Believe it or not, getting from the point where you are developing a business idea to actually opening the doors is a process with 10 clearly defined steps!
The benefits you get from completely each of the steps outlined below will be directly proportionate to the amount of time and effort you put into completing each of them.
If you are truly serious about creating and new online home business, it is important that you take the time to plan your business properly.
A small online (home) business can be inexpensive to start if you plan on doing a lot of the development work yourself and most people discount the investment if a majority of that investment is time. But think about just think about it for a moment.
How much is your time worth?
Let's say you spend ten hours a week working on your new online business. Not a huge investment in time you might say, I can afford to lose that if the business doesn't work. But what if you had taken that time and invested it in something else?
What about a second job that paid $20.00 an hour? No related expenses, so in a week you would earn $200.00 before tax, or $9,600.00 a year (assuming a 48 week year - 4 weeks unpaid time off - assuming you are casual...).
You don't spend the time to plan your online business properly and fire ahead building your online site or your store. You get to the end of your first year in business and you are still not breaking even and it looks like it never will!
So, do you still think that kind of investment of your time (ten hours a week for 48 weeks) would be a good investment?
So maybe instead, you invest 10 hours a week for the first three to six months on planning your business. And only then do you start building your business.
You hold back until you know what you need to build to make money with your online business. At the end of the full 48 weeks, you might still not be breaking even, but you can see from the analytics you have installed on your site that your traffic is increasing month by month and your visitors are actively engaging with your site.
Because you took the time to work out what they needed, how you would provide it to them and make some money by doing that!
Don't skimp on these steps when you are starting a new business. The future viability of your online home business literally depends on it...
A 10 Step Process for Starting a New Business
1. Generate a small business idea or two
What are your favourite online business ideas? Some people, when they get bitten by the entrepreneurial bug and are starting a new business, know exactly what they want to do. Many, many others though, struggle to pin down their choices, they just know that they want to own their own small business.
Do you know what is your business going to be? The first thing you should do when you are working out which online business ideas appeal to you is to do a little bit of self-analysis. Get some paper and a pen and write down everything you love doing.
2. Develop a business model based on your idea
Once you have generated some ideas for your new business, the next step in starting a new business is developing a business model. Basically you need to use those ideas you generated in the previous step to define an online business model for each of your business ideas.
Only then can you do the analysis and compare each model to determine which one will result in the most viable business.
Simply put, online business models describe what problem a business intends to solve or the value that will be provided for customers and how it will do so profitably.
In the first instance, a business model is a clear concise statement of what your business intends to do. But honestly, it is much more than that.
3. Investigate the Market that you intend to operate in
Conducting small business market research is one of those must do tasks that all would-be entrepreneurs undertake to determine the feasibility of their business model.
Conducting small business market research involves looking at your customer base.You need to know about their behaviours, wants and needs and you need to look at the industry to see how your future competitors are currently serving the market.
Your market research will look at the conditions in the market (and the wider economy), and attempt to forecast future trends and identifies how your new business might fit within the market.
4. Analyse your strengths, weaknesses, opportunities and threats (SWOT Analysis)
SWOT Analysis involves gathering information on four areas of interest about your business (or your proposed business model) and the environment in which you are or plan to operate when you are starting a new business.
Two of the areas are internal to the business (strengths and weaknesses) and two are external (opportunities and threats).
By using a SWOT Analysis Matrix and assigning numerical values to each factor identified in your analysis, you can compare and evaluate multiple models to determine which one is the most promising.
5. Determine the profit potential of your business model
One key element of your business model to evaluate is the startup profit
potential. Can your business model earn you the profit you require or will it
end up being a money pit?
An online home business is likely to have a lower start-up cost that a brick and mortar business, but you still need to consider the profit potential of your business model during the planning phase. How will your online business generate income - which type of online business are you planning - and what will your costs be?
6. Develop your business identity
When you talk about a business identity, people often assume that you mean your branding. They talk about logos, the colour palette you use on your promotion materials or you website and the fonts you use. But even branding is so much more than just the styles you adopt. And developing your business identity is even bigger.
Your business identity is what the public sees when they walk past your store or scan the pages on your website. It is the perceptions they build about how you do business every time they interact with you or one of your employees. It is how they feel when they do business with you and it is at the core of what or who your business is. It is the 'personality' that you create for your business and share with the public either consciously or unconsciously.
If you do not spend time defining your identity and aligning your business practices with your identity and make sure that everyone who works in your business is one board, you will present a disjointed or conflicted view of your business to the people that you want to work with.
You can tell people who you are until you are blue in the face, but they are not going to believe you until you walk the talk.
7. Select a legal structure
When you are setting up an online home business, one thing you will need to consider is which business structure will be the most suitable for you. In Australia, there are four main legal structures that you could choose from, sole trader, partnership, company (limited or unlimited liability) and trusts.
Quite often this is a step that is skipped by people starting a business at home, they either don't know that they need to address the legal issues or they don't think that they need to. Some put it off until it feels more like a "real business". The problem is though, that if you leave it until later (for what ever reason) you may end up with a complicated mess to clean up and quite possibly being missing out on some tax advantages.
A few of the things you need to consider include:
It is very important that you discuss your options with your accounting, tax, and legal advisers before you make your final decisions!
8. Research your options for business infrastructure
The infrastructure that you need will vary depending on the type of online business you are planning to start. For some, all you will need initially is a domain name and hosting (either free or paid - I would advise to go paid btw - that way you have more control over your business), for others you will need much more in the way of infrastructure, possibly including:
9. Develop a business plan
This is one of the most important steps to starting a small business! No matter who you go to for advice, they will recommend that you put a lot of time and effort into your business plan but unless they need external financing (in my experience at least) very few first time entrepreneurs do.
Writing a business plan is hard work. Much of the content will need to be researched and tested and the end result is often far from exciting, so why would you bother?
Believe it or not (look out - cliche coming):
it is the journey and not the destination that is important when you are talking about business planning!
The work you put into researching your business idea to prepare your business plan will provide you with valuable information about how your business will operate.
10. Seek funding for your new business (if necessary...)
If you are determined to start your own business and you have successfully negotiated the previous steps to starting a small business your main concern at this point will be obtaining small business financing. But before you begin the process of sourcing your financing, you are going to need to work out how much money you are going to need!
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