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Four essential small business tips for startups

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small business tips for startups

According to the Ministry of Business Innovation and Employment (MBIE), more than half of Kiwi businesses (with no employees) built in the year 2010 were no longer in existence by 2015. According to Bob Weir, founder of Hamilton-based small business advisory Pinpoint Business, around 45,000 businesses are started in New Zealand every year, and approximately the same number disappear. Failure might be famously known to be a stepping stone to success. But no company wants to fail. So, here are four business ideas to help ensure your small business startup has a fighting chance to survive through those first critical years.

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1. Create a business plan

A business plan is a company’s most important document. Yet, many companies fail to create one. A business plan helps you set business goals and create a plan to achieve those goals in a definite, streamlined, and focused manner. No matter how small your venture, you need a business plan to ensure business success. Here are some tips to creating a successful business plan:

·        Firmly establish what you want to achieve through your business. With a precise and clear-cut goal(s), your team can move forward in a concrete direction, and with conviction.

·        Keep your business plan short, precise, and easy to understand.

·        Ensure your goals are realistic and doable. Consider the economy and the conditions within your industry.

·        Use reliable resources when collecting business data (for example, Stats NZ).

·        Conduct a SWOT analysis to determine your SWOT (strengths, weaknesses, opportunities, and threats).

2. Make sure your business idea is viable

If you haven’t started your venture yet, it pays to find out if your business idea will work. Before you get your business running, ask yourself these questions.

·        Is there a demand for the product/service I plan on providing?

·        Who will my audience be? Will I have a sufficient target audience?

·        Who are my competitors? Are my competitors making money?

·        Can I ensure my idea is better and more appealing than what is already available?

·        How much will it cost me to set up and run the business for the first year?

You won’t be able to answer any of these questions until you have conducted thorough market research. So, spend a great deal of time researching for answers – it won’t be in vain.

3. Avoid small business startup issues

As maintained by the 2020 World Bank Doing Business study, New Zealand is the most accessible country to start a business. But like it is with any other country, startup issues are not uncommon. Here are some tips to make sure you face the least hassles and startup problems:

·        Understand New Zealand’s business structure. There are three structures, namely Sole Trader, Partnership, and Limited Liability. Understand what each of these is, the differences between them, and the benefits of each. Most importantly, understand which structure best suits your business.

·        Check with the local council when setting up your business premises. Each territory is governed by its own set of rules and regulations. Some business activities are prohibited in certain areas. For example, auto repair shops are not allowed in residential areas.

·        Set up tax numbers (Company or individual tax numbers, depending on your business structure.

·        Ensure you have a lawyer.

·        Set up business bank accounts.

4. Budgeting is a must

It will be awhile before your business witnesses profits coming in. Meanwhile, you will need money to start your business and sustain it. New companies must create realistic financials and a budget for any new business idea. Fail to budget, and you put your company’s financial health at risk. But also, a budget allows you to create timelines and project profits. With a budget in place, you have better control over expenditure, improve profits, and increase returns on investment. You might also want to invest in small business insurance to protect your business, assets, and reputation if your company is ever caught in a legal battle.

Consider the following financial tips when you create your company’s budget.

·        Ensure you have enough money to tide your business over the first year.

·        Keep expenditure low, so you don’t run out of money.

·        Reinvest the first profits back in the company, your product, and marketing.

·        When creating a budget, anticipate and consider all your short-term and long-term financial needs.

·        If you are not good with finances, hire an accountant for financial confidentiality and support.

Conclusion

Most startups fail even before they have a chance to transcend the startup phase. There is no single formula for business success. But starting with a plan, understanding your market and competitors, and creating a budget will ensure you have a solid business foundation. Follow these four tips and give your new small business venture a fair chance to survive. Innovative businesses – those that survive the first few years do something else as well.

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