Based on our personal startup experience and those of our clients we have developed a list of questions that may be helpful in evaluating and planning the startup of your new business.
In general, the more time you spend evaluating and planning the startup of your business (within reason), the more likely that it is that it will be a success.
- Why are you starting this business?
- Do you have a basic written business plan? The business plan does not need to be a huge document and you should not spend too much time on it, as it will evolve over time as you learn more about your business. The answers to the questions below should help you develop your business plan.
- How are you going to finance the business? Bank, savings, family, credit card?
- What is going to be the ownership structure of the business? Trust, company, partnership, sole trader?
- Who are going to be the decision-makers? How will decisions be made?
- What is the name of the business? Is the name available? Is there a web domain available? Does the name say what you do?
- What are you selling?
- Who is your market?
- Is your market going to grow or shrink over time?
- How are you going to market your business?
- Think about the 4 P’s of marketing – Product, Price, Promotion and Place
- How big (or small) do you want your business to be?
- Who is your competition? How are you different to them?
- Why have you chosen the location that you have chosen? What are the advantages? What are the disadvantages of this location?
Regulation and licenses
- Are there council and other government department laws, regulations and licenses relating to your business? Who do you talk to about these requirements?
- Have you contacted the Council to see how they may be able to help you with the creation of your business. They are very supportive and have lots of useful information.
Finances and cost
- Have you documented your proposed startup costs? Have you worked out your running costs?
- What is your backup plan when cash is in short supply (because it will be at various times)?
- Are you going to pay cash for supplies, or take credit? If credit, are you going to accept the conditions of personal guarantees from suppliers?
- What accounting system are you going to use?
- Do you have suppliers in place? Have you negotiated pricing and terms with them?
- What insurances do you require? Do you have a good insurance broker who can help you with this?
- How are you going to employ? Where are you going to find staff? Will they full-time, part-time, casual or are there other arrangements?
- Where will you get HR advice when you need it? Awards, pay rates, terminations, etc.
Two of the most important startup questions that people never think about:
- How do you want to exit the business? When?
- What is your plan should things go badly? Who are the people that you will turn to for advice? What is your emergency plan?
The biggest mistakes when starting a business:
- Not enough capital at the start.
- Under estimating the cost of starting the business.
- Thinking success will come quickly.
- Not budgeting carefully enough.
- Underestimating the need for solid internal processes (cash handling, employment, ordering, decision making, reporting, compliance, etc).
- Mis pricing your product.
- Hiring the wrong staff.
- Ignoring legal, contract and financial matters.
- Not understanding your competitors.
- Not adapting or iterating quickly enough (being able to identify problems and make quick, informed decisions).