Small Business for Dummies. Veechi Curtis
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Probably the safest and most reliable approach is to go for an established kind of business; one that lots of people have tried and succeeded in before you. Most retail shops and many service businesses fall into this category — for example, bookshops, florists or hairdressers, builders, electricians or plumbers.
One good thing about going into the kind of business that many others have done before you is that you can find out what to expect in terms of sales, profit margins, expenses and more. With this kind of business, success depends not so much on the strength of your original idea, but more on good business sense and your ongoing capacity to differentiate yourself from your competitors. If possible, this difference should capitalise on your skills and resources, so that this difference is hard for competitors to imitate.
If you choose to go with an established kind of business, you may prefer to purchase an existing business, rather than starting from scratch. For many kinds of established businesses, franchising is also an option. Skip to Chapter 3 to find out more.
Finding your own niche
The next type of business is called a niche business. Developing a niche means doing something specialised and catering to a small but (hopefully) dedicated market. A niche business can cover anything from manufacturing custom guitars to producing hand-stitched silk lingerie, or from designing permaculture gardens to cooking special food for diabetics.
The best thing about niche businesses is that you can start off on a small scale. Starting small means low risk, less expense setting up and an opportunity to try out your idea and test the response. The best way to promote a niche business is usually through online advertising, where developing your own e-commerce site along with a social media presence can mean generating business all around the globe. For lots more about social media and building your marketing plan, check out Chapter 11.
Going out on a limb
The last type of business is called the entrepreneur type, reserved for new inventions or new market concepts. Untested and unknown, this type of business can occasionally experience resounding success but (sadly), more often, spectacular failure. (I still feel a pang whenever I remember my friend’s invention of a solar-powered windmill-hat, a great idea but scarcely a hot fashion item.)
With the entrepreneur type of business, you’re taking a gamble. Though the chance of failure is high, if you do succeed (and success is always possible), the rewards can be huge. I talk about market research, and how to find the products or services that customers really want, in Chapters 2, 5 and 11.
Assessing your chances of survival
Australians are a pretty entrepreneurial bunch. With a population of 25 million (give or take a few), almost 2.4 million businesses are alive and kicking. Impressive, don’t you reckon? Almost 10 per cent of the population run their own business.
But what about business survival? Are all these businesses fly-by-nighters, that start up one year and are gone the next? Not so long ago, a business coaching franchise advised a client of mine that 80 per cent of businesses go bust in the first year, and only 8 per cent of businesses survive five years or more.
Pish tosh. Business is tough, but it’s not a suicidal mission. The ABS reports that half of new businesses without employees, and 30 to 40 per cent of new businesses with employees, cease trading within the first three years. However, these figures don’t shed light on how many businesses chose to cease trading (as opposed to going broke or ‘failing’), and how many businesses actually experienced financial loss upon closing their business. In my experience, very few business people rate their overall experience as a negative one.
A QUICK QUIZ FOR SUCCESS
So, you’re not sure if you’re cut out for the world of business? Then don’t leave your steady (but mind-numbingly boring) government job quite yet. Instead, complete this illuminating questionnaire to see how you rate in the success stakes.
Your most recent power bill is unreal (as is your newest love). You know you can’t pay the bill on time. Do you …
1 Think ‘what the hell’ — this is what love is all about.
2 Stay awake at night wondering where you’re going to find the readies.
3 Contact the power company and ask for a fortnight’s extension.
4 Live on Vegemite sandwiches and take cold showers until you’re flush with cash again.
It’s horror hour. Dinner needs cooking, the kids need help with homework and your mobile is ringing. What do you do?
1 Have a beer and ignore everyone.
2 Scream at the dinner, stir the homework and pour soy sauce on the kids.
3 Cook, call out instructions to the kids and take the phone call. All at the same time, of course.
4 Do one thing at a time, logically one after the other.
How are you with maths?
1 Okay, so long as you can make figures up whenever you have to.
2 Just the thought of maths makes you feel inadequate.
3 You can use Excel and don’t mind doing simple stuff.
4 Fine, especially if the maths has a practical application that’s relevant to you.
You’re playing Pictionary with your partner at a local fundraiser. How do you behave?
1 You act the goat. It’s a game, after all.
2 You get cranky and wish it weren’t so slow.
3 Relaxed. You’re naturally good at Pictionary.
4 You play with dogged concentration and a will to win.
Describe your relationship with bureaucracy.
1 You chuck bill reminders and letters from the government in the recycling bin as soon as they arrive. They’re not even worth reading.
2 You feel anxious about completing forms correctly, and anxious that if you get something wrong, you might get fined.
3 This kind of stuff is okay. You whiz through most forms pretty quickly.
4 You enjoy the orderliness of completing forms and having everything in order.
It’s Sunday afternoon, you’re painting the verandah and some old friends drop by unexpectedly. Do you …
1 Ask them in and let them help themselves to tea. Shame that there’s no milk.
2 Pull up a chair and talk until the cows