What to Think Before You Jump When Starting A New Business

The old proverb: think before you jump is one that is quite an apt and insightful when it comes to starting your own business. A frightening tale of woe that should be told to most new start up owners is that more than half of start-ups fail and have close soon after they get going.

The main reason for this is that people who want to start up a business, sometimes are not fully aware of what it takes to run the business or do not consider all the external factors that have to be calculated to see if a product or service is viable or not. This is especially true for people trying to sell a new or unique product or item. Friends and family may find it really cool and ask you to start a business selling some items but if the real-world people do not like it, the business is sure to fail.

Calculating the Actual Cost of Operations

One very real and very common problem that people face with new businesses is that they do not calculate the actual cost of the product or service. This means that you are charging less than what you should, and you are actually losing your own money while the business shows a profit. This is because when starting a personal business, we put in a lot of our own money.

However, we forget to include that in the cost calculation. This is why it is important to take a proper look at the product and calculate all costs. For example, use an Australian GST calculator to make sure you capture the tax as part of the cost of the item included in the final sales price. Capturing these costs properly can then help you properly estimate the expense of your business and make sure that the profit margins you set, actually turn out a profit.

Identifying All Your Stakeholders

Another key area that people do not often properly look into is the stakeholders in the business. This is not just the customers (though they are probably one of the most important) but other stakeholders like suppliers, investors and competitors. It is important to understand and develop a proper relationship with these parties so that you are aware of how each one will play a role in determining the success of failure of your business.

For example, if you are selling some unique product, it is important to make sure that you have proper wholesale suppliers. Most often the mistake done is that people look at a normal retailer and get their supplies from a retailer at retail prices. This means that your cost of manufacture is far higher than what it needs to be. This will put added burden on your product as you will have to keep a profit margin that is competitive and one that actually does turn out a profit for you in the long run.

If you keep these two critical components in your mind at all times when starting a new business, there is a good chance that the business can go on to be an amazing success and not another statistic of failed businesses.

 

Tags:

 

More Posts in Business Plan

 
 

Share this Post



 
 
 
 

Leave a Reply

Your email address will not be published. Required fields are marked *