What are the advantages and disadvantages of starting my own business?
Advantages
- Freedom – you have the freedom to choose the business name and location. In the long run you get to choose the hours you put in and you govern the overall nature and quality of your business.
- Control – you have full control over the products and services you want to offer, how much to charge, how to advertise and your method of doing business. You are able to develop operating systems that suit you, and if you want, you can hire and train staff according to your standards.
- Low cost – starting a business from scratch can be less expensive than purchasing an existing business or buying a franchise business.
Disadvantages
- Setting up – establishing your branding, sourcing finance, leasing or buying equipment, establishing relationships with suppliers, advertising campaigns – these can be all be enjoyable, but are also complex, time consuming and may require special expertise.
- Upfront expenses – there are necessary expenses that you’ll need to pay up front, and it may take some time before your business begins to be profitable.
- Risks – as your business is brand new and the concept has yet to be proven, the perceived risk is higher, therefore, securing finance may be more difficult.
Where to go for help setting up?
You’ll find a wealth of information relating to starting and running a small business at these websites. Add them to your list of favourites for quick reference.
Obtaining a business loan
Banks and other lenders offer a variety of loans, so make sure you investigate your options and find a loan that suits the needs of your business.
Think realistically when assessing your financial needs. Consider initial set-up costs. Estimate how long before your business is likely to be self-supporting. You should be able to demonstrate that you will be able to repay the loan, taking into account potential risks such as lower than predicted sales or interest rate increases.
Applying for a loan
If you are starting up a new business and need to apply for a loan, the lender will require the following information from you:
- A description of the products and/or services you intend to provide
- A marketing plan showing how you intend to bring in business
- Evidence of the demand for your products and/or services.
You will also need to provide details of your own qualifications (both business and educational), previous business experience and past achievements.
Making your business stand out!
What is it about your business that sets you apart from your competitors?
Your Unique Selling Proposition (USP) identifies what makes your business unique and what makes it distinct from other businesses of its type. Your USP is your competitive edge; it is the reason people should deal with you rather than someone else.
Here’s an example:
Josie wants to open a hair salon in an inner city suburb where there are already several other well-established salons. Why should people go to Josie’s salon instead of the others?
Josie lists her business strengths as being welcoming, competitively priced, excellent service by stylists with years of experience. However, Josie soon learns that not only do all of the other salons have experienced stylists charging competitive rates, most of them offer beauty services too. Josie knows she needs something unique.
Based on her market research, Josie discovers an untapped niche in the market – she decides to ‘go organic’. Josie sources organic hair products and colour treatments. She even decides to serve organic coffee, tea and chocolates!
Josie’s USP is that her salon is totally organic.
