Have you got a great idea for a small business? It’s a career move that many people aspire to, but it requires courage and self-belief to take that big step into the world of self-employment. The rewards of running your own business can change your life for the better, but in order to be successful you need to start with a solid foundation, and that’s why your planning stages are so important. Anyone can create a business plan without having to commit to following it through, so if you’d like to explore the possibility of setting up your own business, it makes sense to assess the viability of your idea.
Is your idea viable?
The first question to ask yourself is would the business you have in mind be realistically capable of returning a healthy profit? Is there a demand for the service or product you intend to sell? Unless there are people out there who would be willing to pay for what you are offering, it won’t matter how clever an idea you’ve had; no market means no sales, so you need to be sure you will have enough potential buyers to turn a decent profit.
Creating your budget
You need to calculate whether you can price what you’re selling at a level that will ensure healthy sales figures while still giving you a comfortable margin. You could have sales revenues in the millions, but if you’re not making anything on each sale, your profits will still be zero. Having an accurate budget is something that many budding entrepreneurs trip up on, because they underestimate the costs involved and often overestimate the profits they’ll make. This isn’t a task that can be completed with guesswork or ballpark estimations. You need to forecast every cost accurately you’ll incur, and be realistic about potential profits to create a budget that will genuinely help you start a business.
Calculating your costs
Some costs will be easier to anticipate than others, for instance, purchase costs for the items you plan to sell, rent and overheads on your premises, and business rates for retail outlets. You should also factor in costs for expenses that you’ll incur that may be less obvious, such as office stationery, health and safety equipment like fire extinguishers, and bathroom supplies. Have you thought about protecting your business information? If you lost data because of system failures, viruses, or fraud, it could cost you your business. Therefore, you need to budget for robust IT system protection, and have a contingency for hiring professional Secure Data Recovery services should the worst happen. You can’t budget for every possible problem, but having a contingency fund will give you a buffer against the kinds of expenses that can’t be predicted.
Once you’ve assessed the viability of your business idea, you may find your original plan doesn’t offer the profits you’re looking for. If that’s the case, rather than give up, go back over your idea and see what you could do to make it more viable, for example starting it as a side business from home. If you have the drive to succeed, there will be a business solution to suit you, you just need to be sure you’re going down a profitable path.
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Disclaimer: This is a collaborative post.