not only your own skills and expertise, but also whether you have the timing right: The right timing for the business idea, the right timing for you and your family, and the right timing for the business environment.
Timing it right for your idea
An experienced entrepreneur once said to me: ‘If real estate is all about position, position, position, then business is all about timing, timing, timing.’ He’s right, of course. If you were selling fondue sets in the 1970s, chances are your business would be successful. Try to sell the same fondue sets for a living these days, and it would be slim pickings indeed (although my mother does have very fond memories of cheese and chocolate fondue dinner parties).
If you’re not sure whether now’s the right time to start your business, consider the following:
Fickle fashions: Humans are capricious creatures and what’s hot today may be ice-cold tomorrow. Whether the latest craze is kids going nuts about a Disney action doll or adults getting worked up about a big sporting event, make sure you’re not the one who suffers when everyone gets bored and tired. Try to jump on the bandwagon near the beginning or during the build-up — don’t leap in at the peak.
Industry trends: The difference between a trend and a craze may seem hard to pick at first, but the difference is both real and important. Be aware of trends in your industry and capitalise on opportunities. For example, the long-term and growing interest in low-carbon and energy-efficient building supplies is a positive trend that indicates a whole host of business opportunities.
Lead times: If you’ve got a long lead time for your project, research the project well. I remember a client who decided to build storage units in a busy country town. The demand seemed guaranteed, because there weren’t any at that time. Three years later (after prolonged development applications through council and a $350,000 construction), the units were ready. The only snag was two other developers opened units that same year, creating a glut of supply and fierce price wars.
Bleeding edge or cutting edge? You may love being leader of the pack, but creating a product or service that customers aren’t ready for yet is pointless.
Seasonal variations: If you’re planning a business that is highly seasonal, factor this aspect carefully into your timing when making your business plan. Give yourself time to plan carefully for the peak season so you can take full advantage of that period.
Timing it right for you
Of course, good timing is not just a question of whether the outside world is ready and eager for what you have to offer. Good timing is also about how ready you are, personally. Consider the following:
Experience: For example, if you’re looking at buying a nursery, do you have horticulture training as well as hands-on retail experience? If you’re considering going freelance as a consultant, do you have enough consulting experience behind you? In Chapter 3, I explore how you might compensate for a lack of experience, and why buying an existing business or purchasing a franchise may be preferable to starting a business from scratch.
Planning: I recommend you don’t even consider starting a new business without first drawing up a business plan. In fact, planning for your business is so important that I dedicate Chapters 4 to 7 to this very topic.
Capital: Don’t start a business without enough capital behind you. (I talk lots more about how much money is enough in Chapter 15.) Starting a business with insufficient capital is like competing in a marathon when you didn’t sleep the week before.
Age, health and stamina: Age can be a factor at both ends of the spectrum. Most 18 year olds are unlikely to have enough experience to cope with running their own business. On the other hand, a 65 year old may be short on motivation, ambition and energy, especially for new ventures requiring long hours and huge input.
Your family life: Don’t start a new venture without consulting your family and enlisting their support. The backing of your partner is vital during this time. (Resigning from your regular job to become a self-employed mural painter the week before your partner is due to deliver twins isn’t likely to go down well.)
Timing it right for the economy
No business is an island but, rather, functions as an organic part of the world around it. Imagine owning a fantastic, go-ahead cafe in the Pilbara region of Western Australia. However cleverly managed, this café is at the mercy of whether local mines expand or shut down, whether the economy is booming or in recession and, further still, world commodity prices. Be aware of the following economic influences:
Industry-specific events: Be alert for changes in your industry that may affect the viability of your business, such as additional licensing requirements, new government regulations or major shifts in available technology. For example, with the changes in financial planning regulations, many accountants are now restricted in the types of advice they can supply to clients.
Tax or government policy reform: Many a good business has been sent to the dogs because of tax reform. Think of a political football such as the solar industry, which has been subject to major government funding changes every year or so for the last 15 years in Australia. Keep your ear to the ground and listen out for these changes within your industry network and via the media, before they happen.
Interest rates and currency exchange: Some businesses are more affected by interest rate and currency exchange fluctuations than others. Importing, exporting, construction and real estate are just some of the businesses that can be affected, as well as any business with large borrowings. If you’re likely to be affected by interest rate or currency exchange fluctuations, look carefully at economic indicators and plan accordingly.
Recessions: Even the most successful business can sometimes have a bad year, or a couple of bad years, especially in times of recession. Such businesses rely on profits built up over previous years to see them through. However, if you start a new business in the middle of a recession, ask yourself whether you’re going to be able to finance it until the good times arrive.
Just as you wouldn’t expect to drive a car without ever having lessons, I recommend that you don’t plunge into a new business venture without
