Skills to start.
Running your own business and making it a success requires certain skills and personal strengths. Learn about these skills and strengths and how you can develop them.
What it means to be your own boss.
Establishing a business, running it and making it profitable requires passion, courage and persistence. It also requires you to honestly assess your skills and strengths and when you may need to call on outside help.
While there are stories of overnight success, most often running your own business requires hard work and long hours, especially in the early stages. If you can accept this challenge, here are some other important things to be aware of.
You need to be passionate
If you’re not truly passionate about your business and what you have to offer customers, you’ll be easily discouraged by the inevitable hurdles. In addition, you might have a great idea to make money but if it isn’t something you’re truly passionate about, your business will lack this magic ingredient and it will be harder to stand out from the competition.
Some tips for determining if you have the passion:
- Ask yourself what you really enjoy doing and if you are really good at it
- Ask friends and family if they can see you running the type of business you have in mind
- Talk to someone in the industry you intend to enter, preferably a non-competitor from another area
- Attend industry events to get an inside view on what you want to do.
You need to be persistent
It’s unlikely everything will go according to plan when you start your business. You’re likely to encounter challenges, from financial issues to technical hiccups and problems with suppliers or production. You’ll need persistence and patience to manage these challenges.
Some tips for managing setbacks:
Consider seeking a mentor through Business Mentors New Zealand. Alternatively, you may turn to a trusted friend for mentoring.
Ask non-competing businesses who they recommend to build your network of advisers and suppliers.
You’ll face risk and uncertainty
When you go into business, it might take weeks or months before the business can pay you a wage. You might need to dig into your savings or even take out a loan to finance your business operations. Starting your own business always involves risk and uncertainty, so you need to be sure there is demand for what you offer, and that you have enough money to support yourself and your business until you reach your break-even point and start turning a profit.
Some tips on reducing uncertainty:
Work out your break-even point so you know what you need to turn over to cover expenses.
Download Westpac’s cash flow forecast1 and complete it. Be sure to include expenses that can be easily overlooked, such as insurance, and always overestimate your expenses.
Make sure you start with sufficient capital to lower the financial stress.
You’ll have to make sacrifices
You’ll need to put in hard work and long hours while getting your business established. Sacrifices might involve less time with your friends, less time for hobbies, and less time with your family. You may initially be taking home less money and might have to forego holidays or put major household purchases on hold until your business is established.
Some tips on solving sacrifices:
- Make sure your family understands what it will take to get the business established, and keep communicating
- Celebrate every small win in the early stages of your business
- Don’t try to do it all alone – get help and support where you need it.
Getting the necessary skills.
Very few entrepreneurs start out with all the skills they need. The secret is to do an honest appraisal of your current skills and identify the gaps in your knowledge base. You can then either get the training you need, or employ people with the necessary skills.
You’ll need the following skills to run your business:
- Market research skills to understand who your target customers are and to stay on top of market developments, customer preferences, and what your competitors are doing
- Marketing and sales skills to promote your products or services effectively and reach your break-even point as soon as possible
- Money management skills to forecast when you expect your business to break even, understand your financial position, and asses the financial implications of any business decision you make
- People skills to help you manage and motivate your staff and deal with customers
- Negotiating skills to ensure you’re able to strike the best deal when dealing with suppliers or other contracts.
In the longer term, it’s a good idea to get some training in all these areas. For example, if you’re not mathematically minded, aim to develop these skills over time. A basic understanding of financial statements will help you run your business better.
Find out more about Westpac’s series of workshops on managing your money2.
Things you should know.
1 These tools and resources are intended as guides only and are not intended to constitute financial advice.
2 The content of the Managing your money workshop is general in nature and is not intended to constitute financial advice or an offer of any financial products and services by Westpac.
The material on this webpage is provided for information purposes only and is not a recommendation or opinion.
The material on this webpage is does not take your particular financial situation or goal into account. We recommend you seek independent legal, financial and/or tax advice.
Links to other sites are provided for convenience only and Westpac accepts no responsibility for the availability or content of such websites.