How To Start Your Own Small Business
This is a text copy of ENC's free online business startup course which we have on the teachable platform. It's been running for a couple of years now and is very popular. I decided it would be good to have a copy of the text part of it in case something happens to the current platform. LinkedIn is a place where I will remember I have saved it.
Edit: It was lucky that I did that as the platform I was using has shut down. I have now rewritten this course and hosted it on the ENC Website. Feel free to access the new, improved course here.
There are also a heap of useful business resources on the ENC Business Startup Resource page.
Starting your own Small Business
Starting a new business is a big step and the keys to success are passion, focus and preparation.
Running your own business is not easy. You will put in long hours, and it will cause you stress. But the rewards can be fantastic.
This course will get you thinking about what you want to accomplish, give you a roadmap of how to get there and guide you through the bureaucracy and risks that are involved.
This course is aimed at New Zealand businesses and is particularly focused on businesses starting in North Canterbury.
We recommend you sign up with?Business Mentors NZ?- they will help you to put your plan together and assess its viability - and they cost very little to use.
The?ENC Business Startup Page?has a huge amount of free resources and information.
The?ENC Planning Guide?is a business planning template with explanations of each aspect of the planning process.
We also encourage you to talk with the appropriate ENC Business Service Partners listed below. They contribute to the ongoing operation of ENC and we value their contribution to our organisation.
Other Resources
ENC Business Courses?are available throughout the year. These can be attended in person, or some via video conferencing.
Our?website?includes a number of?resource pages for business
Our?Business Service Partners?have a wide range of expertise in all areas of business
Sign up to the?ENC newsletter?for news, advice, support opportunities and business events in North Canterbury
Attend a free?Talk with the Experts?sessions with a range of professionals
Access?funding?for business training and coaching
Useful Links
Getting Started?- this fantastic guide from business.govt gives a huge amount of good information on starting a business
Ministry of Awesome?- A free service helping early stage entrepreneurs with advice, events and resources
Te Wānaga O Aotearoa?- Free business courses and diplomas
Goal Setting
You have a business idea that you want to pursue. Running your own business is scary, thrilling, fulfilling and just plain hard work, but you need to know what you are getting into and you need to prepare.
The first part of that preparation is more about you than about the business. It's a very simple question:?"What do you want to achieve?"
Many business owners start their businesses without really thinking about what they want their business to achieve and what they personally want to gain from their business in the long run. Having personal goals and business goals to accomplish will help you with planning and with deciding which paths to go down. Here are some common personal goals:
When you do not know what you want to achieve, it means that your business does not have the direction it needs to thrive and the chances are that what you accomplish will be quite different than the reason you went into business in the first place.
If you do not have set goals your business has a greater chance of failure. Even if it succeeds, without goals you are more likely to find your business personally unfulfilling.
As well as your personal goals, think about your business goals. This is your vision for the business.
A business vision affects all aspects of what you do, from what you charge to the quality of your product/service to what opportunities you follow up, and which ones you turn down. It's important that your business goals reflect your personal values. Examples include:
Write your goals down. The mixture of personal and business goals give you a reference point for every decision you make. Every decision should actively move you towards achieving your goals, or (at worst) should not distract or detract from your goals.
Now that you have your long term goals you can start thinking about how to achieve them. Do this by breaking them up into achievable steps. Write down what you want to achieve in your first 2-3 years. You don't need to know exactly how you will achieve it, but you need to make sure it is somewhat realistic.
What's the first step? What do you want to achieve in the first year? Write it down and when you are writing your business plan, attach targets to it. Having numerical targets will let you know how you are progressing month to month. It might be that you are wanting to grow your customer base or achieve a certain number of sales. If you have monthly targets (which may change seasonally) then it makes it easy to see how you are going.
After you have finished the first year you will be able to review how you did, see how it contributes to your mid and long term goals and set targets for the next short term goal.
The best way to travel down this long road is step by step.
Market Validation
Here's where I play devils advocate. There is a lot more to creating a successful business than having a great idea. A great idea may not be a commercial idea, and even a commercial idea has to be able to get enough sales to make it viable.
Before you start spending too much time and money on setting up your business, reflect on the following points:
If the answer to all three of those is 'no', then walk away. If you want to have a successful business you need something that is either unique (for your community), better than what already exists, or have a real point of differentiation.
If you feel that you do tick one or more of those boxes then you need to test your idea. If your business is quite similar to others you will be able to shortcut some of these steps, but if you do - try and get as much information from those other business as you can.
Step One - Identify Your Target Market
Start by thinking about the problem that your product or service solves. How does it make things better. Then think about what sort of person will be the main user. Narrow it down as much as you can and in as many ways as you can.
All businesses are different, but you don't just want to identify who might be your customers. The trick is to identify 'your perfect customer'. The one that this service or product fits perfectly. This is the customer you want to work with more than anyone else.
Examples might be:
"Women aged 25-45 who get sore feet from standing"
"New homeowners with combined incomes of over $90,000"
"Parents of young children with eczema"
"Owners of small or medium sized businesses in the Waimakariri and Hurunui areas"
There will be a wider group of people who will buy your product, but narrow it down until you identify your main target group. If you can prove that your business is viable for that group then you will be in a very good starting place.
But challenge your assumptions. Sometimes your product or service may not suit the target market you expect, but there may be a whole other group of people who will be interested.
Then have a look at how many people might exist in your target market that you can capture. If there are enough people to realistically give you an ongoing income, you might be onto a winner. If not, you may need to rethink your product or service, or re-scope it to meet a larger target audience.
Step Two - Defining Your Value Proposition
This is where you really need to think about what makes your product or service special. Write these down.
At the moment the question is "should I sell this product?", so if your product or service is not fully developed don't panic. This process may actually change your mind about some of the details of what you will sell.
Step Three - Ask Questions
This step is vital for most businesses, but if you have an original idea or product then you also need to be careful. You don't want to give your amazing business concept away so make sure you can trust the people you are talking to, or that you are not giving enough details away that someone else could beat you to market.
You may need to consider your Intellectual Property position. If so, we recommend visiting the?Intellectual Property Office?as a first step, and then possibly talking to an Intellectual Property lawyer such as local IP expert,?Infinity IP
But that warning aside, ask as many relevant people as you can
Try to avoid asking friends and family. This is the worst group to ask as they are more likely to give you positive feedback when what you actually need is honesty.
As much as possible, get face to face with people. This gives you the opportunity to ask questions and gain a good understanding of what does and doesn't work for each person. Surveys are OK, but not as valuable as conversations.
Remember, you are not asking questions in order to sell your product or to justify your ideas, you are asking questions to get an honest opinion on the viability of your idea. So don't try and change their minds if they are negative. Encourage people to challenge your assumptions so that you are forced to think about what might not work.
Try and ask the question "What?" and "Why?" as much as possible.
Going through this process should give you an idea about whether there is going to be an appetite for what you have to sell. This gives a starting point to setting the goals for your business, and for putting together a solid plan.
Creating a Plan
You are now at the stage where you can plan your business. This is a challenge. This is where you transition from general ideas of what you want to accomplish to specific tasks for how to accomplish them.
How long does a plan need to be? It depends. If your business will be low cost, will rely only on your skill and labour, can grow slowly over time and you don't need to draw an income from your business then you can get away with a very short plan. In fact, most businesses start without a written plan. However most businesses also fail within 5 years and a plan helps you to avoid the pitfalls.
There are a number of business planning templates available. All of them are slightly different, most of them are good and none of them are specific to your business. Your business is unique and no business planning template will fit your business perfectly. So be willing to change it, or leave areas blank where they are not relevant. A business planning template should do the following:
A business plan should also have a cashflow forecast as part of it. We'll discuss that in more detail in the next section, but a cashflow forecast is vital if you are looking for bank loans, funding or partnership. A cashflow forecast is also vital for you to be able to track whether the business is likely to succeed or fail as you go.
But why is a business plan important?
A well written business plan gives you direction while identifying risks along the path and helping you solve problems before you get to them. It makes easier to see what your assumptions are so that you can test them.
But a business plan is also fluid. Much of it is made up of educated guesses so whenever you look at another aspect of the business then you may need to review and change your plan to take account of the new information. It will never be perfect, but a good business plan will give you the information you need to identify and address risks in advance and make sure that you have a realistic chance of success.
Mark Cole from BDO discusses the business cycle
Tim Douglas from BDO talks about business plans
Useful Links
Money
It's called the bottom line for a reason. Without money flowing through your business, you cannot grow, you cannot change and you cannot achieve your goals. While the primary purpose of the business may be around lifestyle, or community good, or any other number of worthy outcomes, you need to keep a good eye on the financials and understand them.
In the planning phases, it is wise (and often essential) to put together a cashflow forecast. This allows you to estimate the income and outgoings of the business, to know when the business is making money and know when the business is losing money. Most businesses do not start seeing a profit until 2-3 years down the track, so you need to work out realistically what you need to get the business going and how much money you need to survive while you work on it.
Putting a cashflow forecast together also helps you plan for seasonal variations in income and to understand when you are able to purchase items.
When putting together this document, take a middle-of-the-road or slightly conservative view - don't inflate expected income or underestimate costs. Your cashflow forecast should try as much as possible to be realistic.
We recommend filling in a cashflow forecast on an electronic template (like the links below), as you will want to adjust it as you go. Writing a cashflow forecast will show you where the gaps are, which will mean you make changes in your plan, which will change the numbers in your cashflow forecast. Writing a cashflow forecast really shows where the gaps are, and are the most important part of any business plan for knowing if your idea is viable.
Cashflow Forecasts
Cashflow forecasting is the part of the business plan where you test your assumptions and calculate how viable your business is. A cashflow forecast will show how much money you need up front to start your business, how much money you might need to borrow to survive while the business grows, what your costs and income will be, and where any stress points might be.
In business, cash is king. Many businesses fail despite being busy, simply because they do not have the money in the bank to pay the bills when it is needed.
The secret of a cashflow forecast is…. it is all guesswork. However, you should try and make sure that your guesses are educated ones so that you are as close as you can be to what the reality is likely to be.
You are better to err on the side of caution. If you slightly underestimate your income and slightly overestimate your costs and the numbers still stack up, then that means that you should be able to survive the unexpected. If you overestimate your income or underestimate your costs, then that could mean your business fails.
We suggest writing a cashflow forecast for more than one year, as it can be several years before a business starts making a profit. You may be looking at investing more than you think in the first couple of years and you need to have a realistic idea of how much money you will require.
A simple cashflow forecast template is provided on the last page of this document, but electronic versions of good cashflow forecast templates can be found on the?ANZ Bank?website or the?Westpac?website.
A basic cashflow forecast is not a great tool for calculating tax liability, but it can be used to help you work out whether your business is viable and will identify pressure points and opportunities throughout the year. Doing a cashflow forecast helps you to identify and mitigate problems well in advance of when they might arrive.
Cash In
Start by making an estimate of how much money you will make every month from the month you begin trading. This should include all sources of income, including loans you might receive or your own capital you use to start the business. If you are applying for business grants such as the business startup grant from MSD you should include the estimated amounts here as well.
If you are registered for GST then make sure GST is included in your calculations. You will not be able to work out how much you can claim on GST until you have completed the Cash Out section
Remember that you are unlikely to be at full capacity to begin with and it may take months or years before you get there. It might be that you generate little or no income in the first few months.
Many businesses experience a good level of sales in the first month, followed by a slump and then a slow growth as you build up a solid customer base.
Other events that may affect the income you generate are:
? The seasons - will certain seasons affect your income generation, or should you reduce (or increase) your predictions based on the time of year?
? Holidays - How will Easter, Christmas, School Holidays affect your ability to earn?
? Short months - How many days will you be trading each month? Will this affect your income?
? Sporadic Sales - It may be that you do not have a constant income. Put the predicted income in the month where you think it will occur.
If you are writing a business plan as part of an application for a bank loan or for any other formal purpose, then it is very useful to write an explanation of your assumptions. It should be clear why you think you will make x dollars in any month for any item.
Cash Out
Go back to your pricing and costing. Some of your costs will be fixed and some will be variable. The fixed ones are easy to calculate and should be the same each month. The variable ones will change depending on how much activity you are undertaking or on outside factors (such as more power costs in the winter).
In some cases, there will be a lag where you need to pay for materials or services well before you are able to generate an income from the product you create. Be realistic in your timing.
You still need to eat.
A common error in a cashflow forecast is forgetting to put money aside for yourself. This is generally drawings (if you are a sole trader), or it can be salary and/or drawings (if you are establishing a company). The important thing is to try and pay yourself a regular and survivable income while you are setting up. Some of your costs may be less than you think (such as if you have taken a portion of your weekly rent or mortgage as a business cost)
It is worth writing up a personal budget showing how much you need to survive. This should be the minimum you pay yourself, with the hope of increasing this amount as the business progresses.
You should now be able to subtract your costs from your income for each month to calculate your surplus (if you have made money) or your deficit (if you have lost money). The opening balance for your first month will be $0. Do not panic if you are running a deficit on any given month, what is important is that your closing balance stays well above zero. This indicates that you will have enough money on hand to pay bills as they arrive.
Bank Balance
If you are not making enough money to pay your bills, then there are a number or aspects of your business you can relook at:
If you find you have a very tidy balance at the end of the year, then that gives you options to improve the business or to draw more income from it for you.
Assumptions in your forecast
In your cashflow forecast you will be making assumptions and intelligent guesses. That’s fine, but if you are presenting your cashflow forecast to someone else (such as a potential investor, a business startup fund or a bank) then they will want to know the basis of your assumptions.
Most of your assumptions will be in the ‘cash in’ section. The ‘cash out’ takes a lot less guesswork.
For example:
Write down any assumptions you make, or any items that are not self-explanatory.This will help readers to understand the basis of your cashflow forecast.
Banks
Get alongside a good business manager at your bank. It has to be someone you feel comfortable with and who you feel you can have an ongoing professional relationship with. Make sure that the bank aligns with your business goals. Be willing to change banks if you do not feel that they are the right fit for your business. You are setting up a long term relationship here and you want to know that they understand you.
Cash is King
Every business survives on its cashflow. You need to have money on hand to pay bills when they arrive. Many excellent businesses go broke simply because they did not have the money they needed when they needed it. This can be a timing issue, you may be pricing your product or service too cheaply, or you purchased items for the business at the wrong time.
Looking at your cashflow may show you that you need to get an overdraft facility, or to have a cash buffer to manage the slow periods.
Many businesses fail even when they are bringing in a large amount of work - this is because they have not planned out their cashflow.
Raising Finance
When you are trying to bring in investors or get a loan, any potential source of funds will look very carefully at your cashflow forecast. This is the part of your business plan that really shows whether your business is likely to succeed and it is also the part that demonstrates how realistic you are in your assumptions.
Useful Links
The boring bits - Business Structures, Intellectual Property, Tax and more...
Yawn. Not exciting, but necessary. The boring bits are what put a structure around your business, make sure no-one steals your ideas, intellectual property or even your business name, and ensure that you don't suddenly get caught with an unexpected debt to the government.
Business Structures
Think about your vision for the business. That will help you to decide what structure you want to put on your business, or in some cases if it would be better served by another structure altogether (such as a charitable trust, incorporated society or other not-for-profit). Common structures are:
The Ministry of Business, Innovation and Employment?define the different business types well.
The social enterprise movement is growing in New Zealand, but is not a business structure in its own right - it is more correctly defined as a purpose driven organisation that operates commercially in order to deliver a social or environmental impact. A social enterprise can fit any of the structures above.
Intellectual Property
Intellectual property laws are all about protecting you from people who would take your ideas and use them to make a profit themselves - sometimes competing directly with you. This might include protecting your brand, your designs, your creative works, or your inventions. In most cases, protecting your intellectual property is straighforward. This can be done through the?Intellectual Property Office.
If you have invented something then you may be considering patenting your idea. While a patent gives some protection, it is an expensive process to pursue someone if they infringe your patent. We suggest getting professional advice from a business coach or intellectual property lawyer before pursuing this option
Tax
We strongly recommend find out all about what you will need to pay and what you can claim as costs. The IRD are actually pretty approachable about this and have community compliance officers. That sounds scarier than it is - their job is to make sure you understand what the rules are. You can contact IRD about this?here.
Or if you have an accountant or business coach you are working with then they should also be able to help.
Provisional Tax seems to be a common danger for new businesses, particularly as you start paying it very soon after paying your first years tax bill. We recommend saving 20% of all profit throughout the year so that you are not scrabbling to pay your tax when the time comes.
There are a?number of ways?to work out your provisional tax obligations. We recommend talking with an accountant or a business coach about what will be the best method for you.
If you think you will be generating more than $60,000 then you are obliged to become GST-registered.
ACC
Everybody who works or owns a business pays?ACC levies. When you own a business it becomes a little more complex. Every business has a different levy rate depending on the type of work you do, and you can sign up for different ACC packages depending on what business structure you have.
We also recommend looking at how ACC packages fit with any private health insurance you have. If you are self-employed the Coverplus Extra package can work very well in conjunction with private insurance and you may find you have better cover for a lower cost than if you went on the standard package. Health insurance brokers are well worth talking to if you want to make sure you are well covered at a reasonable cost.
Insurance
We recommend having a chat to an insurance broker. As a business there are a number of insurances that you should probably consider depending on what you are doing. These might be for property, your vehicle, your own health, public liability, business continuity and more. Also talk to other people you trust such as other business owners, a business mentor or your accountant. You may not be able to afford the level of insurance you want straight away, but this should definitely be part of your plan.
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Franchises
If you are looking at buying a franchise business do your homework first. There are good franchises and there are bad franchises. Taking on a franchise can help you eliminate a lot of the guesswork in starting a business but you still want to make sure you have a business that is going to succeed. Franchises vary a lot in terms of the amount of support they give you and in the amount of control they allow you. Do your homework before signing any agreement as a franchise agreement is not a guarantee of success.
We suggest putting the same amount of planning work into a franchise as you would for a new business - don't automatically trust any franchise owner who tells you that you'll be making lots of money.
Useful Links
Other Links
Business Funding and Investment
You have your business plan together, you know what your startup costs will be, you know what gear you need, you know how much you will be paying in rent and you have a good idea about how long it will take before you start generating an actual income. Now all you need is some money.
Not all businesses need money to get started, but most do and usually it's a decent chunk of cash.
When you are looking at financing your business you are generally looking for money to get the business going, as well as some income to survive on until the business is generating enough cash to support you. Where do you get this money from?
There are a number of options, but it's usually not easy. Starting from the most likely sources:
Organic Growth
This can be a good way to grow for a business that does not have many startup costs. You start small and grow the business as profits allow. This can be a lot safer than borrowing money or getting investment, but it can make it more difficult to grow.
Your Own Resources
You may have savings, you might sell your collectables, you might use some equity from your house. If you can find the money yourself that is usually the best way to get started. It means you are not beholden to anybody else and you are not paying interest or dividends.
Even if you do use one of the other sources of cash below, chances are that you will need to raise some of the income yourself. Most lenders and investors won't be interested if you aren't putting any skin in the game.
A Business Partner
When more than one person is setting up the business then you can both bring your resources and expertise into the mix. This can be a great way to get a business up and running, but make sure that you have a solid legal agreement in place. Disagreements will occur and people do eventually choose to move on. You need to have considered 'worse case scenarios' before you start formally working together, make sure that your expectations are aligned and that you have a method to deal with disagreements.
If your business partner is also your spouse then you need to be even more careful to set expectations, responsibilities and establish how decisions are made. An unresolved business disagreement can be poison for your home life.
Family and Friends
This is a great way to lose friends and destroy family relationships. Make sure your eyes are wide open to what can go wrong if you accept money from family and friends. Make sure everything is in writing. We strongly advise getting legal advice and making sure that peoples expectations are set down from the start. While it can be easier than other methods to get loans or investment from people you know it can also come with misunderstandings and resentment if it goes wrong (or even if it goes right).
Banks
If you need to borrow money, make this your top option. Banks require a lot of surety before they will lend you money. They will want to see a well written business plan with a realistic cashflow forecast. They will want to know that you have done the market research and that your plan is viable. Good banks will work with you where they see gaps in your business plan and help you reduce any risk.
However banks usually require security such as an additional mortgage on your house . This reduces the risk to the bank as it means if your business fails and you are unable to pay the loan, then they will take the value from the security you provide. However if you are starting out with no assets to use as security then you could struggle to get the banks on board.
Bank loans are usually low interest and the bank will not tell you how to run your business day to day. If you are going to borrow money, this is usually the best and safest option.
Microfinance
If you are unable to get a bank loan due to a lack of collateral, another option may be a microfinance agency. These are usually not-for-profit organisations that are dedicated to helping people start out in business. They don't require collateral, but they do require a robust business plan. The main microfinance agency in Canterbury is?Just Dollars.
Finance Companies
If you need to go to a finance company to fund your business then stop, take a deep breathe and reconsider whether your business is viable. Finance companies offer easy money with little security at huge interest rates. If you don't generate the money that you think you will then you will quickly find the interest costs mounting up. In the most part, finance companies are sharks and you are best to stay far away.
Investors
If you are willing to give up some of the ownership of your business, getting investors can be a good way to go but it is also difficult to achieve. Generally investors want to put money into either something that is already generating income and is a safe bet, or they want to risk their money in 'the next big thing' but own a good proportion of the business in return for the risk they are taking. Investors will want to see that you are also putting your money and resources into the investment - why would they take a risk if you are not.
Investors can provide expertise, experience and access to networks and markets which could make your business much more likely to succeed.
Having investors will have a long term impact on your business as you repay the investment, make sure they get the returns they are expecting and possibly pay part of the profit of the business to them indefinitely. Having an investor on board may give you an initial burst of cash but might negatively impact the long term viability of your business. Some investors will push you to sell your business once it is succeeding in order to maximise their short term return. Make sure you adjust and examine your cashflow forecasts carefully.
If you are looking at getting investors on board see a lawyer first. There are lots of risks with getting other people involved with your business and you want to make sure all the legalities are in order.
Investors will want to be involved in your business, so do your homework on any potential investors and make sure you are clear on what they expect for their investment before accepting an offer
Incubators and Accelerators
These are generally for tech startups. These are a great method for developing your product and getting it ready for market, while building good connections and getting help from business experts. If you can get involved with an incubator or accelerator then this is a good option.?Most incubators and accelerators?have good connections with investor networks and can help you raise money.
Crowdfunding
There are a number of reputable business crowdfunding websites in New Zealand and this can be a good way of raising money for your business. To do it, you create an online campaign featuring your business or product and set a financial target.
Think about why people will put their money into your business. Will you offer product, rewards, shares in the business, permanent discounts? Make sure you factor in how this will affect your cashflow forecast. Crowdfunding is not appropriate if you are sensitive about intellectual property (such as if you are developing a unique product) and you do not want details of your product in the public arena.
If you are looking at using a New Zealand Crowdfunding Service then make sure they are?licensed with the Financial Markets Authority.?Snowball Effect?and?Pledgeme?are the most popular New Zealand services.
Government Grants
As a rule of thumb, don't expect the government to put any money into your business. There are a few exceptions to this rule.
If you are on a benefit you may be eligible for assistance from Work and Income to start a business through their?Flexi Wage for Self Employment?and they might assist you with a?Business Training and Advice Grant
If you are Maori or establishing a Maori Business, Te Puni Kokiri offer?Maori Business Growth Support
Te Rūnanga Ngāi Tahu?offer mentoring and grants for new startups, growing businesses and those thinking of starting a business through their?Puna Pakihi?programme. Your business must be at least 50% owned by a registered Ngāi Tahu whānau to be eligible.
If you are developing an innovative product then?Callaghan Innovation?have a range of assistance including?research and development grants.
Useful Links
Marketing - cheap and effective ways to gain customers
Marketing is a vital component of your business. If you aren't sending people a great and attractive message about what you do it will be very hard to get people to use your service. Many good businesses have failed simply because they didn't communicate well to their audience or people weren't even aware that the business existed.
Marketing strategies rely on your business vision. What do you want to achieve and what are your values as a business? Having a solid business vision gives a good basis for creating a coherent and consistent marketing message. Keep in mind who your target market is and ensure that the message you communicate is 'in their language' so that you can aim your marketing at them and the channels that will reach them best.
It is good to think about your brand. This is how your business is perceived by others. A brand is far more than just a logo. If you think of a person, their brand is the entirety of how you interact with them. You may make your first judgement based on the clothes they wear, but you will form your long term opinion of them based on their personality, whether they do what they say they will, how they treat other people. A business brand is the same - it's not just the visuals of the marketing or of your location - it's also whether you treat your customers with respect, offer more than they expected and provide a great and friendly service.
There is no point in having a great marketing campaign if you then put people off when they walk in your door. The actuality of peoples experience needs to match what your marketing promises otherwise you will be simply wasting the money you have spent. Don't launch until you are ready. If people decide to try you out and don't get the experience they wanted, they won't be coming back. When you are thinking about your marketing don't just think about the launch of your business. Also consider how you will continue to attract new clients. Most businesses start off with a lot of people showing interest, but those numbers can quickly dissipate and it can be a hard job to bring them back in again. Try and create as many repeat customers as you can. Repeat customers are your most important customers. Make sure you don't take them for granted.
There are a good number of cheap(ish) ways to market your business that may be useful while you are starting out, but you should plan for the long term - cheaper does not mean better.
An essential aspect of marketing is measurement. Try and find a way to measure the impact of every dollar you spend and every message you write. There is only one metric that matters - how many sales your marketing leads to. Measuring results means you can discontinue marketing that does not work and try something else.
There is no magic formula for marketing. Every business is different and your should be willing to try new techniques out.
Website
Whatever your business is, you should have a website. That is a basic requirement in modern society. The first place people look when they hear about a business is on the internet. If you don't exist on the internet then they won't be able to find you and they will go with someone else instead. You will never know about the work that you lost.
Most businesses don't need anything too fancy. A website that portrays your business well, shows what you offer and makes it easy for people to take the next step is usually enough. There are free services that will enable you to create these websites such as?Wix?or?Squarespace. If you have basic design skills and the time to fiddle about, these sites are a good option. Make sure that you do not use pictures or graphics that are copyrighted.?Pixabay?gives you access to a wide range of pictures you can use for free, or use your own.
If you want to have a professional looking website with special features (such as a shopfront) then you are best to get a professional to design this for you. If you do this make sure that you will own the content and the url (the web address). There are some dodgy web designers out there who will try to lock you into using their services forever. The good ones know that you will stay with them because they are good at what they do.
Professionals will also help by making sure that your website is easy to find and ranks highly on search results.
Having a website is not enough though, people still need to know you exist or they will not be searching for you on the internet.
Word of Mouth
Word of mouth is a fantastic way to get people to use your service and tends to be the key for most successful businesses. The only real way to get word of mouth referrals is to be a business worth recommending. That takes a lot of hard work. It requires providing excellent goods and superior customer service as well as having seamless processes. It involves meeting and exceeding customer expectations.
Social Media
Social Media is a great method for promoting your business. Most businesses use Facebook, but many businesses also use Instagram, LinkedIn, Twitter, YouTube or many others. If you are not comfortable with social media then you should probably just concentrate on one social media avenue that is the main one that your target market use.
Make a social media plan around what you want to promote and think about the conversations you want to have with your customers. You need to be interesting. If you do nothing but advertise you probably won't get many followers, but if you are posting useful information then over time you will become more and more popular.
Paid advertising on social media is a great way to get your message out there. We recommend attending a course on making the most of social media. ENC run these courses as does the Canterbury Chamber of Commerce and many other providers. The money you spend on understanding how social media works will pay great dividends.
Personal Branding
Personal branding can be great where you and your business are inextricably linked. This is usually done by professionals in very specialised roles where the business is unlikely to be sold (in the long term) and the business owner will always be the figurehead. Your personal brand allows you to stand out from the crowd so that when people see you they automatically think about your business. Think about how you want others to perceive you and dress, act and promote yourself accordingly. Politicians are a great example of this.
Examples of business-people who have used their personal brand successfully are Sir Richard Branson, The Mad Butcher or the Big Save Furniture Lady. However this can lead to problems when you sell the business, given that so much of the profile is tied up in your personal brand. On the flip side, if you start another business you can use momentum that your personal brand has already built up (such as with Sir Richard Branson's multiple businesses).
You can hire someone to be the personal brand of your business (such as the Briscoes Lady), but if they decide to stop working for you then you will need to redesign your marketing campaign from scratch.
E-mails and Newsletters
Sending e-mails and newsletters is a great way of get way of encouraging repeat customers. This is done by building up a database of customers who want you to communicate with them and sending them notifications or newsletters that are interesting and keep them informed. They advertise product, but often have related items that are interesting but do not lead directly to sales.
Think about what your customers want to receive. Not many people want wall-to-wall ads, but most don't mind ads mixed in with stories that are interesting to them.
Businesses that are very successful at e-mail marketing build a good database of customers and break down what they are interested in. They then automated systems that send notifications to customers that perfectly fit what the customer wants to know about, or personally tailored newsletters, such informing an individual customer about a new item coming into stock that they had registered an interest in.
Only send e-mails to someone who has expressed an interest in receiving your messages. No-one wants spam and?you could be fined if you continue to send spam to people.
Loyalty Schemes
Coffee cards, Flybuy points, discounts for referals of new customers - all of these loyalty schemes are designed to get people into your business in order to earn a 'reward for loyalty', or to use other people to bring new people in. Businesses do these because they work.
Community Sponsorship
Community Sponsorship is good for your brand. You may not see many direct sales from it, but it makes a wide group of people feel more positively inclined to use your business. That means that in the long term you should see long term benefits from it while you are helping your community.
Don't just give money away to a worthy cause though - put a little strategy around your largesse.
Newspapers, Magazines and Radio
These can be a good option for advertising, but they don't work for everyone. If you are going to advertise in printed media or through the radio, make sure you do it well and make sure you have a method to measure the results. It can be an expensive option, but for some businesses these forms of media bring great results.
Networking
Every region has the opportunity for you to attend business networking functions and groups. This can be particularly useful for any business whose target market is other businesses. Go in expecting to talk to people and push past your comfort zone to actually say hello. If you can find out who will be there before you go that can help you to identify who you want to talk to. There are a mix of different types of networking priced from free to very expensive and they all have different flavours. Decide which ones will be useful to you and attend a few to see how they go. It's also a great chance to talk to other business owners and can act as a good way to build friendships within the business community.
Marketing Resources
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Setting up a website
?Media Tools
Social Media options
Social Media is a great way to communicate with your customers, but different businesses will suit different social media types. Think about which ones will be more likely to be used by your clients. You are better to use one or two social media channels well, than to have many but not have the time to keep them vibrant.
Email Campaigns
When you build up a customer database, email campaigns are an extremely effective way of generating sales. Many email campaign platforms are free initially, and start to cost more as you add features or get above a certain number of customers on your database. So come with built in database management tools. It's worth looking carefully so that the one you choose now will work for the business you are planning to be.
Marketing Data
Marketing Training
Other Marketing Resources
Summary - Bringing it all together
Phew. What a lot of work. You've worked out what your business is, set your goals, made sure your customers actually exist, created a cashflow forecast, looked at all the legal stuff and prepared, worked out where you are getting the money to start and put together a marketing plan. What next?
Next is to make sure that all of the bits feed each other. Your cashflow forecast should have a budget to pay for your marketing plan. Your marketing plans should reflect the goals and values of your business. You should know what you need to do to make sure you meet all legal requirements.
Once you have your plans polished and they feel pretty good you should take a step back and decide whether to press 'go'.
Pressing that button is hard, especially since every business plan is made up of a certain level of educated guesses and assumptions. The only way to really know what mistakes you have made in your planning is to test your plan, and the only way to do that is to enact it.
So if you honestly believe that your business has a reasonable chance of success - go for it. Your plan will never be perfect and and some point you will need to take the leap. But your business plan gives a blueprint that will maximise your chances of success and help you to avoid some of the pitfalls.
Once you have started, don't feel that you have to stick to your plan. A plan is just a guideline. Opportunities will come up and failures will occur that you never expected. Play to your strengths and find other people who can do the tasks that you are weak at. Be flexible, be prepared to change and be prepared to be uncomfortable, but always keep your eye on your personal and business goals and always assess a new opportunity before following it.
Good luck.
Optional Module - Employing Staff
Most startup businesses don't need to employ additional staff but if you will need to, you need to make sure you get this right. Being an employer can be the most stressful part of running a business and putting in the foundations to both protect you and make your staff happy will make a huge difference to your own stress levels.
If you genuinely care about your staff then you are much more likely to attract and retain good staff, but caring isn't enough. Managing staff and leading people is a lifelong journey. This is an area where we recommend reading, taking courses and absorbing as many leadership techniques as you can so that you can find the style that works for you and your staff. It is worth spending money on this up front.
The best resource is the?Employment New Zealand?website. It has all the legal information you need, a number of free videos and fantastic tools that will make things easier and save you money.
If you really want to make sure that you are getting it right, get some professional advice such as from an HR lawyer or a recruitment and HR company such as those listed below.
Recruiting Staff
Take the time to scope the job correctly, promote the job accurately and to hire the right person for that job. It is so much easier to put in the work now than to deal with a disruptive and negative staff member later.
Systems, Processes and Paperwork
If you do not have an employment agreement in place and signed before your employ starts work, then you may put yourself at legal risk. We recommend having an Employment Agreement in place with a clear Workplace Policy document and systems in place to make everything as simple as possible for you from day one.
Other Useful Links
Optional Module - Social Enterprises
Starting a social enterprise is a noble goal and a popular option in today's business environment. But what exactly is a social enterprise and how do you go about setting one up?
What is a Social Enterprise?
Social enterprise is a concept that fits somewhere between pure commercial business and community project.?No formal legal definition exists yet; currently?social enterprise sits in a weird legal space between commercial and non-commercial organisations.?
The ākina Foundation?defines social enterprise as meeting three key objectives:
But there are many definitions of social enterprise and they all involve business-like structures that are primarily established to make an improvement in the community or in the world.
Why Start a Social Enterprise?
We now see a greater number of people?wanting to set up their business with a foundational goal of helping their community, improving the environment or making the world a better place.
As more and more consumers become aware of the social or environmental impact of their purchases, they are becoming more willing to spend a little more on products or services that make the world better and to put pressure on business practices that are unsustainable. It’s because of this that we will soon see the end of chicken battery farming, of plastic straws and of single-use plastic bags. If consumers are more aware of your social objectives, they are more willing to buy your product or service.
Social enterprise, when done well, can make a real difference to the community while still succeeding on it's own merits as a business.
How to Start a Social Enterprise
Setting up a social enterprise is a noble goal, but how do you achieve it?
As a business you still need to make money in order to operate and as a business owner you want to have a comfortable lifestyle. You can do this under any of the?normal business structures.
For some people it’s better to set up a not-for-profit organisation. Although it means sharing or passing over control of your vision it gives more scope for fundraising to get started or to supplement income generation. It also helps ensure that the goals of your enterprise do not belong to just one person and will keep going even if you move on.
Either way is valid. For entrepreneurs who want more than profit, it is totally possible to be profitable while making an impact. For not-for-profits that want long term sustainability, it is totally possible to generate income without 'selling out' your vision.
Useful Links
?Examples of Local Social Enterprises