A lot of my friends are suffering the economic standstill due to the coronavirus. Some of them got sacked, or were asked to go voluntarily, are considering to start a new business.
As such, we would love to share our thoughts on how to discover opportunities and the considerations you should bear in mind when considering starting a new business.
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Discover business opportunities
The key is BE OBSERVANT!
You may have tonnes of ideas. Among them, you should immediately question their marketability first.
Is there a market at all? If so, how big the market is? Are there a lot of similar alternatives in the market? Why would people choose you among others in the market?
Let’s take starting an online shop selling phone cases and accessories as an example. The market is huge. Meanwhile, there are thousands of people doing the same. The chances are you will find it difficult to earn something decent unless you have some extraordinary marketing skills.
We believe new business can stem from one of the three ways below. Of course, the below is non-exhaustive. To create or get into an existing market, you must observe, observe and observe.
1. Get a new idea and target a niche market
With the prevalence of the internet and social media, a niche market may not be as small as you would have imagined. People of similar interests or similar circumstances are gathered more easily through various online channels. For example, there are Facebook pages for travellers and specific hashtags for people who like photography.
Of course, you have to be familiar with the niche market that you choose. Often, you will find such a market by reflecting on yourselves, e.g. any specific hobbies or habits, or observing others’ needs, e.g. elder parents or parents with small kids.
If you want to start with an unfamiliar niche market, make sure you do sufficient market research (see below for things you need to consider for a market research).
2. Satisfy the unsatisfied demands
If the market fails to satisfy a group of people, that’s where the demand lies. This usually involves extending a pre-existing product to another market.
For example, people are getting more concerned about their health. Coca Cola launched the sugar-free and no-calorie Diet Coke to cater to these people. However, some of these people are struggling Diet Coke has a flavour profile different from the standard coke. It then launched Coke Zero hoping to satisfy the unmet demand.
Therefore, in a business of selling phone cases and accessories, you still have hope to get a decent profit if you can come up with something unique, which serves the unsatisfied demand!
3. Grow around an ecosystem
If you really cannot think of what to do, you can develop a business around other people’s business. For example, you can have a stationary business or a toy business somewhere close to a school. You can also start a massaging business or simply place some massage chairs in a mall to serve the customers who are tired from their shopping journey.
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Key Considerations for a new business
Before putting in your precious time and capital, you would want to carefully think about the below 4 key aspects – legal, money, market research and getting the right team.
1. Legal Compliance
A good business model must be legal and less prone to legal risks. Legal and compliance costs are sensitive to startups. Less than 1% of startups are willing to afford proper legal advice.
While creativity is key to business survival, you should avoid significant legal risks. It is crucial to do some legal research on any licencing requirements and relevant taxes for your proposed business.
For example, if you are considering running a music cafe, you may need a food and beverage licence. For professional consulting services, you may need licences from the relevant regulatory bodies.
You may make good use of some free legal advice and government’s inquiry hotlines.
Business: Money is critical to all businesses, especially for startups with a thin initial capital. You should consider (i) how much initial capital is needed, (ii) how long your proposed business can run without any profit, (iii) whether you will get any financing and (iv) your estimated timeline to achieve profits.
Once you have launched your products, your revenue trend speaks a lot about how promising your business and business model will likely be.
Have a realistic plan and start with your own money.
Avoid taking loans or sharing equity at the very beginning.
Personal: Prepare for the worst. Running a startup is always risky. It may run at a loss for quite some time.
Do not underestimate the personal expenses you need, e.g. rent and food.
You need to make sure that on top of the capital for business, you have the necessary financial means for a living. On top of this, you will need to leave a cushion for some unforeseen circumstances, such as medical or family expenses.
3. Market Research
You must work very hard for your own business.
Before launching anything new, you must do market research on aspects such as :
- Your proposed trade name
- Direct competition and any alternative
- Market Trend
- How to reach your target customers
- Market Size
Google will certainly be your best friend. You may also ask around your friends – “if ABC, would you XYZ?”
Researching on your trade name may sound silly. If you are hoping for a long term business, don’t skip this. Do a quick trademark search, domain search, company search AND google search. You will need to see whether someone has already used your trade name or if such name is associated with something undesirable.
Ultimately, you will need to find out:
- the size of the market and any room for further development and expansion
- the edge of your products/services, which will form the core of your marketing strategies;
- how to market and promote your products/services
- what risks are inherent to your business
- whether it is good timing to start your business
4. Right Team
Having the right business partners is essential. Needless to say, your partners should have the same beliefs and goals as you.
Ideally, there can be three people in the team, excelling at leadership, creativity and execution respectively and complementing each other. That said, there must be flexibility so that if anyone drops out, the business can still run as usual.
Remember, there is never a problem-free business. The gist lies in whether you foresee you can resolve the issues.
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We’d love to hear from you!
Considering starting a business and want some input?
Talk to us! It’s free and we are always here!
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