Are you wanting to start your own small business?
Introduction
There are many different options to choose from when deciding on an idea for your small business. In this article I will be discussing two different types; service based and product based businesses. These two types vary as they have differing capital investment requirements. Choosing a business that caters for current demand could be better than entering a new market. Whatever idea you decide, it is important you consider the financial ramifications and impact on lifestyle. Starting out as an entrepreneur can be time consuming at costly. Therefore it is important to first establish a plan and process when starting out. I have provided some common business ideas below that could earn a new income stream.
1. Product Based Business
A product based small business sells tangible (physical) products to customers. Generally to optimise marketing these products to customers you would need to display your products. This could be achieved either in store or online via a website. If you are just commencing your journey read the article about designing an e-commerce website. This will provide an insight into creating a platform for you customer to visit and purchase products.
Growing market audience with Social Media
Firstly, growing your business brand can take time and engagement with potential customers. Social media posts featuring your product with live demonstrations can enhance engagement and increase traffic. Over time this can be a strategy to grow an audience for your brand. Furthermore, some challenges start out is creating a following that is engaged with your brand and products. If you are interested in ideas head to the Wage Investor Instagram page. Therefore, partnering with popular brands in your niche can aid in boosting your products market audience and gain greater exposure to new customers.
Products that best meet the needs of customers that are differentiated to their competition are more likely to outperform and increase their sales. For instance, one example of a company that does this well is Apple through the production of the Iphone. Although there are many competitors in the market they have created a product with a loyal following and strong brand recognition. Furthermore, incorporating an eco-system of products through their laptops, iPads and iCloud subscriptions can retain customer loyalty.
A product based business can start out selling one type of product such as:
- Technology products (smart phone accessories)
2. Consumer products (jewellery)
3. Food products (bakery goods)
These ideas may first require an investment in capital either through debt/equity funding or acquiring assets. Building manufacturing and distribution channels would aid in making the production process more efficient and cost effective. A financial plan could aid in allocating and budgeting costs for future cash flow and expenses. Deciding on a product based business would first require research into the market to identify if there is a gap in consumer demand.
2. Service Based Business
A service based business requires skills and expertise in an area that is going to offer value to customers. By solving a problem or offering a standardised subscription services that meets demand a business owner can begin to grow their customer base. Creating a relationship is important so customers can trust the business and the services provided. This can be achieve through gaining positive online reviews and testimonials of the services offered. A service based business generally require less capital investment in start up costs as they rely on the skills/high quality service that the business provides.
Some examples of service based businesses that can be started include:
- Professional services (Accounting, lawyer and engineer)
- Home business (Gardner, plumber and electrician)
- Health Care Business (Doctor, dietician and physiotherapist
3. Starting a small business or hobby
After having gained experience and expertise in my field of study I decided to start providing accounting services to clients. Offering a service of preparing individual tax returns and business bookkeeping services required years of experience in the field learning the processes and procedures. Although starting out does have upfront costs (accounting software, insurance, registration licence) it does not require costly production capital. I have found the learning the systems interesting and have realised the importance of building networks and word of mouth referrals. If you are interested in starting out a business can be done outside of your day job. If you are wanting to build it up slowly you can avoid the need to lose a consistent income. This also mitigates the risk if the business does not work out and you need reevaluate your options.
Summary
Whatever business you choose service or product based, it needs to meet the customer demands. Researching what customers are wanting will aid you in determining if there is a market for the products or services you are offering. Reviewing the competition in the marketplace can provide a benchmark to the services offering and assist with determining if your business will be able to compete in the market. If you are wanting more information about starting a small business read the following article on how to start a new business.
The information in this article is general in nature and not tailored for your unique circumstances. Before making any financial decision it is important to first consult a licensed professional.
