Do you have a great business idea or opportunity and want to start your own business? Read our 12 top tips from experienced professionals on what to think about before you begin.

1. Your Vision

Before starting or buying a business take some time to work out your own personal vision. What’s important for you and why?  Then look at the business and decide what the vision for that would be too.  Then ask yourself these questions.

  • Are both visions aligned?
  • Will my business get in the way of me achieving my personal vision?
  • Does the business have the capability to achieve what I need it to financially? 
  • Will I love what I do in this business?
  • Am I excited about the future when I look at my business?

If everything lines up then start detailed due diligence.  

If things don’t align, maybe it’s not for you and it’s time to look for a better idea or opportunity.

Wayne Baird, Director – The Alternative Board Hawke’s Bay, Gisborne, Taupo

2. Key Things

The five key things you should think about before launching a business-:

  1. WHY – are you launching the business?
  2. PLAN – what does a three year plan look like?
  3. FINANCE – understand the financial implications of the business plan and ensure sufficient funding is in place.
  4. SYSTEMS AND PROCESSES – stay ahead of systems and process requirements.
  5. EXIT STRATEGY – always  operate with an end game in mind whether that is sale, stepping back, or selling down a shareholding.

Steve Wilkinson, Director – The Alternative Board Christchurch & North Canterbury

3. Strategic Plan

Always start with what you want from your life (personal vision) and how the vision of your new business will help deliver your personal vision. If the two are not aligned, don’t do it. If they are aligned, create a strategic plan of where you want to be in 12 months, 3-5 years, and 10 years. Write it down – it becomes more real when you have to record it. List your goals, your strategy for achieving them, and the activities you need to do to succeed.

Mike Tyson said, “everyone has a plan until they get hit”. That doesn’t mean you shouldn’t plan, but you should be nimble enough to adjust your strategy and activities so you can still reach your goals no matter what you come up against. The strategic plan is a living document, not a detailed roadmap.

Peter Mayall, Director – The Alternative Board Hamilton Waikato

4. Questions to Ask Yourself

Can you answer these questions?

  1. Are you building a recurring revenue model, and what is your cost of acquisition of each new customer?
  2. Do you have enough cash to bridge the valley of death to commercialisation?
  3. What re-engineering to your USP will be needed for different channels?

Gordon Stuart, Director – The Alternative Board Auckland Central

5. Future Plans

Take a good, honest look at where you want to be personally in three, five and ten years’ time and ask yourself is this business the vehicle to get you there?

Russell Eastwood, Director – The Alternative Board Auckland North

6. Resilience

Most of us start a new business because we know that we can do what we do better than our current employer.

And while that may be true, in terms of your current knowledge and skill set – there is one question you need to ask yourself before launching – that none of the text books will tell you. And this is: do you have the personal resilience to weather the storms that will inevitably arise?

Being a business owner is a roller coaster. One day everything is going well, and the next you are plummeting head first down to the bottom – when your best client or best employee leaves, or a project fails – sometimes through no fault of your own. The ability to get back up and start again – to find a new best employee, or client, or project IS what those who survive – and thrive do. While those who close their doors, don’t.

Karen Van Eden, Director – The Alternative Board Auckland West

7. Roller-Coaster Ride

Be ready for a roller-coaster ride! You will have hard times and good times but know that with resilience and support you will survive and emerge with a sense of achievement and pride at what you have achieved.

Stephen James, Facilitator – The Alternative Board Auckland North

8. Things to Think About

Some things for business owners to think about before launching a new business

  • What do you want the business to look like in one year, three years and five years?
  • Who is your target market, and how will you reach them?
  • Why will customers buy from you (what are your point(s) of difference)?
  • How will you supply the goods/services to these customers?
  • What price point and volume will ensure you are competitive but will also ensure there is sufficient margin to make a profit?
  • How will you fund the business, particularly as you start, and then as you (hopefully) grow?

Scott Morris, Director – The Alternative Board Auckland East

9. Right Step – or Not

Think seriously about what you want to achieve personally, and how the business will help you in reaching these goals. If the business takes you further away from your ultimate vision, then maybe it’s not the right step.

Chris Wallace, Director – The Alternative Board Christchurch & South Canterbury

10. Challenge Yourself

What do you want out of your business and how will the business achieve that?  I suggest speaking to other business owners and advisers to challenge your answer.

Mike Kelliher, Facilitator – The Alternative Board Auckland South

11. Working Capital

Do you have access to the required working capital to get the business from startup to cashflow positive? Almost every new business severely underestimates this and subsequently puts huge stress on the business and the business owner.

Daryl Narain, Director – The Alternative Board Wellington

12. Start and Operating Capital

While it’s great to have a vision for a business, it is important to understand how you are going to fund your business.  What capital is needed to start the business, what operating capital is needed to operate the business and what margins are needed to ensure the business is viable?  It’s also important to understand what cash reserves will be required to cover the ‘lag’ period that inevitably exists between starting a business and growing it to a level that is sustainable. In other words how long can you survive in the business with minimal income?    It’s important to remember that most businesses will need 12 to 18 months to reach profitability.

Chris Deere, Director – The Alternative Board Auckland South

There is a lot to think about before starting your own business and it can seem overwhelming.  Talking to experienced and like-minded professionals can make a big difference.  Contact The Alternative Board today to learn more about peer-to-peer advisory groups that bring together business owners in confidential group settings.

Call us on 0800 822 929 or email [email protected]

Business Coaching / MentoringStarting a new business? 12 things every business owner should think about first.
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