- Running a business in every industry is a tough challenge that requires thorough planning and resources- and the financial sector is no exception.
- Running a financial service business is potentially lucrative and also highly competitive, and in order to be successful in this sector, there are a few important aspects you need to pay attention to.
- Read on to learn about proper planning, marketing and key legal considerations before you start your business.
As the various SME owners of the world may be aware, running your own business can be a challenging and complex venture, and one which requires careful planning and consideration.
Australia, however, is known for its entrepreneurial spirit and flourishing business scene, with more and more businesses appearing every year.
The financial services industry is one which is both potentially lucrative and yet highly competitive, and entrepreneurs should be prepared for the challenges they will face when starting out.
What do I need to consider when starting a business in the financial sector?
Here are some of the factors to consider when starting a business in the financial sector.
The first thing any prospective business owner must do is construct an extensive, detailed business plan which outlines their short and long term goals, as well as how they will achieve them. This will include calculating any initial outgoing costs, as well as looking at how you will use your initial capital investment/funding to set the business up.
For the financial services industry, you will need to consider where you will be basing your operations, as this can be key to accessing the best possible customer base.
Setting up in the centre of a city, for example, is likely to produce the best results, given that this area is usually seen as a major financial district by most of its inhabitants.
2. Assess your competition
Another major aspect of running your own business is the competition which you will inevitably have to deal with. Since the financial services industry is fairly popular/lucrative, it is likely that you will have to deal with numerous businesses operating in a similar field to yours.
Whilst this is usually healthy for business, it helps to study your competitors (who are probably more established) to learn how they conduct themselves and find out what their day-to-day business practices are like.
It is also important to note that most businesses coexist harmoniously, so you do not have to adopt a ‘cut throat’ mentality when doing this.
3. Financial compliance and regulation
One of the most significant industry-specific challenges for financial services is that of regulation. Since the global crash in 2008, financial institutions across the world have had to abide by stricter regulations and conduct themselves with greater prudence and professionalism.
You must, for example, keep up-to-date records of everything related to your business operations and transactions for the purpose of future audits.
ASIC and APRA are two of the major regulators who you will need to be aware of, as well as the regulations which will specifically apply to your business. Once you have systems in place to effectively deal with the regulations, it will free up time to focus on other areas of the business.
4. Understand your market
Finding out how your market behaves and then effectively delivering your service to potential customers is one of the first major steps towards success. Through market research, you can gather a deep understanding of customer behaviour and needs, and then go about building a marketing campaign to make them aware of your business and its offerings.
It would also be a good idea to consider how the emergence of your startup may disrupt the current playing field, especially if it will bring new/original service to the industry.
5. Plan for growth and investment
To maximise chances of long term success, business owners need to plan for growth, as a company that does not grow risks stagnation and potential failure. This means setting aside profits each month, which can be reinvested straight back into the business.
Some of the areas you may want to consider investing in would include employment, marketing, and equipment. Some owners even choose to invest in global markets through methods like online share trading, with a look to building a significant lump sum of capital for future investment purposes (if their investment is successful).
6. Think about the future
The world is a diverse and increasingly connected place, and as such, you should also think about the changes you may need to make to your business in the future. As technology advances and industries change, many businesses find themselves having to adapt their operations and structure to meet new demand.
This change is accelerating, and with the widespread introduction of AI on the horizon (which might be rolled out into many areas of financial services), it could be worth ensuring that your business is versatile and adaptable from the start.
These form some of the major considerations for those entrepreneurs looking to start out in the financial services industry. It is both an exciting and opportunity-filled sector, but make sure you do not underestimate the challenges that come with it and use your resources wisely.
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