Monthly Archives: July 2015

Do your homework when calculating start up costs

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Over the past few weeks we have posted a few tips to consider when starting your own business.  Today we talk about calculating start up costs, and the importance of not being caught short before your opening day.

Start up costs refer to the total cash amount needed to get your business up and running.

How to calculate your costs

List everything that you will need to pay for up front prior to launching your business. These can be separated into the following categories:

Capital costs

Depending on the type and size of business, the capital costs could be either substantial or fairly minimal. Capital costs include things like lease of premises, fixtures, fittings and furniture, equipment and vehicles.

Establishment fees

These expenses are for things like legal fees, registrations and permits, website or logo design fees; things necessary to establish your business.

Initial operating expenses

It may be some time before your business generates a substantial profit. So it’s important to have cash available for operating expenses in the meantime. As a guide, calculate your operating expenses for one month, then set aside enough to cover you for six months.

Personal living expenses

In addition to setting aside enough to cover your initial operating expenses, it is recommended that you set aside enough cash to take care of your normal living expenses for those initial six months.

Estimating the costs

It is better to overestimate than underestimate your start-up costs, but try to be as accurate as possible.

Discuss prices with your suppliers, contact the relevant government departments about any necessary registration fees, and speak to property managers about leasing costs.

You may find it helpful to speak to other business owners as quite possibly they’ve encountered some hidden expenses, especially in the early stages. So if possible, allocate an additional 10% of your budget to ‘miscellaneous’ expenses – just to be on the safe side!

Once you have a good idea of what your start-up costs are likely to be, you’ll be in a good position to decide on the most suitable way to finance your business.

YOUR ACTION PLAN

  • Calculate your initial capital costs.
  • Calculate any professional or regulatory expenses you need to pay up front.
  • Set aside enough cash to cover your operating and living expenses for the first six months of your new business.

Contact the McMahon Osborne Group team today on (03) 9744 7144 for assistance with your Action Plan!

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Market Research will point you in the right direction

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Why spend time, effort and money setting up your business, only to find an identical product is already being sold elsewhere, or that customers simply don’t want to pay for the service you’re offering?

Unfortunately, asking your mates if they think you have a good idea for a business probably won’t be enough! A more honest and reliable response to your idea will likely come from a number of people in your target market, or from a cross-section of the public.

Simple market research ideas

Information can be obtained through written questionnaires, face-to-face surveys, online surveys and focus groups.

People often look at the first few questions on a questionnaire before deciding whether or not to complete it. To encourage people to complete your questionnaire, make the first few questions the most engaging. Questions should be simple and understandable, and at the same time meaningful and interesting. Any technical terms should be clearly explained. Avoid ‘biased’ or ‘leading’ questions – be careful not to lead the respondent into giving the answer we would like to receive! If your questionnaire is simple, concise and quick to complete, people will be more likely to complete it.

If conducting face-to-face surveys with members of the public, approach people who appear unhurried and relaxed. Be friendly and positive, even if people are unwilling to participate. Again, ask questions that are easy to answer and always thank respondents for their time.

Focus groups are helpful to explore people’s attitudes, behaviour, views and concerns on new products or marketing ideas.

They are usually run for a fee by professional marketing companies on behalf of their client, the business owner.

The focus group consists of small group of volunteers who meet in a conference room together with a trained moderator. It is the moderator’s job to lead the discussion, ask questions, listen to the responses and provide results and feedback to their client. One disadvantage is that the focus group is small and may not be representative of public opinion in general.

Results of your research

The results of your market research, whichever method you use, should give you a good indication of:

• The demand for your product or service
• Customer buying behaviour and attitudes
• Customer awareness of a product or service.

This knowledge will help you determine how best to promote your product or service.

YOUR ACTION PLAN

Decide which method would produce the most helpful results for your business:

Written questionnaire?
Face-to-face survey?
Focus group?

Contact The McMahon Osborne Team today on (03) 9744 7144 for assistance with your action plan.

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Win our Winter Wine Package

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Have you downloaded our App?  McMahon Osborne Group want to keep you up to date with the latest in financial news and events.  Simply download our App and have important information at the touch of a button.

WIN-  For your chance to WIN our Winter Wine Package, valued at over $200, simply click on the links below and download the McMahon Osborne Group App, then complete the entry form under the Promotions Tab.

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Competition closes Monday 31st August, 2015.

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Thinking about starting a new business?

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Are you thinking about starting a new business?  Setting up your own business is an exciting prospect and getting it right from the beginning is vital for success. Before you launch into the process of setting up your own business, we have listed below some steps you may wish to consider;

Is it right for you?

It takes more than just a good idea to start a business. Commitment and dedication are also key factors because getting your idea off the ground can often involve long hours and many sacrifices – well worth it if you are passionate about your business.

You need to have good business management skills to keep the business running – especially since, according to the Australian Bureau of Statistics, many new enterprises fail within their first five years of operation!

Research your market.

Make sure you have a solid concept for the business, not just a vague idea. Think about whether your business will be feasible. Is there a real need for your product or service? Who are your customers? Who are your competitors?

Initial market research to answer these questions will help you work out if your plan will succeed. Ongoing market research will ensure you keep in touch with the latest trends, industry changes and the economic conditions – all factors that will impact the success of your business.

Adequate finance.

Take the time to count the cost. Financial planning and budgeting are essential for any business. Budgets are effectively your business plans expressed in financial terms. Remember, in the early months of operation, you will need sufficient cash to carry you through until your business begins to generate a profit.

Seek reliable advice.

Advice from your accountant, financial planner and solicitor will prove highly valuable at the outset. Although the cost of good advice may be a concern, think of it this way: what would be the cost if your business were to fail because you didn’t seek expert advice early on.

YOUR ACTION PLAN-

  • Make appointments to get expert advice from your accountant, solicitor and financial planner, and talk to other business owners about their secrets to success.
  • Make a list of all the questions you need to ask, aim to take away as much information as possible before you embark on your business.

Contact The McMahon Osborne Group team today on (03) 9744 7144 for assistance with your action plan.

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