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Got a good business idea? Why not give it a go

It is the dream of millions of would-be entrepreneurs the world over. You have that great idea that you think will make you a couple of million dollars. Whether it is an online idea or it is a traditional business there are some key areas that will influence your potential success. In this article we have outlined 12 ideas that could help you in developing your new small business.

Here are our 12 tips for budding entrepreneurs

1) Do your research

Before launching any small business you should try to do as much research as you possibly can. Try to estimate what the size of the potential market is and who the potential customers are. Try to work out what you think these customers would be prepared to pay for the particular items or service that you are selling and how much profit margin there potentially is for you and your organisation. You should also consider whether there will be additional costs involved in delivering your goods and services, are there any government taxes or controls over your proposed business and who are the main competitors. The more work that you do upfront in determining all of these variables the better informed you will be when the issues present themselves later on.

2) Prepare a comprehensive cash-flow forecast

Before you start commissioning websites or getting your marketing information printed up you need to have a thorough idea about how you are going to fund the operation. Try to use the information that you have acquired during the research phase to plot out your expected cash inflows and outflows. If you don't have a financial background or don't have a good feel for numbers it may make sense to bring a bookkeeper or an accountant in to help with the forecasting process. Remember, when preparing your forecasts you should look at a number of different scenarios. Sure, you can have a bullish version that shows you making lots of money but you should also look at doing a really conservative model and a mid range model. If you can afford all three then you are on a good track. Also, don't just create a cash flow and then forget about it. You need to review this cash flow on a monthly basis and adjust it as you go.

3) Don't stick to the old format

Just because something has been done a certain way in the past does not necessarily mean that it has to be done a certain way now. Try to think outside the box when it comes to the processes that are required to run your new operation. Back in the old days there were set ways that things were done, you would get a physical office, employ a bunch of people and send sales people out into the field to find you business. Nowadays with the internet and cloud technology it is possible to have a virtual office, employ virtual staff and do your marketing online. If you don't know what the possibilities are then just ask a few people in the industry or go to a few conferences.

4) Don't employ staff unless you have to

Employing staff in Australia can be expensive. Not only are you up for a hefty salary but you can also add around 20% of that salary on as on costs. On top of all that you need to also think about where your employees are going to work, what equipment they are going to need and phone/internet connections etc. Rather than locking yourself in to all of these draining fixed costs it might be an idea to explore the concept of making use of virtual staff like virtual receptionists and virtual assistants to carry out some of your work. Using virtual staff can save up to 40% of the cost of a physical staff member.

5) Don't do it all yourself

When you start a new business the temptation will always be there to try to do everything yourself. While it is quite reasonable in the first couple of months to be cleaning the office, packing the orders and answering the phones it doesn't make a lot of sense for you to be doing all of these things 6 months in. Financially it will make a lot more sense if you focus your attention on the more strategic money making tasks while you get someone else who doesn't have your skills to focus on the more clerical tasks.

6) Find a mentor

None of us knows everything about everything. It makes a lot of sense to acknowledge this fact and find good people who are experts within their field and who are willing to share that expertise with you. Small business owners that have good mentors perform significantly better than those who think that they can do it all themselves. Why stop at one mentor, why not look for several who can help with specific areas of your business. A word of warning though, do not outsource all of your strategy. The mentor is there to help guide you and build your business knowledge, they are not there to create your strategy for you.

7) Think globally

Don't limit yourself to a specific market or country. The internet has dramatically reduced the size of the world and it is now possible to market into different countries without leaving your desk. As with all new projects however, you should do your research in advance to ensure that you are complying with any local restrictions or any local tax regulations.

8) Remember the 80/20 rule

The 80/20 rule or the "Pareto" principle states that for many events, roughly 80% of the effects come from 20% of the causes. What this means in practice is that 20% of your income will likely require 80% of your effort and vice versa. What you need to keep in mind when starting your new entity is that you need to focus on the tasks and jobs that will generate you the easiest money. If you are putting in 80% of your effort and only getting back a small return it is quite likely that those specific tasks are loss making.

9) Get an external accountant

Even if you are an expert with numbers and know your tax legislation I would suggest getting an external accountant involved. You don't need to offload all of your accountancy work to them but simply having them involved from the start will add value to your enterprise. When you eventually come to selling or listing your new business it will add a huge amount of credibility to the business if you can show that you have an external accountant with in depth knowledge of the company. Also, a number of the big 4 accounting firms will offer discount rates to startups with the hope of keeping them on board when they start to earn decent money.

10) Be ruthless if it doesn't work

If things are not working out using a specific approach or method then you should look at changing things as quickly as possible. Do not get too attached to processes or to people. You need to act quickly and set yourself time limits for how long you will keep doing specific things.

11) Try to earn a decent wage

People start small businesses for a variety of reasons. Maybe they want the freedom of being able to do their own thing or maybe they think that there is the potential to earn big money. Other people may be looking for a retirement business where they don't have to work so hard. Whatever your reason, you need to be honest with yourself about what you are prepared to earn. If you need to support a family and a mortgage then you need to factor these costs in. If your small business is not delivering your required salary then you need to either increase that income or look at selling/closing.

12) Keep focused on the strategic stuff

It's easy to get distracted when running a small business. The phone rings and the person on the other end has a question or wants to place an order. All of a sudden you are lost in the moment and you lose track of the strategic tasks that need to be addressed. Make sure that you allocate enough time to think about strategy. Get yourself avirtual receptionist or a virtual assistant to manage all of that basic stuff while you focus on the key tasks in front of you.

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