Running your own business as an entrepreneur and becoming your own boss is something that many of us want to achieve. Fortunately, this isn’t such a far-fetched reality and can be easily attained in this day and age.
Since the pandemic unfolded this time last year, we’ve seen a surge in home-based small businesses popping up at every corner as many people were made to adapt to remote setups.
With more time at home and opportunities to explore our creative self, this has spurred the entrepreneurial spirit in many people across the globe, including Singapore.
As exciting as the idea of starting a small business may be, there are still concrete steps that we need to take to minimise the risks and maximise the chances of success.
To get you started on your next venture, this is your 12-step master guide to starting a small business right here on our Little Red Dot!
12 Essential Steps To Start A Business In Singapore
1. Check The Viability Of Your Business Idea
All businesses start with a single idea. When it comes to gearing up for the first few stages of starting your business, you should ask yourself if your idea is viable enough to execute in the first place.
To help you with your thought process, here are a few questions to ask yourself as a new entrepreneur:
- What are the key features of my product or service?
- Will my business meet a need or provide a solution to a problem?
- Are there other brands already doing this? If so, what sets me apart from other businesses?
- Do I have the means to acquire the necessary resources to launch my business?
- Is my idea realistic, attainable, and sustainable for the long run?
- How would I measure the progress and success of my business?
To take a step further in testing the viability of your business idea, consider conducting focus groups or surveys to find out whether there is a sizable niche market for your brand.
If you’re still struggling to find a suitable and feasible business concept, here are 13 side income hustles to consider from becoming a freelance web designer to selling handmade crafts!
2. Determine Your Business Model
At its core, your business model can be described as your company’s approach to making a profit. However, do note that your business model is entirely different from your business plan. When making important decisions, you’ll find yourself going back to your business model as an anchor.
Here are 9 common business models you can consider:
1) Advertising — This is one of the most common business models out there. You create content on a platform such as YouTube, build a subscriber base and monetize the attention by allowing businesses to advertise on your channel.
2) Affiliate marketing — Affiliate marketing works on commission. Entrepreneurs can sign up with a company or online merchant, sell their products on their behalf, and get paid for each successful sale.
3) E-commerce — At its simplest form, e-commerce allows individuals to sell various products on the Internet by building a website or signing up on a commerce platform.
4) Franchising — The franchiser, or original business owner, grants third-party franchisees permission to operate a business and distribute their goods and services using their business name. Common examples of franchises in Singapore include F&B chains like McDonald’s, Starbucks, and Subway.
5) Freemium — The freemium model is a combination of the words ‘free’ and ‘premium’, which gives users free access to basic features of a service before charging them for premium “upgrades”. Spotify, MailChimp, and Skype are all businesses that use this method.
6) Subscription — This business model requires customers to pay a fixed recurring fee to gain access to a product or service. Examples of businesses operating on a subscription model include Netflix, The New York Times, and ClassPass.
7) Razor blade — This is the process of selling a product at a lower price to increase sales of a complementary good. For instance, game consoles and printers are complementary goods that require paired accessories to function.
8) Reverse razor blade — On the other hand, this model involves selling a high-margin product upfront paired with low-margin products on the side. This ensures a single high-end purchase with a series of smaller purchases in the long run.
9) Agency & freelancing services – From offering digital marketing services to website design, this model is perhaps the most straightforward way to start a business. You trade your time and expertise for money, allowing you to get started fast and without much start-up costs.
Take the time to determine your niche and see which of these business models align best with your brand and your customers’ needs.
3. Craft Out A Comprehensive Business Plan
The words ‘business plan’ may sound intimidating at first, but you don’t have to create a 100-page proposal to get started on your entrepreneurial journey. Remember: it all starts with an idea. From there, you can start working on the various components of your business plan.
Generally, it should cover these main points:
- Executive Summary — A one-to-four page introduction that summarises the key points of the business plan.
- Company Overview — The company or business overview offers important details of the business including the legal entity type, location, business formation history, and description of your products and/or services.
- Target Audience — Your target audience or market refers to the specific demographic of consumers that you want to cater your products or services to. This can be indicated by a range of factors such as gender, age, income, as well as location.
- Marketing Plan — This step outlines your marketing strategy and how you intend to market your products or services to your desired target audience. This is also where entrepreneurs decide which platforms they want to market their products on like social media, direct mail, newspaper ads, etc.
- Financial Plan — This portion includes all the information with regards to finances such as the amount of starting capital you will need, how the funds will be used for the business, and other ongoing business expenses including salaries and promotional expenses.
- Operations Plan — An operational plan should contain a detailed process on how your team intends to achieve your organisational goals on a day to day basis.
Here’s a great business plan template to get you started on your first draft.
4. Decide On Your Business Name
Without a name, there will be no business. While choosing a name may come more naturally for some, others may struggle to come up with something creative that stands out to customers at the same time.
If you are part of the latter group, consider tapping into the essence of your business idea for inspiration or conducting a brainstorming session with your team. Inspiration can come from a myriad of places, so make sure to take your time and trust the process as well.
While choosing a business name sounds like all fun and games, there are a few legal considerations for Singapore-based businesses to factor in:
- Two companies cannot bear the same name
- Your company’s legal and trading name don’t have to be the same
If you’re not sure where to begin, here are 12 tips for choosing a great name for your small business.
5. Decide What Your Brand Stands For
When it comes to starting a small business, chances are that there’s already someone else doing the same thing as you are. This is where brand purpose comes into play.
While making a profit is certainly one of your main goals when pursuing a small business, having a purpose shows your customers that there is more to the brand than just the products, services, or advertising campaigns. In fact, 91% of consumers are likely to switch to a brand that supports a good cause.
A good example of a purpose-driven small business in Singapore is The Fashion Pulpit.
While their core service is offering affordable secondhand clothing options, they have garnered a steady customer base because of their stand on sustainability in the fashion industry.
Having a strong brand purpose and translating them into your products or services can give customers a greater sense of connection with your brand, encouraging them to support your business beyond its tangible offerings.
6. Work the Start-up Cost For Your Business
Just like in any business venture, you must find out how much start-up capital you’ll be needing to get your business running. These startup costs refer to all the expenses incurred during the process of starting a new business from scratch.
There are two types of costs you need to be aware of – capital cost and fixed cost.
Capital costs are your initial expenses needed to launch your small business including the funds required to register your business or website, which are usually one-time payments.
On the flip side, the fixed costs are the expenses you need to pay regularly, regardless of whether your business is making a profit. This includes employee salaries, office rentals, as well as equipment and supplies.
While these may sound like a hefty amount of funds, many small businesses can be launched from the comfort of your own home without excessive startup costs.
To get an idea of how much it will cost to set up your business, you can get a rough estimate through this Setup Cost Calculator.
7. Plan the Financial Runway For Your First 12 Months
Now that you have the funds you need, it’s time to plan the financial runway for your first year in business.
The first 12 months in your journey as an entrepreneur is all about survival. As daunting as that might sound, it’s a great way to test out different ideas and see what works out for you and what doesn’t.
Starting a company is not all about making money online. It involves a great deal of budget planning to ensure that your finances are on track.
A realistic and detailed budget not only provides essential data and information for operating within your means but also helps to anticipate revenues and estimate expenditures as well.
8. Decide On Your Business Structure & Register Your Business
Before incorporating your business in Singapore, you first need to determine your business structure or entity. In Singapore, these are the five most common business structures you can choose from:
- Limited Partnership
- Limited Liability Partnership (LLP)
- Private Limited (Pte. Ltd.) Company
In order to choose your business structure wisely, take the time to look into each of your options to see whether it’s the right fit for your small business.
On top of this, do note that there are also different tax obligations for the different structures available. You can learn more about them here:
- Tax obligations for Sole Proprietors
- Tax obligations for Partnerships, Limited Partnerships and LLPs
- Tax obligations for Private Limited Companies
Once you’ve chosen the right one, you can finally proceed to register your business! Entrepreneurs have the option to do this step on their own or seek help from an external firm specialising in company registration and incorporation.
9. Settle Your Office & Administrative Matters
After you’ve finalised all the creative and financial matters, it’s time to get down to the nitty-gritty and move on to the administrative requirements. This involves everything from handling your taxes, knowing the accounting basics, and registering your office address.
When it comes to your taxes, it would be useful to educate yourself on Singapore’s tax obligations and important filing dates to prevent any legal complications in the future.
For accounting matters for small businesses, you can develop your own bookkeeping system to keep track of your finances or sign up for an affordable accounting software plan that gives you automated data through the use of integrated solutions.
Last but not least, we have the registration of your office address. In order to complete the incorporation process, you need to have a registered address in Singapore. This involves setting up your utilities (such as electricity) for your business office as well.
For entrepreneurs that conduct all their operations and work from home, you can simply register your HDB or private residential property as your office address.
Learn more about the different addresses you can register with ACRA here.
10. Establish Your Digital Presence And Create A Website
Nowadays, it would be impossible to market your small business without establishing your digital presence.
You’ll find that online marketing is the most efficient way to reach your customers in this digital age, not to mention how cost-effective and simple it is to set up as well.
For a start, you can try building your website with the help of free website builders that come with a plethora of templates for you to choose from. If you’re looking for something simpler, consider creating social media pages for your brand and monitor the progress of your engagement rates as you go along.
To get started on your digital marketing journey, here is a handy 101 guide to read.
11. Develop Your Marketing Plan & Promote Your Business
A marketing plan outlines the various strategies you intend on carrying out to effectively promote your business. Without a game plan, you wouldn’t know where to begin.
Ultimately, having this will allow you to achieve two main business goals: reaching your target audience and generating new leads.
Here are a few channels to explore that can help you promote your business:
- Social Media Platforms — Social media is by far the most effective way to reach your audiences, whether you are opening a cafe or selling physical products. From advertising on Facebook and Instagram to creating your very own YouTube channel, social media allows you to engage your ideal customers, market to them and build a fanbase all at the same time!
- Local Event Sponsorships — From business conventions to esports tournaments, local event sponsorships are a great way to build your brand awareness and connect with the community.
- Influencer Collaborations — By collaborating with influencers in your niche, you’ll be able to tap on their audience in a way that is natural and convincing. These collaborations normally involve content creation (such as product reviews) and not outright advertising, so audiences are engaged and more likely to become customers.
- Run A Competition or Giveaway — Everyone loves free stuff and you can use it to your advantage! Running an online giveaway, through platforms such as Facebook, will allow you to effectively market your products and create massive brand awareness that can be very cost-effective. Just be sure to make sure the prizes and theme of the giveaway is related to your brand!
- LinkedIn — If you are in the B2B space selling to other companies, LinkedIn is more than just an online resume. You can network with executives and people in your industry, share useful content and enter discussions in business groups for business development.
- SEO Your Website — By optimising your company web pages and creating valuable content, you will drive more traffic to your website, which can lead to more sales and new customers.
- Set Up Google My Business (GMB) Profile & Get Reviews — Testimonials are powerful, especially when you are selling online. One of the main steps you should take is to set up your Google Business Profile and start getting reviews from your current customers. Plus your GMB profile helps you get found easier on local searches.
- Physical Trade Shows — Trade shows are a great way to pitch your business idea to potential customers and even investors, who are looking to invest in small businesses like yours. In addition, you’ll be able to interact face to face with your customers and learn more about their wants and needs.
While a business plan helps you define the overall direction of your company, your marketing plan acts as a map that will help you get there.
12. Toughen Your Mindset For The Long-game
Running a small business from the ground up is a commitment, which is definitely not for the faint-hearted. That’s why having a strong mindset is the foundation of what makes an entrepreneur successful.
Compared to large multinational companies that have numerous teams handling various departments, small business owners make up the whole team.
With that, you need to be prepared to rise above all the challenges and trials that may come your way, whether it may be transitioning to integrated digital solutions or learning how to manage operational matters. From learning how to take advice to leverage your strengths, here are 5 tips that can help you get your head right before running a business.
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