It’s exciting times starting a business, coming up with the concept of what your business is all about, then you may hit brick wall in trying to work out - where to from here. A goggle search on “starting a small business” will get you 915 million hits in .88 of a second, gosh what a wealth of information, but it is so overwhelming. We live in a world of information overload and are constantly bombarded with “stuff” on do it this it way, do it that way, buy this, read that etc.
So, to provide some clarity I have put together a list of the top questions I will walk/ talk through with clients that are starting their new business venture, before we even get to the nitty gritty of business structure set ups, tax and all the other exciting advice!
1. What is your business idea? Let’s get really clear on exactly what your business will do. What are you selling, services, products, a combination of both?
2. Are you passionate and excited about your idea? Running a business, you are passionate about will put fire in your belly and knowing why you want to go into business will set you apart from your competition. Simon Sinek has a great TED talk – on “People don’t buy what you do people buy why you do it”.
3. Have you tested your market? Pre-selling and validating your ideas with friends and colleagues will give you a good gauge as to the demand for your business. A friend willing to part with cold hard cash for something you have to offer can be a validator of your business idea. When I first started my accounting business, my first clients were family and friends, then they refer and then it is a snowball effect.
4. Who is your ideal customer? client? Who are you selling to – what problem are of theirs will you be solving? What needs of your customer does your product or service satisfy? Then, who is the ideal customer for what you are selling? If you can explain to someone how you can solve a pain point for them, they are much more likely to buy from you. Your ability to clearly define and determine the best customer for what you are selling, will save you wasting a lot of time and money than with a scatter gun approach and set you up for business success.
5. What will set you apart from your competition? How will you stand out from the crowd? This is a whole other topic in itself, but things like outstanding service (everyone says they deliver it – but do you walk the talk), fixing customer pain points, being passionate about what you do, be a little different, focus on a narrow niche, offer a money back guarantee – these are just a few things you can do to make your business different to the one down the road, and potential customers more likely to buy from you.
- The Wealth Genie
There is a lot of media hype now over the amount you need in super to retire – and I am a bit over it. And talk of increasing the retirement age to 70 is a little depressing. Currently, most people can access their super when they are 60, and age pension around 66 increasing to 67.
The reality is that superannuation or retirement savings is only one aspect to your financial independence, other things such as owing your own home, your human capital and other assets outside of super can all work together to create a lifestyle for you that doesn’t have you turning up at a desk at 8.30am Monday through Friday.
Take your family home for example with the explosion of AirBnB you can rent out some or all of your home for a period of time and earn some extra dollars, and some clever folks are even earning money from helping others with their AirBnB’s building side hustles, property managing several properties for others.
Go a step further, and that caravan that is sitting down the side of your house, can also be hired out. There are websites such as www.camptoo.com and www.camplify.com.au where you can list your caravan, motorhome, campervan etc for hire We recently picked up a motorhome from a lovely man in North Fitzroy, and cruised around for a week, in his fully decked out motorhome. I asked him how he found hiring it out – his answer “brilliant – we were going to put the van in storage for six months but discovered camptoo and instead have been able to generate some decent money”. Brian’s motorhome rents for approximately 20-30% less than your mainstream van hire companies – it’s a win win!
So, you have human capital which is your ability to work and earn an income, and you have financial capital which is what you have accumulated by using your number one asset, your ability to earn an income,
The goal has always been to reach the point where our financial capital covers all of our needs, and we don’t need the human capital anymore. That’s what we call financial independence, “I don’t need to work to get paid anymore.” But it’s still your choice about whether or not to harvest your human capital and turn it into additional dollars—and you can.
You can continue to “work in retirement.” That’s why I’m a huge fan the label of “financial independence” and not “retirement” because in reality what often happens is most people when they first retire, have some time off and then they realise they are kind of bored and they go back into some sort of work – and now work looks completely different for them. It may only be on a part time basis or in totally different role to what they were doing previously. I have a client who is a retired engineer who is having a ball working in a wine bar, mixing his two loves wine and chatting, no, he is not earning the same dollars but it’s an extra $20,000 per year he doesn’t need to draw from his super, and he is super happy!
When you consider that you can earn around $20,000 without paying any tax, and if you are over 60 any income you are drawing from super is tax free, with a little bit of planning now, you may be closer to financial independence that you think! So I encourage you to think outside the square and look at things a little differently 😊
Michele Purvis is an advisor with over 30 years experience working in the accounting and financial services industry helping clients to define and create their wealth.