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Entrepreneurship – turning a bright idea into a successful business
Find out what it takes to be an entrepreneur, and the steps to take when setting up a business.
Discover what it takes to become an entrepreneur
We often hear about successful Kiwi entrepreneurs like Sam Morgan, founder of online trading website Trade Me, but what does it really take to turn a bright idea into a successful business venture?
Find out here what makes an entrepreneur, how to generate ideas for a business, and where to go for advice on setting up a business.
What is an entrepreneur?
An entrepreneur is someone who:
- can identify a niche in the market – an entrepreneur can spot business opportunities that will fill gaps in the market
- can identify key people to help achieve goals – nobody is an expert in everything!
- takes risks – even if you have carefully researched the market, there's always a chance that customers may reject your product or service
- shows drive and initiative – if you are launching a business you need determination and energy to overcome any obstacles
- is resilient – all entrepreneurs have failures and successes. Your ability to learn from mistakes and move on is key to the success of your business.
Hear Trade Me founder Sam Morgan talk about becoming a successful entrepreneur – video, 1.24 mins
How do I come up with a bright idea?
Creative thinking allows you to come up with new ideas, or an innovative approach to a problem.
With businesses, new ideas can result in a new product, or a process that cuts costs or improves quality, for example. Fresh ideas give businesses a competitive advantage, and help make goods and services stand out in the market.
Different ways to generate ideas include:
- lateral thinking – solving problems through an indirect and creative approach. Often referred to as thinking outside the box
- blue-sky thinking – open-minded thinking where everything is possible, and you are not restricted by realities.
- MindTools website - find out about different brainstorming techniques
Where do good ideas come from? – video, 4.07 mins
Checking out the competition
Once you’ve gone through the brainstorming process and come up with or refined your business idea, it is time to check out the competition. All trading companies in New Zealand are required to register with the New Zealand Companies Office. You can search the office’s website for company details.
I’ve got my bright idea – now how do I turn it into a successful business?
Thomas Edison once said “Genius is one percent inspiration and 99 percent perspiration.” As an entrepreneur, it can take a long time, and a lot of perseverance, to see your bright idea turn into a successful business. You need to be prepared for this.
Only half of new businesses in New Zealand survive past three years.
To increase your chances of success, set yourself up with a mentor you trust, and do some detailed financial and business planning.
Choose a business mentor
A business mentor is an experienced business professional who provides you with advice, guidance and support as you launch and maintain your business venture. Having a mentor will boost your business’ performance, and increase your chance of success.
A mentor will:
- help you analyse your bright idea to see whether it is viable
- connect you up with key business people and customers
- provide a fresh perspective on how to grow your business
- be a sounding board when you need to discuss difficulties you are encountering
- challenge you to set goals for your business that may achieve better results.
A number of organisations have business mentoring programmes, including:
- Business Mentors New Zealand - provides mentoring to small and medium-sized enterprises
- Te Puni Kōkiri - provides guidance to business owners of Māori descent
Some organisations offer business incubators. These help businesses that are starting up by providing services such as business advice, and access to shared premises.
New Zealand Trade and Enterprise has more information on business incubators.
Create a business plan
Once you have come up with an idea for your business, and done some research and planning, you need to write a business plan. This should outline:
- your key business objectives for the next three to five years
- how you will achieve these objectives
- the date when you will achieve these objectives
- how you expect to run day-to-day operations, and make business decisions.
Sort out your business finances
Starting a business is costly, and many owners of small and medium-sized businesses underestimate the amount of money they will need. You need enough to set up the business and cover operational expenses until the business starts to generate a profit.
Before you commit your life savings to launching a new business, ask yourself these key questions:
- Does your business idea have the X factor that would get investors excited about your venture?
- How much of your own money are you willing or able to invest?
- What is your business track record and will this help or hinder your chances of getting financial help?
A range of organisations provide in-depth information about financial considerations and support for business people:
- Business.govt.nz website - finance and money
- Angel Investment Network website - connect with potential investors
- NZ Private Equity and Venture Capital Association website - how to get venture capital
- Inland Revenue Department website - information on starting a business
- Sorted website - financial planning advice and tools
Find out about your obligations as an employer
As your business grows, you are likely to hire staff. It’s important that you have a good understanding of employment relations, and health and safety requirements for businesses.
Plan the life cycle of your business
Now is always the best time to start thinking about the life cycle of your business – even if you have only just set it up.
Further down the track you may decide to sell your business, or close it down voluntarily. If things don’t go as planned, and you have financial difficulties, you may be forced to close your business. It’s useful to plan for all eventualities.
Rob Milne learned about entrepreneurship when he helped launch the GradConnection New Zealand site.
He stresses the importance of having a realistic long-term plan. "We work on a year-to-year growth plan, running the business as if we are still going to own and be running it five years from now. If anything else comes up along the way – it's a bonus. Operating any other way can be very dangerous."
Rob Milne, Director GradConnection