Can I Get A Grant To Start My Own Business?

I was recently asked if I could offer some tips about starting an online yarn shop. I was keen to help, as I have recently made the leap into my own online venture. So here are some of the tips and traps that this not so young player experienced in the wonderful journey that became my very own yarn shop!

These tips apply to all types of online business and are not intended to be a complete guide. I urge all potential business owners to use the many resources available both online and in the greater community. It is a hugely challenging and exciting step to take but being a one person business doesn’t mean you have to do it alone! So here are my top tips for anyone thinking about starting their own online business and living their dream.

1 – Learn about business. It’s not just buying and selling. While you may have strengths in some areas, there are specific things that you must learn. No-one can be an expert on every aspect of running a business. Get training (local college courses, government funded programs etc) and make sure you have at least a basic understanding of all areas of business. I started my business with the assistance of an Australian Government funded program called NEIS (New Enterprise Incentive Scheme). It is a program for people who are registered as unemployed and who want to start their own business. The program offers training (Cert 4 in Small Business Management, which is a Nationally Accredited course), a fortnightly payment which is paid for 12 months, and regular mentoring sessions. I found the learning process extremely valuable and eye-opening, as I was introduced to many business concepts that I was not aware of. Without this training, my business dream would have remained just that.

2 – Know what is involved. There are many facets of running a business and if you go into this blind you will almost certainly fail. Make a close friend of your local Small Business organisation. It is one of the smartest things you will ever do.

Startup funding. Do you have savings that you can put towards setting up a new business? Or will you need to apply for finance, in the form of loans or grants?
Regulations – Does your local Government have rules about running your type of business, eg, home business regulations, insurance?

Taxation – This one is probably the most challenging of all. Get some basic advice from your taxation regulator. Their websites are usually packed with good information about starting and building a business and complying with taxation laws. If this is not one of your strengths, budget for an accountant to help you with this. Even if it is, you should have an accountant on hand for annual returns.

3 – Website and supporting systems – Be prepared to spend time and money on your website design and implementation. Online businesses are booming, but that doesn’t mean they are easier to set up than traditional stores. You can’t just slap up a website and expect visits and sales from day one. You need to optimise your site so all of the major search engines can find you and customers can reach your site based on their chosen search terms. If you use a website designer ask them about SEO (Search Engine Optimisation). It can add a significant cost to the build, so learn as much as you can and do as much as possible yourself if you can.

Know what you need from your business systems. Do you have web design experience (which is quite different to knowledge, as I found out!). Do you know what you need in a website/shopping cart? Again, talk to people, check out web design firms and contact their clients for feedback. Don’t assume that a website/shopping cart will have the features that you assume are standard, eg, stock control, email and newsletter facilities.

The same goes for accounting and office software. If you have bookkeeping experience you are ahead of many. If not, consider taking a short course or employing a bookkeeper. Yes, this will add to your operating costs, but so will being stung with a huge tax bill!

Make sure your computer skills are up to date, as you will be doing lots of word processing, budgeting and emails. You may also want to invest in a writing course, as you will be shocked at how much time you will spend banging away at the keyboard, replying to emails, social networking posts, preparing newsletters and blogs.

4 – Do your market research. If you don’t do this you won’t have a market to sell to. Obviously you are going into business because you have a passion for something, whether it be knitting, gardening, or any other reason. You may excel in one or more areas, but don’t assume you know what customers want based on your beliefs.

I spent weeks researching yarn websites, checking what they were selling and seeing what other services they offered (blogs, freebies, tutorials etc). I looked at their design and overall feel. I also visited local yarn shops to see how I could translate the physical shop front into a virtual one. The main message I drew from this was that I had to provide a friendly, easy to use and informative website with plenty of variety and ways for the customer to interact with the store.

You need to know who your competitors are. Direct competitors are those who sell the same type of product that you want to sell. Indirect competitors can be retailers who sell mass produced knitwear or cheap non-branded yarns. Your business plan should include a general description of your competition and outline how you will fit into the current industry and how you will stand out from the crowd.

You are looking to offer a USP (unique selling proposition). This can be selling a product that no-one else carries that is in demand, or providing a service that isn’t available, for instance, coffee shop facilities, delivery service, classes etc. It’s all about developing your business as a brand. Think of some big companies and note down what comes to mind when you hear their name. It is as much about how they do business as the products they sell.

5 – Develop a business plan. This can be done on your own or with the assistance of Business Support Centres. A business plan is essential for obtaining finance, as well as being your “bible” that you refer to frequently, both to see if your business is performing as per the plan, and also to remind you why you did this crazy thing in the first place!

A well prepared business plan gives you an edge when you are negotiating finance and getting started, as it shows that you are serious and professional in your approach. It should include results of market research, your biography as it relates to your intended business and a set of start up and projected financials.

6 – Develop an effective marketing strategy for your business. Letterbox drops may not be the most effective way to promote an online business, but well placed posters and flyers in shopping centres, libraries, community centres, retirement homes, hospitals may work well. Print advertising doesn’t have to be restricted to just yarn magazines. Consider parenting, craft and lifestyle magazines as well.

Use social networking sites. I have a Twitter account and a Facebook page. Out of the 2 Facebook has been the most valuable, as it offers the viewer a look inside my business and its core values. This relates to building your brand. I didn’t realise the relevance of this at first, but after attending a couple of business seminars and doing my market research, I realised that my “brand” is the core of what I do. My aim is to assist knitters of all skill levels but particularly new and inexperienced knitters, who may be afraid to approach a high-end store for advice. This is becoming my “brand”.

Identifying your brand is a key feature of your business plan, so try to get this established as early as you can. And do remember, your original business idea may well evolve and change as you respond to customer demands.

7 – Be prepared to generate no income for at least a year. Although I receive an allowance for the first 12 months, I still have to rely on my savings to survive. You may have to consider running your business alongside a “real” job for a time. I haven’t resorted to this yet but I do feel the time may come fairly soon. In the meantime I am doing everything I can to prevent this, but have to be realistic.

8 – Network. Talk to people! If you want an insider view on the type of business you want to run, talk to someone who runs a similar one. Obviously you could scare some operators who perceive you as a potential threat. Why not talk to someone who runs a non- competing business, for instance, if your business is knitting yarn, talk to a scrap booking or other craft shop owner. They are usually happy to answer questions and take an interest. You can also contact the same business type in a completely different location, as they are unlikely to be a direct competitor.

Participate in forums and subscribe to newsletters and magazines to keep up with trends and gather feedback from people who use the products you want to sell. When I was first looking at starting a yarn business I wanted it to be a physical shop, containing a coffee shop and play area as well as an extensive yarn selection. I posed the question “What would your dream yarn shop look like/have?” to a local forum group and they came up with exactly what I had envisioned. This was really encouraging, but after a lot of thought and soul searching, I realised that I wasn’t ready for the challenge of such an ambitious operation. Starting online is in no way a compromise, or practice run, but it may well lead to me opening a retail outlet in the future.

9 – Last but not least, stay positive and passionate about what you are doing! Most people who have dreamed about opening their own yarn shop (or any business for that matter) focus on one aspect of that business. For us yarnies it is the dream of being surrounded by beautiful fibres every day! While this is always going to be the case, there are so many other facets of owning a business that can overtake your dreams.

The day to day pressures of small business are always going to be there, so keep reminding yourself why this was so important to you. And if you sometimes forget what it was that made you want to do this, remind yourself by picking up your needles and yarn and escaping to your dream world even just for an hour – you’ll soon remember what madness lead to opening your very own yarn shop!