You asked, we answered: Everything you’ve ever wanted to ask about starting a small business
Starting a small business can be as hard as it is rewarding. We cut through the noise to address the most common questions and concerns people have when starting a small business.
How much money do I need?
That depends on your business – but some costs apply to all. At a minimum you’ll need to register your business name ($35/year), and some businesses can be started for as little as $100.
Other common startup fees include domain name and hosting fees ($10–$100), accountant fees ($300+), insurance, computers, software, rent, utilities, motor vehicle registration and trade tools. If you’re selling goods, you’ll need to buy stock too.
What does good due diligence look like?
Whether buying a business or starting your own, essential steps include:
- Knowing where you sit in the market and who your competitors are.
- Ensuring there is steady cash flow in the short term and profit over the long term.
- Finding the information to plan and project for the future.
Prospa’s business strategy template will help you put it all on paper.
How do I build my customer base?
The digital age gives you more information about your customers than ever before. Using tools like Google AdWords and Facebook Analytics will allow you to segment and target particular groups.
There are also more traditional methods, like finding a niche, establishing yourself in the community, networking, hosting events and old-fashioned outstanding customer service.
Why do so many new small businesses fail?
More than half of small businesses don’t make it past their third birthday. It’s usually due to some combination of the following:
- Lack of cash flow due to poor planning and underestimating costs.
- Insufficient market demand, through oversaturation or inability to scale.
- Poor management, particularly in collecting debts and record keeping.
- The 360-degree nature of global and digital competition.
How do I take on my competitors – and win?
Know them better than they know themselves:
- Conduct a SWOT analysis on both your business and theirs.
- Compare your digital presence.
- Visit their shop, and watch them interact online.
Once you know them inside out:
- Replicate and build on what they do well.
- Target their weak points when competing for customers.
- Learn from their mistakes.
- Remember that speed kills (your competitors!).
When is the right time to grow and take on staff?
When the numbers add up.
Try using Prospa’s cash flow forecast calculator and 12-month profit and loss projection tool to make sure your financials are ready for growth.
If that’s the case, and you’re projecting or investing in an increase in sales, you can dip into your savings or seek funding to grow. You’ll need to show a plan for getting from your current state to your future state to any investors or lenders.