Starting Your Own Business - The Business Model

Financial Idea Gathering

To this point your should have a general concept about how your business may be structured, and it's time to investigate the financials.

You need to have a reasonable guide to how much the product or service will cost to deliver in it's entirety. The most basic steps involve costing the products from wholesalers. Research each of your ideas, and as you do investigate the cost of supplying the products or services. The wholesale pricing may surprise you.

Remember that just because you wouldn't typically be placing orders for tens of thousands of dollars worth of their goods, doesn't mean that they wont provide you with the product at a price you can make some serious money. It's in the wholesalers best interests to have businesses selling their products, regardless of whether you're selling 1 a week or 500 per week.

Generally there will be greater discounts for bulk orders, so consider these options later when you are a little more established, but for now price a relatively conservative amount.

You should also price the following depending on your proposed business(es).

• Shop rental
• Website Creation
• Delivery Costs and Times for clients
• Delivery Costs and Times from wholesalers

Customer Idea Gathering

When assessing how you will get your customers is obviously essential, and is highly dependent on the product itself. Typically you should look at how you became interested in offering the product originally as inspiration.

As one example, if your product was a technical one such as retailing home theatre components you should evaluate:

• Where do you go when considering your own electronic purchases? If the answer is a magazine or technical web sites, you may look towards direct advertising in that publication. If you are more likely to go to a product forum online, or speak to a group of friends about their recommendations, then taking a more active role in that community which could build you a reputation that would spur sales. Because of your first hand experience with the purchase cycle used you should find it easier to assess for the potential customer levels you will experience.
• Where would your audience most consider? People with different experience levels purchasing certain products tend to shop at different places. While a less experienced shopper may go to a major department store which perhaps offers new buyers more assurity and assistance in selecting their services, while a more experienced purchaser would look for the products online or at smaller specialty shops with lower prices.

Establishing a Legal Small Business

This step is actually really easy, but can be really intimidating when done for the first time. You are actually taking out some insurance against the tax department or a consumer bureau shutting you down, and are protecting yourself against another business registering your business name after you are already operating under it.

While I only have first hand experience in getting things legal for an Australian small business, the practices are very similar internationally as well. You will need to register a business name that you will be operating under, and become GST compliant if appropriate in your country. In my case a business name was around $80, and GST compliance (which in Australia comes with an ABN) was free to register.

Getting The Word Out Initially

Until you business starts to generate word-of-mouth recommendations (which are easily the best advertising), use your own friend and associate networks to get the ball rolling.

In it's most basic, this involves passing information about what you're doing to people you know, and listening to them about what experiences they have with your product and who they interact with about it. Take the initiative to ask these people if they mind you contacting people in their network of friends. Even if they are not potential clients, as long as they have the knowledge of you and your business you're on the right path.

Passing your business card and contact information can produce surprising results. I love phone calls out of the blue from people I've never met wanting to contract me for a job because they have spoken to someone who has ended up with my card. Viral marketing is big. Very big.

Spreading The Word

Take a loss on your potential earnings with some jobs. This is a huge gut instinct call, but the networking and future revenue possibilities it brings is significant.

Note that I am not saying take a loss on the job as a whole, just your potential earnings. Just because you could charge for every minor "extra" on top of a client's order doesn't mean you should. If, and only if, they have been a pleasure to work with and they have the potential contacts for future work or further work themselves, then throw in an extra for free.

You should still be making enough to provide your product and continue to do so as your full time job as part of your business, so the extra should only be a minor upgrade on their expectations, but it is the thought that counts. One example is shipping for your product if that's appropriate. If shipping was discounted or free for your customers who have built good business relationships with, you give them the bonus of being "in the group" of special clientele.

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