Heather Smith is a sought-after small business expert who provides education, training and
support to businesses across Australia, and helps them maximise their productivity and
profitability. Heather is a popular speaker and media commentator on all things small business.

For further information and bonus resources, visit www.HeatherSmithSmallBusiness.com.

Learn Small Business Startup in 7 Days

By Heather Smith

John Wiley & Sons

Copyright © 2013 John Wiley & Sons, Ltd
All rights reserved.
ISBN: 978-0-7303-7823-5

Contents

About the author…………………………………………………..ixAcknowledgements…………………………………………………..xiIntroduction………………………………………………………xiiiDay 1: Are you ready to start a business?…………………………….1Day 2: Establishing your business……………………………………29Day 3: Getting professional advice…………………………………..55Day 4: Marketing…………………………………………………..79Day 5: Finances……………………………………………………105Day 6: People power………………………………………………..133Day 7: Launching your business………………………………………157Appendix A: Business plan template…………………………………..193Appendix B: Business plan for Mulrenan Gardeners………………………207Appendix C: Resources………………………………………………227Appendix D: Glossary……………………………………………….233Index…………………………………………………………….239

CHAPTER 1

Day 1Are you ready to start a business?

Key areas we will cover on day 1:

* defining `small business’

* setting goals for a business

* managing a work-life balance

* choosing a business idea

* undertaking market research

* understanding the competition and business environment avoiding the pitfalls of starting a business.

What is a small business?

How do you define a small business? Interestingly, there seemsto be no universal definition. Various government authoritieshave suggested definitions that centre around ownership,turnover and assets. I think it comes down to simply the numberof people employed within the business. Yes—just this one,simple measurement. I think one to four people represents amicrobusiness, and five to 20 represents a small business. Intoday’s internet age, multimillion-dollar businesses can be runby a couple from their garage. It seems odd to suggest they areanything other than a microbusiness.

Goals for running a business

Have you determined what your personal goals are for running abusiness? What are your objectives for running a business? Whatare you hoping to achieve? Have you set yourself a time frame?

A common business methodology for formulating goals is toapply the SMART goal framework (first mentioned by GeorgeT. Doran in Management Review, November 1981): specific,measurable, attainable, relevant and timely. The SMARTcriterion is used to formulate a goal with substance. So, ratherthan suggesting your goal is:

`I want to start a business and make lots of money’you would say:

`Within six months I want to start a home-based business thatwill sell Australian-made body lotions all over the world andgenerate a regular income of $4000 per month so that I willhave more time to spend with my family’.

The latter goal can be broken down and matched with theSMART goal framework:

* Specific. The specific goal is to `start a home-based businessthat will sell Australian-made body lotions all over theworld’, indicating what the goal setter wants to achieve.

* Measurable. The measurable goal is to achieve a dollarfigure income per month, which in this case is to `generatea regular income of $4000 per month’.

* Attainable. With the right resources it seems like anachievable and realistic goal. If the time frame had beenshorter—say, six weeks—or if the regular income hadbeen higher—for example, $10000—the goal, whilepotentially achievable, would seem unattainable.

* Relevant. `More time to spend with my family’ givessome meaning and purpose to the goal. Essentiallythe goal setter hopes the business will not take up toomuch time.

* Timely. The timely goal is `within six months’, indicatingby when the goal setter hopes to achieve the goal.

What are your goals for starting a business? You may see agap in the market and believe you could start a business toaddress that need. You may have a hobby and want to see if ithas commercial potential. You may want to start a business toget away from something. Maybe you are simply fed up withlaughing at your boss’s jokes, corporate culture, or working ina business that operates inefficiently and you think you can doit better yourself.

If you are fed up with reporting to a boss and want to start abusiness so you no longer have to report to anyone, think again.A business owner reports to customers, to the bank, to the taxoffice and other government departments—to anyone with avested interest in the business. There is a line of people you willhave to answer to. Once you are running your own business,you may find that you actually have more appreciation for thejob that your boss did. Running a business has many rewards,but it is not always the easy option.

Individuals have various reasons for starting a business. It maybe to make money or to create a work-life balance around theirfamily. An inventor may see it as a way of bringing an innovativeproduct to the market. You may have been made unemployed,and due to a lack of suitable jobs, may see it as a way of creatinga job for yourself. You may see it as a way of helping people andsharing knowledge efficiently. You may be frustrated with thecurrent personal taxation system and want to take advantageof the tax benefits of running a business. Are your reasons forstarting a business valid?

Are you suited to running a business?

You need self-motivation, determination, drive, resilience andknowledge to run a business. Once you have started a business,you may find the business environment is not as you predictedit to be, and you may need to exploit different opportunities.Your goals may change and evolve, but you need to start withgoals and plans.

On day 2 we will start developing a business plan. Understandingyour business goals will assist you in formulating a solid businessplan. You will also need to make decisions about everything todo with your business. Personally I find that I am constantlyfaced with working through so many decisions in my businessthat when it comes to personal decisions I am totally spent!I don’t care if you give me tea, coffee, macchiato or a skinnylatte—as long as it’s hot, I’m okay with it!

Are you suited to starting and running a business? Will youstay focused and motivated? Are you decisive? Are you facedwith trepidation or excitement at the prospect of running yourown business?

Part of the process of contemplating starting a business mustinvolve assessing whether you and your personality traits aresuited to running a business. You may have a great productand a captive market, but the long-term success of the businesswill depend on your ability to launch, manage and growthe business.

I once trained a female business owner in the basics of MYOBaccounting software. Her business quickly developed into anaward-winning, nationally successful business. While she didnot spend time entering transactional data for her business,the MYOB training helped her source financial informationwithin the MYOB accounting software and she used theinformation to assist her in making informed decisions.Would you benefit from additional training and knowledgebefore starting your business?

Do you want to be the boss? Are you comfortable that you willneed to make a lot of decisions and be responsible for thosedecisions? Certainly you may employ staff and delegate rolesand decisions to them, but ultimately the responsibility andrisk remains with you. You may reap the rewards, but you mayalso lose your investment capital if the business does not go asexpected. Running a business can be stressful. Do you want theresponsibility and the stress that comes with it?

Do you have the time commitment to run a business? Speak toany successful business owner and they will tell you they spenda lot of time in their business. A business does not just stop at5 pm on a Friday afternoon. Businesses are not predictable.Staff members may call in sick at short notice, and suddenlyyou find yourself working yet another shift in the business,rather than leading the business.

Are you prepared to give up evenings, weekends and holidaysfor your business? Are the people around you prepared for this?Do you have the energy for this?

Are you focused and self-disciplined and do you have a strongbelief in yourself? Can you remain motivated to run your ownbusiness? Can you stay focused on one project, or do you easilyget distracted and develop new passions every week? Do youthink you have the commitment required to launch a business?Do you have a belief in yourself that will carry you through thedifficult periods and help you make the hard decisions? I have atalented and hard-working friend who works long hours in theretail industry. She has talked about starting her own business foryears, but has never taken the leap of faith. Rather than investingin her own development and taking charge of her life, she spendsher time doing overtime for an unappreciative boss about whomshe complains all the time. Her job totally depresses her. However,she has a mortgage and is worried about how she will pay it offin the long term if she leaves the security of employment. I don’tknow if starting her own business will turn her life around, but Ihate seeing her so depressed and lacking belief in herself.

Do you have the knowledge, experience, industry know-howand skills to run a business? When people invest in your businessor do business with you, they will be keen to know the priorexperience you are bringing to the venture. A small businessowner needs to wear many different hats and coordinate manydifferent priorities while juggling a work-life balance. Runninga business full time involves passion, 24/7 dedication and ahuge commitment.

Don’t get me wrong, starting a small business has many benefits,but there are always aspects that you may not like or that you mayhave little understanding of. Yet the responsibility for things likehealth and safety issues, chasing debts, deciding on marketingstrategies, managing staffing rosters, choosing attractive coloursfor logos, and dealing with unreasonable customers fall squarelyon your shoulders. These sorts of issues combined with longworking hours and the isolation of being in charge must beconsidered. Can you cope with that responsibility? Do youknow how to deal with all aspects of the business?

A local carpenter was working with a building companywhile planning to start his own business. He analysed wherehis experience gaps were, and undertook evening studies tocomplete his Building Services Authority licence, which wasnecessary for his own business start-up. He also arranged forhis wife to undertake MYOB accounting software training soshe could do the books for the business. When the carpentereventually started his own business he would bring to thebusiness relevant skills, experience and certifications.

As you read through this book you may identify areas thatyou need to spend more time understanding. Of course, youdon’t need to know every aspect of the operations. There areconsultants and qualified staff available to shoulder some areas,and there is a vast wealth of knowledge available for free onlineat the ‘Google University’. If you launch an airline no-oneexpects you to fly the planes.

Before you start a business you should assess whether thereare gaps in your knowledge. Would you benefit from spendingsome time learning about a certain area? Can you develop yourknowledge through a business course or work experience,either in your current role or in a new contract position or evena voluntary position?

Work-life balance

Business commitment can take many shapes and forms, andI don’t want to scare you off with thoughts of never having aholiday again! You will, however, have to become very skilledat managing your time productively. There are only 24 hoursin a day, and try as you may, you cannot change that. Yourwork, your health, your family and your life rely on your abilityto be productive.

You only need to look at BRW‘s annual rich lists to see that thereare some very unhealthy and overweight successful businesspeople—over the long term this is not desirable. So thinkabout how can you integrate an acceptable work-life balanceinto your business from the outset.

Clearly understanding the goals of your business and whatyou want to achieve with your business will assist in planningthe structure of your daily business life. You may want tostart a business on the side, or a home-based business, forsome extra income simply so you can have a flexible lifestylewhile generating some income. There are a growing numberof mumpreneurs, dadpreneurs and greypreneurs whorun small, successful businesses around family or retirementcommitments. They may opt to forsake growing the businessand employing staff, and the inevitable stress, by establishinga small, home-based business, working during school hours orworking when the bowls tournaments are not on!

On the other hand, you may be ready to launch an empire andlive and breathe your business 80 hours a week.

You need to establish daily exercise and healthy eating routinesand incorporate them into your day. Can you ride to theworkplace or swap business lunches for meetings on the squashcourt? I sign up for charity fun runs, get involved in communityevents, and publicise what I am doing through social mediaand my newsletter, combining my efforts with promoting mybusiness. You will need to establish workplace boundaries anda planned daily schedule.

Where will your business be located? If your business starts athome, do you have dedicated space and dedicated time whenthe family will not disturb you? If the location of your businessis outside of the home, how long does it take to get to yourbusiness location? Are you using your travel time productively?Would you benefit from investing in a chauffeur and a laptopfor long trips?

My own business started on the kitchen table while childrenwatched TV in the lounge room. Once I was more established,I took over a dedicated room in the house, and my turnoverseemed to take a significant leap with this move! Most of thework I now do is in the clouds (internet based) and I operateas a digital nomad. I can work from anywhere I can connect tothe internet.

Another person I know works in the import/export business.Initially they started the business at home. This was good forthe cash flow while the business established itself. However,more and more parcels were being sent to the house untileventually the front foyer was filled with boxes and you hadto jump over them every time you visited. The importer/exporter looked around for suitable offices and eventuallyfound another import/export business conveniently locatedclose to the airport that could rent them a large room. This wasa great location for the growing business as the owners wereable to undertake their business while receiving goods into thewarehouse, enabling them to separate their business from theirwork life. If the business grows further one day they may lookat expanding their office facilities.

For your own sanity you need to maintain some structure toyour day. When do you work best? What do you need to keepyour business mojo in top form? Perhaps driving your kids toschool, or a boxing session two afternoons a week clears yourhead and gets you in the mood for work. Current thoughtsaround productivity are that multitasking is a myth and less ismore. To be effective, understand when you are most productiveand target those hours of the day by removing all distractionsand focusing on work.

As a mother juggling school kids, I would get up early and workfor an hour before they woke up, then get them ready and takethem to school, before returning to do a solid five hours’ workbefore pick-up time. After dinner I would settle down to my thirdsession of work from 8 pm until late. I was working long hours,and had no ‘me’ time, which was unhealthy and eventually Irealised it was also unproductive. I now avoid working late,ensure I get at least seven hours of sleep, and when I do get upearly I arrange to go for a jog with my dog Charlie and a friend.

If you are suited to running a business and you launch abusiness suited to you, you will not have to wrestle with awork-life balance. You will simply be living.

Finding a product or service to sell

What products or services will your business sell? If you don’tknow what business you want to start, but have a burning desireto start something, there are a number of avenues you can lookto for inspiration. I suggest you get yourself a blank book fromthe local stationery store and write in it anything that interestsyou: words, pictures, drawings, stories, cut-outs—anything atall. Over time you may see a pattern of what you are passionateabout, and from that realisation consider whether you can turnyour passion into profit.
(Continues…)Excerpted from Learn Small Business Startup in 7 Days by Heather Smith. Copyright © 2013 John Wiley & Sons, Ltd. Excerpted by permission of John Wiley & Sons.
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