How to Know If You’re Ready to Start a Business (Infographic & Checklist)
We’ve been talking about how to write the ultimate business plan, when to hire staff (or even how to fire one), and all sorts of stuff that you might find useful as a business owner. But… What if you’re not there yet?
Hey, we didn’t forget about you guys – Those of you that are still deciding if you’re ready for business, and researching what you need to prepare.
This post is for you.
If you’re reading this, then you’ve probably entered the Preparation & Research Stage of your business. During this stage, many to-be-entrepreneurs fall off the wagon due to various reasons. For some, it’s because they realise just how much work is involved and decide they’re not ready to commit. For others, it’s because they’ve skipped this stage altogether to jump right into the Operations stage, only to run into problems that they didn’t prepare for. And when that happens then? They’re less likely to start from scratch again because they feel like they know enough from experience.
So – well done, you, for committing to start off on the right foot. And let’s see if you’re ready to start your own business!
First, here is a simple infographic we’ve put together to give you a very basic snapshot of what kind of things you need to tick off before starting a business.
Now, let’s cover some of those points in more detail.
Knowing Your Goals and Purpose
You might’ve thought about why your business idea is brilliant (or at least doable), but have you really thought about why you want to embark on this business journey? Your personal “why” is slightly different from your business “why”. While your business “why” could be about providing great value to your customers that can help improve their life in some way, your personal “why” is about your personal values, goals and motivation. A lot of entrepreneurs who don’t consider this fall into the trap of losing motivation and interest early on in their business journey.
Another thing to consider is whether or not your decision to start a business is a way to avoid some kind of undesirable situation you’re currently experiencing. Maybe you have a horrible and incompetent boss, or maybe your company isn’t willing to put in the time and money required to help you develop professionally. If so, is business really what you want? Or is it just an escape route?
If you’ve carefully considered your “why” and decided this is really what you want to do, then right now, write down some goals you want to accomplish and how long they should take. Setting some proper goals now can help you come back later when you’re feeling confused and exhausted, to remind yourself of why you started.
Preparing Yourself for the Road Ahead
Business is hard! All the success stories you read and the glamorous entrepreneurial lifestyle you see and read about are not all there is to business. It takes a lot of work to get your first business off the ground, and more work to gain traction, and then A LOT more work to make comfortable income to support your dream lifestyle. Are you still committed?
Then, you need to first take a look at your ability to overcome these hardships. Do you think you’re a resilient person? Are you aware of your strengths and how to develop them further? Do you know your weaknesses and how to take criticism and work on them? Consider how you normally deal with adversities in your personal life and what you might need to do differently.
Next, do you have a good habit of taking care of yourself both physically and mentally? When I say that business is hard work, I don’t just mean you’ll be working long hours. At times, and especially in the beginning, there probably will be some soul-crushing moments when you feel like you’ve lost all hope and are just left with self-doubt. When these moments occur, maintaining a good physical and emotional health can be the most important thing you can do for your business.
Same goes for having a solid personal and professional support network. Do you have close friends and family that can support and encourage you when you’re struggling? Or a professional mentor or support group that can give you some tips and suggestions? If not, check out some local networking events and small business groups to connect with like-minded people!Maintaining physical and mental health is important if you're thinking of starting a business!Click To Tweet
Preparing for Your Business – Initial Considerations
If you’ve been able to tick off everything so far, then it’s probably likely that you’ve got the mindset to start your business journey. Now, let’s consider some of the most important and basic things you need to know before starting a business.
Of course, the first thing is knowing what your business will actually be about. What kinds of products and services are you planning to offer? Have you thought about how to operate your business? For example, will it be online, in a shop, an office or your home?
And considering that, do you know who and what you need to make your business a reality? Say, if you’re planning on opening a restaurant, you might need a few cooks, wait staff, cleaners, delivery services, and many more that can help you set up and run your business. Once you’ve considered who you need, think about how you can obtain them and what kind of contractual relationship would work best for you. For example, if you need a website set up with just some contact details and directions, you probably won’t need an ongoing contract with a website designer or developer.
Now that you’ve got all that, do you know roughly how much money you’ll need to set up, launch and operate your business for the first few months? Where can you obtain those funds? Consider what you need to do and who you need to talk to, in order to pay for all equipment and the people you hire.
Preparing for Your Business – Registrations & Legal Obligations
If you’ve been able to get through the last section, then you’ve probably got a pretty good idea of what to prepare and how. That’s good, because you won’t want to register your business or do anything concrete without being able to fully commit to it.
Depending on what type of business you’re planning to run and how, certain business structures would be better suited than others. The common business structures in Australia are as follows:
- Sole trader: an individual is legally responsible for all aspects of the business (you can still hire other people!)
- Partnership: two or more individuals running a business together, sharing profits and other responsibilities
- Company: a legal entity separate from its members (directors, shareholders)
- Trust: an entity that has control and responsibility of running the business for the benefit of others.
Of course, the registration process depends on what you’re actually registering for. Depending on the business structure, you might just need an ABN (Australian Business Number), or an ACN (Australian Company Number) and/or GST (Goods and Services Tax). The business structure also determines the types and amount of tax you need to pay. So, consider this carefully and talk to an accountant to find out the best option for your business!
Next is considering your business name and registering it. Business names should ideally represent your business and its main product, and not contain any inappropriate words. What’s more important, your business name can’t resemble or be too similar to an existing business! So make sure to look up your preferred name before applying for it.
And last but not least, make sure you know the rules and regulations that apply to your business and industry. If you’re not sure, consult a solicitor or your local government for advice.
Researching for Your Business
Hooray! You’ve gotten past the boring legal stuff now. Onto the fun part…
You need to know the ins and outs of your business, its products or services and the market before you can truly feel confident about where you stand. Do you know how to price your products, or what your competitors are charging? Do you know the size, volume, trends, limitations and fluctuations of your market? Do you know who your customers are and how you can reach them? Do you know your strengths and weaknesses against your competitors?
This research stage might sound intimidating at first, but trust me, you’ll start to have fun as you find out more about the market you’re entering and start to solidify your business plan and model. And of course, businesses that have done their research do a lot better in the long term compared to those that haven’t.I didn't realise just how much I knew about my business until now!Click To Tweet
Planning for Your Business
Think about everything you’ve learnt about your business so far. A lot, right?
So, do you have a business plan that contains all that information? A business plan is a formal documentation of your business goals, how they can be achieved, and other information relating to the attainment of the goals. You can show it to banks and other potential investors, or you can keep it for your eyes only to keep track of your business as it grows. There are loads of reasons why you should have a business plan even if you don’t think you need one, so spend some time on it!
Write everything down in a business plan format and take a look at the monstrous piece of document in front of you. It’s starting to look like a real thing, huh? (It’s okay if you don’t know how to write one. That’s why we’re here. Learn how to write an amazing business plan and get our free 27-page workbook while you’re at it!)
Additionally, you might need other types of plans depending on your circumstances. For example, you might decide to have a separate marketing and financial plan. You might consider developing an emergency management plan or even a succession plan, too.
The types of plans you develop all depend on your priorities and plans for the future.
Hey, look at that! We’ve come to the end of our prep stage.
If you’ve come this far and been able to either tick off everything above or put in some plans to complete them all, then you’re probably more than ready to start your own business. Of course, you might need to look into several different things based on your business idea, structure and industry. But as far as general businesses go, you’re pretty much ready to go.
Before you go and jump right into your business though, carefully consider what else might be involved in actually setting up your business. For example, make sure you have an appropriate business premises, a domain and a clean website. Don’t forget to buy every little thing that might be needed in the day-to-day operations of your business, and make sure to keep on top of your payments to and from suppliers or contractors!
I hope you’ve learnt a thing or two from this post, or confirmed that you’re indeed ready to be a business owner. If so, we’d love to know what your business is about! Leave a comment below and tell us what exciting business ventures you’re about to start. 🙂
You can get a condensed checklist version of this post here. Or if you need some more room to work through everything we covered, then this 45-page Starting a Business Checklist Workbook might be perfect for you.