse sued by customers.
Do you have the necessary skills and expertise to run your new business?
Understanding the legal requirements and standards you need to adhere to will go a long way to helping you to work out if you have the right skill set. If you do not you will need to factor in the cost of employing someone who does have.
Do you have enough time to run your new business?
An awful lot of entrepreneurs woefully underestimate how much time it takes to successfully set up and market a new business. If you are already working 80 hours a week you may not have the time to run the kind of company you want. It is important to be realistic and start small if you have to. For example, sell a few items on eBay to start with rather than try to open a shop in your local town.
Where to find out more about starting a small business
The above is just an outline. Please click through to read the individual articles that cover each of these steps in detail. If you have any questions or feel we should include more steps on this basic checklist please take the time to let us know in the comments below.