The vast majority of businesses in Australia are small, accounting for 97% of all businesses. The advantages of running your own business are clear. You can make unlimited money, have freedom to set your own hours and work where you choose, location wise.
Ideally, you’ll also be doing something you love.
But it also means lack of security, and a very high chance of failure. According to the Australian Bureau of Statistics, more than 60% of small businesses stop operating within three years from launch.
If you’re thinking of taking the plunge with self employment, then consider these five questions first, to increase your chance of success.
1. Do you have a good idea and a market?
Having a great idea or being able to spot a good business opportunity is core to the success of starting your own business. First up, do some research: Is anyone else doing something similar and if so, what can you bring to it that’s different?
For example, it may be an idea you’ve seen overseas that you think would work well in Australia.
If you believe your idea is unique, you need to discover if there’s a need for that kind of service or product (lots of people start businesses because they couldn’t find something they wanted).
Greg Hayes from Hayes Knight Accountants & Advisers told The Huffington Post Australia, there are various reasons why most Australian small businesses struggle to survive. “One of the key reasons is that many small businesses start with a bad idea, an idea that was never going to work,” he explains.
So before you plough lots of time and money into getting started, sense check the idea with friends and business experts.
2. Do you have what it takes?
Running your own business means you have to be prepared to work for yourself. There are well researched qualities that successful business people have. They are often visionary, determined, able to take a great deal of challenge and failure in their stride and be comfortable with risk taking.
Take this quiz by Entrepreneur to see if you have what it takes.
3. Do you have a solid strategy?
You don’t have to watch too many episodes of Shark Tank to observe that enthusiasm is nothing without a solid business strategy. A detailed business plan, a marketing plan, financial plans for loans and equipment, plus knowledge, expertise and training are all crucial.
And while there are people who have been successful in business without these, you stand a better chance with them – why...?
Because they work: Or as Brian Tracy, Entrepreneur and Success Expert says, “If you do what other successful people do, you will enjoy the same results and rewards that they do. And if you don’t, you won’t.”
4. Do you have the resources?
According to Greg Hayes, the biggest reason for failure in small business is a lack of capital. “It’s a common story that many people go into business under-capitalised and they just run out of money,” he says.
To start a business, you have to have funds, plus the time and freedom to work on its growth. Making sure you do is part of creating a solid strategy.
5. Do you have the passion?
Talk to anyone who runs their own business and they will very quickly get to the long hours and hard work involved. Being passionate about what you do will carry you through the effort required and the ups and downs of being your own boss. It’s good to ask yourself, can you see yourself doing this five years from now?
For more great information about starting your own business go to ASIC.
NRMA Insurance offers Business Insurance and Public Liability Insurance for many different kinds of small business. Find out more here.
Disclaimer: To see if NRMA Business Insurance is right for you, always read the Product Disclosure Statement from the product issuer, Insurance Australia Limited ABN 11 000 016 722 trading as NRMA Insurance.