Five reasons to start-up in 2012 – and five reasons to think twice

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Five reasons to stop and think

 

1. The economic picture is looking a little shaky

 

 

Unless you have been living under a rock for the past year, you will have noticed the odd rumbling of disquiet from Europe – riots, soaring unemployment, crippling debt, that kind of thing.

 

What does this mean for your start-up? Well, if you believe Treasurer Wayne Swan, or his predecessor Peter Costello, the debt crisis could have a very real impact upon Australian businesses this year.

 

Your ability to access credit, as well as valuable export markets, could be badly hit if the situation escalates. And with the domestic unemployment rate creeping to 5.2% at the last count, it’s clear that Australia, for all its advantages, isn’t completely sheltered.

 

So, if you’re planning an expensive foray into overseas markets this year, tread carefully. It ain’t pretty out there.

 

 

 

2. Several industries seem stuck in a rut

 

Much is made of Australia’s “two speed” economy, but the reality is that there are several non-mining industries that are plodding along while others are wheezing on the floor.

 

The large retailers may have been slow to catch on that people actually like to buy things online, but it’s clear that the industry is suffering from patchy sales.

 

Meanwhile, the tourism sector has cried out for further government assistance, following a rather miserable 2011.

 

Drilling down further, if you are thinking of starting up as a florist or getting into the paper manufacturing game, you probably should take a look at this recent IBISWorld analysis.

 

As always, entrepreneurs that spot new opportunities in flagging industries can still succeed, but it is worth pondering which way the economic winds are blowing.

 

 

 

3. Who actually needs your business?

 

Sir Richard Branson famously once said: “I never get the accountants in before I start up a business.”

 

“It’s done on gut feeling, especially if I can see that they are taking the mickey out of the consumer.”

 

Trusting your entrepreneurial instincts is important. Alas, we aren’t all in the same league as Sir Richard.

 

Many start-ups device interesting products or services and, with the tools to do so now more accessible than ever, plenty of innovators will be tinkering away to great effect in 2012.

 

However, the crucial question isn’t whether you like your business, but whether your customer does.

 

Or, more specifically, does your customer needs it? If you can’t properly identify why a customer desperately needs to pay their hard earned money for your offering, then you have a nice idea, not a nice business.

 

 

 

4. Stuttering cashflow

 

With consumers stuck in “save” rather than “send” mode and retailers piling on the discounts, even prior to Christmas, many businesses will be facing bumpy cashflow this year.

 

Modern consumers are savvy with their money – it’s not so much about price but value. If your business offers them something of use at a price they can justify, they will part with their cash.

 

If not, you will be hard pressed to turn a consistent profit. Cashflow problems will plague your start-up, especially if you don’t properly forecast seasonal dips.

 

 

 

5. It’s all a bit too hard

 

Starting a business isn’t for the faint-hearted. It will require long hours, little sleep and ramped-up stress levels.

 

You won’t have a guaranteed income, especially in the early stages, and you have to be across every detail, from tax to employment law to competitive threats, just to ensure you keep your head above water.

 

Many people find it all too hard. Will you?

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