7 Steps to Business Success

A guide to help you assess whether your business will be a success

Welcome to the Queensland Governments 7 steps to business success.

Starting a business can be both rewarding and challenging. However, poor planning and lack of preparation contribute to many business failures. By following the 7 steps outlined in this guide you will increase your chances of business success.

Will your business let you achieve your goals?

Make a list of all of your goals (business, lifestyle, family, health, social, spiritual and financial). Which goals will your business help you achieve? Identify areas of potential conflict. How can you eliminate or reduce conflict between your goals? What goals are absolute priorities? What goals are you willing to compromise?

What are the 7 steps to business success?

Step 1 - Consider your suitability Step 2 - Consider your idea Step 3 - Consider your market Step 4 - Consider your competition Step 5 - Consider the environment Step 6 - Consider your finances Step 7 - Consider your start-up Attachments and worksheets: Skills checklist Customer profile chart Market actions worksheet Competitor profile Financial figures worksheet Pricing worksheet Locations chart Useful contacts Further support and assistance

Do you have the right skills and knowledge to run a successful business?
Review and assess your skill strengths and weaknesses. Used the attached Skills checklist as a guide. Research the skills and knowledge that other people have in the industry. Make a list of the training or development you may need. Be sure to include managerial and business training if required.

Do you have the motivation, time and energy to operate a business?

Ask family and friends if they support your decision to go into business. Ask their opinion. Do they believe you have the necessary personal qualities to run a business? Think about what motivates you. How will you stay motivated through difficult and busy times? Consider how much time you can realistically devote to the business. Are you in general good health? Long hours and stress can affect your energy and motivation. Do you have someone who will help you stay motivated? Are your family and friends supportive?

Step 1 - consider your suitability

Before starting a business, you must consider your suitability. You need to question if you have the time, skills, knowledge and energy to operate a business.

Establish networks. Talk to people doing similar things to you. Learn from and motivate each other.

suppliers or businesses interstate who are not your direct competitors. Consider observing other similar businesses to determine the level of demand and observe customers to find out the average sale value per customer. If it is a new idea, be sure to conduct market research to determine the level of demand and its feasibility. Contact relevant industry associations to obtain information from experienced and helpful people in your industry. For further information on your industry or for a list of industry associations contact the Business Support Centre on 13 25 23 or visit www.business.qld.gov.au.

Step 2 consider your idea

Once you have considered your suitability, it is time start thinking about your idea. Is it feasible? Will people in interested in what you are offering? What type of business will you have?

Will people be interested in what you are offering?

Seek feedback from a wide range of people. What do you plan to offer? Would they purchase it? Why or why not? Start conducting some market research. Market research will help you assess whether there will be adequate demand for your product or service. Unsure of what market research is or need some assistance in conducting your research? Contact the Business Support Centre on 13 25 23 or visit www.business.qld.gov.au.

Step 3 consider the market

It is important that you understand and indentify the market (your potential customers) that will purchase your products and/or services. Those customers who are most likely to buy your product or service are referred to as your target market. You will also need to determine how you are will attract this target market and what marketing activities will you undertake.

Have you consider a range of business options?

Start thinking about the advantages and disadvantages associated with different options, such as buying a business, franchising or starting from scratch. Contact business brokers in the Yellow Pages (www.yellowpages.com.au) to find out if there are any businesses for sale that may interest you. Visit a newsagent or library for franchise/business opportunity directories and journals. Monitor the businesses for sale section within local newspapers.

What type of people will buy from you and who will you target?
Make a list of the characteristics of the people who will buy your product or service. What will their buying behaviour be? Where are the majority of these people located? Be sure to complete the Customer profit chart attached to this guide. Use demographic information to find out the characteristics and size of your target market in your chosen business location. For more information contact the Business Support Centre on 13 25 23.

Is there enough potential demand for you product or service offering?

Ask people working in this industry to provide an indication of the level of demand. Sometimes people in similar businesses are willing to help, but if not, try talking to

Have you thought about how you will attract your target market?
Have you thought about your marketing strategy?

What marketing tools will you use to reach your target market and draw them to your business? Will your marketing activities give your customers a reason to contact you and buy from you?

Find out what all your competitors provide and for what price. Consider purchasing from your competitors to assess their product/service. How does your competitors staff interact with customers? Can you indentify any special customer service specialties? Compare advertisements and any street signage used by your competitors. How are they marketing themselves? Are there similarities or differences in what they are offering? Complete the Competitor profile chart attached to this guide.

Do you have enough time and money to devote to your marketing activities?
Consider how many people you need to reach to achieve your expected levels of sales. Consider the cost and time needed for each promotional campaign. Complete the Marketing actions worksheet attached to this guide.

Step 4 consider your competition

Conducting research on your competitors is very important. Successful businesses know who their competitors are, what they are doing and how their customers view them. Once you have done this research it is important to identify why customers will buy from you and not your competitors. What will give you the leading edge?

What can your business offer that is better than your competitors?
Consider what features and benefits customers are looking for and what is not currently provided by your competitors. What are your competitors currently offering? How are they delivering it? What can you do better?

Step 5 consider the environment

By having a good understanding of your environment, the industry along with internal and external factors that may have affect you business will enhance your chances of business success.

Have you researched the level of competition for the product/service you will be offering?
Assess the level of competition for your product/service in your chosen business location. Does the level of competition mean that you should consider a few different locations? Are there benefits to being located near your competitors? Use online resources such as Yellow Pages Online to determine the number and type of competitors in and around your potential business location. Visit www.yellowpages.com.au/.

What external factors may have an impact on your business?

Are you able to identify any trends or impacts that could affect your industry? These factors may have a positive or negative outlook. Think about political, global, technological, social and environmental issues. For example, climate change is an important environmental issue. Have you examined how the impacts of climate change could affect your business? Think about other types of risks associated with operating a business. For example, what will be the potential impact of a natural disaster or increased energy costs on your business? What will be the possible flow-on effects? How will your business deal with

What do your competitors offer?

Collect flyers, price lists and any other material from your competitors.

these various types of risks? For more information on risk management and business continuity go to www.business.qld.gov.au. What are the features of your location and how might this impact on your success? The Business Support Centre can provide you with regional profiles, demographics for your location and a range of industry specific information, which will increase your understanding of you business environment. For more information call the Business Support Centre on 13 25 23.

may be this will help you with you cash flow forecast. For more information on benchmarking visit www.business.qld.gov.au or contact the Business Support Centre on 13 25 23.

Can you make enough income to cover your costs and eventually make money?
Complete the Financial figures worksheet attached to this guide. Calculate key figures such as breakeven point, gross profit and net profit. This will help you estimate the level of sales you need to cover costs and make a profit. If you are uncertain of how to calculate these terms, visit an accountant or under take financial training. What level of profitability can you expect? If you decide you will need to approach a financial institute for additional funding you will have to develop a business plan. Contact the Business Support Centre on 13 25 23 or visit www.business.qld.gov.au for further information. Remember, understanding finances is an area where many small business owners come unstuck. You can participate in a webinar or financial workshop in your region. Go to www.business.qld.gov.au or call the Business Support Centre on 13 25 23 for more information.

What internal factors may have an impact on your business?

What will be the strengths and weaknesses of you and your business? How will you use your strengths to your full advantage? What strategies can you put in places to address the weaknesses? Do you require more skills to effectively run your business?

What is the future outlook for your industry?

Having a good understanding of your industry will allow you to indentify potential opportunities and plan for future growth. Is your industry predicted to experience growth or will it decline? How will this impact your business? Contact the Business Support on 13 25 23 or visit www.business.qld.gov.au for more information on market and industry research.

Step 6 consider your finances

Understanding your finances, establishing procedures and ensuring you have adequate start up and operational funds are imperative in ensuring the success of your business.

What will your start up costs be?

Start listing and estimating your establishment costs. It is recommended that you over estimate, rather than underestimate. Think about how you will finance these startup costs. Use financial industry benchmarks to understand what some of your potential costs

advice to help you decide.

What will you charge for your product or service?

Setting the right prices for your products or services with help you maximize profits while maintaining a good relationship with your customers. When you are deciding your price with will need to consider your existing costs, the prices offered by your competitors and your target market. Fill in the Pricing worksheet attached to this guide. For more information on pricing your product or service visit www.business.qld.gov.au.

See a solicitor before buying a business or signing any contracts. The Business Support Centre can provide a full list of relevant licences and regulatory requirements on a local, state and federal level. Contact the Business Support Centre on 13 25 23 or visit www.business.qld.gov.au.

Do you have the necessary resources to get your business started?

What equipment will you need? Will you buy or lease the equipment? What stock do you need and how much? Where will you store your stock and how will you keep track of it? Who will be you supplier/s? They need to be reliable and have competitive prices, do you research. Have you considered the type and cost of insurance? This is very important. Talk to an insurance broker. You may need to employ staff to assist you with operations. Choosing the right start is very important. Visit www.business.qld.gov.au for extensive information on employing staff.

What is the worst case scenario?

Estimate how long you can survive without making any money from your business. What if interest rates rise or fall? What if finance is not available to the extent you need? Develop a household budget to manage your money until the business starts earning income. Get an accountant to help you prepare cash flow forecasts and develop your recordkeeping system. If the business is unsuccessful, will you have the ability to earn income from other sources and repay debts?

Do you have the best location you can afford?

When you are selecting you business location you need to determine where you customers are located, will the location suite their needs and is it convenient to them. Is your chosen location practical and affordable for you to operate your business and does it meet your my needs? It is a good idea to consider a number of potential business locations and assess the advantages and disadvantages of each. Use the Locations chart attached to this guide. Before signing a lease, contract or agreement, make sure you know your rights. More information is available at www.business.qld.gov.au. It is also important that you speak with a solicitor.

Step 7 consider your startup

You need to start thinking about how you will structure your business and what licences and regulatory requirements will be applicable to you. You will also need to think about the potential location of your business as well as the resources you will need to start operating.

Have you considered what legal and regulatory requirements your business may need?
Have you considered what business structure you will use (sole trader, partnership or company)? You may need to get professional

Attachment 1 business skills list

Which of these skills are important in your business and which do you have? Financial skills
Profit planning and budgeting Bookkeeping Purchasing Costing and pricing Payroll Financial forecasting Credit management Cash flow management Cost analysis and control Tax planning

Marketing skills
Written and presentation skills Selling Customer analysis Promotion Graphic design Negotiation Competitor analysis Product development Merchandising Market research Product testing Advertising

Management skills
Coordination and planning Communication Delegation Interpersonal Recruitment Supervision
Business skills checklist 1

Training and development Problem solving Stock control Decision making Leadership Time management

Attachment 2 customer profile chart

Who are they?
Age (e.g. child, teenager, young, middle aged, retired) Family (e.g. size, non traditional, extended) Gender (male, female) Occupation (e.g. labourer, technical, professional) Income level (e.g. lower, middle, high) Education (e.g. primary, secondary, tertiary) Cultural background (e.g. Caucasian, African, Asian)

Applies? Yes/no

My customers

Where are they?

Location (e.g. inner city, suburban, rural, suburbs) Distance (e.g. distance from your business, locality preference) Residence (e.g. low, medium, or high density housing)

Customer characteristics
Personality (e.g. leader, status conscious, outgoing, introvert) Buying behaviour (e.g. comfort, conveniences, economical, pride) Buying patterns (e.g. seasonal, usage rate, frequency of purchase) Lifestyle (e.g. health conscious, family orientated, career orientated, community active) Expectations (e.g. service, quality, risk, influence) Customer profile checklist 1

Attachment 3 marketing actions worksheet

Customer characteristics
Example: gym, males and females, health conscious, mid-high income, all ages, inner city locations

Market segments
Corporate females interested in stress management

Marketing strategy
Brochures distributed in mainly female workplaces with specials for Pilates classes. Advertisement with body building photo in local sports newspaper

Predicted effectiveness
200 brochures distributed with 2 percent conversion rate equals 4 new clients. Readership of 2000 with conversion rate of 1.5 percent equals 30 new clients.

Potential costs
$50.00

Young males interested in body building

$250.00

Marketing actions worksheet 1

Attachment 4 competitor profile

Answer the following questions for each of your competitors

Company name

What is their location?

How would you rank their location and why? (e.g. exposure, traffic flow, access, parking, other businesses) How many customers do they have in a particular time period? (e.g. you could observe the office or store) How many employees do they have?

How effective are their employees at doing their job?

What is their pricing and refund policy?

What customers are they targeting?

How do they advertise or market themselves?

What is their online presence (e.g. website, social media)?

What is their competitive advantage?

Competitor profile 1

Attachment 5 financial figures worksheet

Income
How much income do you desire?

Are you prepared to potentially earn less income in the initial stages of your business? What minimum income do you require?

What financial investment will be required for your business?

How much could you earn by investing this money? (A)

How much could you earn by working for someone else? (B)

Add the amounts in A and B. If the income is greater than what you can realistically expect from your business, are you prepared to forego this additional income to be your own boss with the prospects of more substantial profit/income in future years?

How to estimate sales

Try approaching your relevant Industry Association or other organisation to obtain benchmarking data. Alternatively, contact the Business Support Centre on 13 25 23 or visit www.business.qld.gov.au for more information on benchmarking. Market potential/market share. Find out the turnover for your industry. How many competing businesses are there? Divide the turnover by the number of businesses to work out the market share for each business. This is the sort of turnover you should be aiming for. Observe your competitors. How many customers do they have, how much do they spend? Observe at different times of the day and week. What do you think their daily or weekly turnover would be? Financial figures worksheet 1

Attachment 6 pricing worksheet A

Step 1 what are your competitors charging?
Product/service
1. 2. 3. 4.

Competitor A

Competitor B

Competitor C

Competitor D

Average

Step 2 what is your pricing strategy?

Elasticity pricing: When demand for a product is sensitive to the price (e.g. grocer y items). Skimming pricing: For new products where initial price is set high to attract people who most The higher the price want it and who are the lower your willing to pay (e.g. demand. technology). Penetration pricing: Aims for high sales through a lower price. For products/services that would not attract an initial elite market. Low profit margin. Image pricing: The perceived image of the product outweighs the actual price, such as luxury goods. Discount pricing: This method is aimed at the budget end of the market where consumers are willing to forgo some quality or service for a lower price.

Step 3 a few methods to help you determine your prices

Use a simple mark-up method
How? Take the cost price and add a certain proportion to all the items. Talk to your suppliers, competitors or associations to find an industry norm or standard. When? Useful when you have multiple products at different price points and the costing method is too complex. Remember to adjust the mark-up depending on your strategy. For example, if you are using penetration pricing you would use a lower mark-up than competitors.

Use a costing method

How? Calculate all your fixed overheads. Add this to the cost of sales. When? This is the best method to use to make sure you are maximising your profit, although it can be a more time- consuming and labour intensive method. Remember if you use this method you really need to have excellent record-keeping skills so you are aware of all of your costs.

Use a charge per hour method

How? Refer to the next table for a step by step guide. When? When you are delivering a service rather than a product. Remember It is easy to overestimate the number of hours and days you have available to work.

Pricing worksheet A 1

Attachment 7 pricing worksheet B

Step 4 how to calculate a charge per hour for services
1. Calculate maximum number of hours available 2. Deduct time off A Number of hours per week (e.g. 38) B Number of weeks per year (e.g. 52) AxB Number of hours per year (e.g. 38 x 52 = 1,976) (A x B) CD Total chargeable hours (e.g. 1,976 hrs 240 hrs 320 hrs = 1,416 hrs) E+F Total turnover needed per year (e.g. $32,000 + $35,000 = $67,000 turnover) (E + F)/H Total turnover divided by total chargeable hours (e.g. $67,000/1,416 = $47.31 per hour)

C Public holidays and annual leave (e.g. 30 day x 8 hours = 240 hours)

D Sick Leave and Misc (e.g. 40 days x 8 hrs = 320 hrs)

3. Calculate total turnover required per year

E Estimated Overheads per year (e.g. $32,000 calculate this using your financial figures worksheet)

F What profit would you like to earn per year? (e.g. $35,000) H Total chargeable hours (e.g. 1,416)

4. Calculate charge per hour

Pricing worksheet B 1

Attachment 8 locations chart

Location 1
What is the passing traffic like?

Location 2

Location 3

Location 4

Is it near an intersection? Does it prevent access? Is there ample parking?

What fittings are included and what quality are they? What is the general appearance of the building? How much space is there? Is there adequate space?

Are you located near your clients?

What is the cost?

Locations chart 1

Useful contacts
AusRegistry Pty Ltd Domain name registration 03 9866 3710 or visit www.ausregistry.com.au Australian Copyright Council (ACC) Copyright 02 8815 9777 or visit www.copyright.org.au

Australian Institute of Management Development of management and leadership 1300 882 895 or visit www.aim.com.au/ Australian Made/Australian Grown (Australian Made logo / stickers) Telephone 1800 350 520 or visit www.australianmade.com.au Australian Securities & Investments Commission (ASIC) Company registration and business name searches 1300 300 630 or visit www.asic.gov.au Australian Taxation Office Telephone 13 28 66 or visit www.ato.gov.au Chamber of Commerce and Industry Queensland 07 3842 2244 or visit www.cciq.com.au CPA Australia Accountants 1300 137 322 or visit www.cpaaustralia.com.au Franchise Council of Australia Franchise information 03 9508 0888 or visit www.franchise.org.au GrantsLink Information on Commonwealth grants programmes, with links to state/local government and non government/commercial sites. 1800 026 222 or visit www.grantslink.gov.au GS1 Australia Barcodes 1300 366 033 or visit www.gs1au.org

IP Australia IP Australia is the Australian Government agency responsible for granting rights in patents, trademarks and designs. 1300 651 010 or visit www.ipaustralia.gov.au National Insurance Brokers Association of Australia Need a Broker Service 02 9964 9400 or visit www.needabroker.com.au Office of Fair Trading 13 74 68 or visit www.fairtrading.qld.gov.au Queensland Workplace Rights Ombudsman Independent advice and information on industrial relations and work related matters 1300 737 841 or visit www.workplacerights.qld.gov.au The Australian Institute for Commercialisation (AIC) New product commercialisation and development assistance 1300 364 739 or visit www.ausicom.com Workcover Queensland Workers Compensation Insurance 1300 362 128 or visit www.workcoverqld.com.au
Workplace Health and Safety

1300 369 915 or visit www.deir.qld.gov.au/workplace/index.htm

Further assistance
Business planning
For more information about any of the following tools and services please contact us on 13 25 23.

Easy Plan
The Easy Plan CD template and guide saves you time by helping you write your business plan, calculate your businesss cash flow and forecast potential profits. $16.50 (inc GST)

Think. Plan. Grow.

The interactive Think Plan Grow CD is a complete business planning and monitoring suite which includes sample business plans, a detailed planning guide, financial spreadsheets and a presentation template. $38.50 (inc GST)

PlanSMART Kit
Whether you're starting a business or investigating new opportunities, a PlanSMART kit provides you with essential market, industry and research information that is tailored to your specific business type and location. The information in a PlanSMART kit is crucial to your business planning as it gives you a clear picture of the factors currently affecting the potential success of your business. A PlanSMART kit may help you to identify unexpected opportunities or prevent costly mistakes, both of which will give your business a strong foundation. $44.00 (inc GST)

SmartLicence
SmartLicence provides access to information on local, state and federal government business licensing permits and registrations. The personalised service allows for lodgement, payment and process on the most common licenses and business name registrations.

Government Business Information Service (GOBiS)

GOBiS connects business with local, state and federal government services and programs. Available business support includes workshops and seminars, financial and export assistance, market and industry research and more.

Workshops and seminars

We provide a series of workshops and seminars covering business planning, marketing and financial for both for business intenders and owners.

Webinars
Web-based seminars are an ideal way for you to improve your business skills without having to leave your desk. We provide a range of webinar topics to help you plan for and continually improve your business.

Trade and export

Trade and Investment Queensland (www.export.qld.gov.au) helps Queensland companies earn more export dollars through individualised and targeted services such as workshops, seminars, networking events and mentoring.

Digital channels
The Business and Industry website (www.business.qld.gov.au) hosts over 200 learning guides, diagnostics, tools and resources to assist people, start, run and grow their business. Our social media channels deliver updates; provide links to useful information and assistance and broadcasts informative case study videos to the business community. For more information visit: https://www.facebook.com/businessqldgov http://twitter.com/businessqldgov http://www.youtube.com/BusinessQldGov