- You need to do some market research, calculate your potential costs and expenses and think about how you’ll delivery your products
- In Hong Kong, you also need to be aware of the tax code and whether you need to register your business
Steve Jobs started Apple with his friend in a garage. Oprah Winfrey turned a gig as a radio talk show host into a hugely successful media empire. If you want to follow in the footsteps of these legendary entrepreneurs, you’ll want to read our beginner’s guide to starting your own business.
Make a plan
Before you invest any money in your potential business, set aside some time to make a strong plan. The first thing to think about is whether anyone actually wants to buy your product.
Let’s say you want to sell masks to protect people from Covid-19, and you’ve found a company online that can customise the face coverings with your awesome handmade drawings, then deliver orders.
Your parents and your friends might be very supportive of your ideas and designs, but you should do some real market research outside your inner circle. Do a mock-up of your design on Photoshop, upload it onto a Google form and ask each of your friends to send it out to 20 of their friends to ask whether they would be willing to pay for this mask. Make the responses anonymous so people give honest feedback, and add a comments section for suggestions on how to improve. Always get a quantitative idea of how strong demand could be before you start a potential business.
Do some preliminary market research before you start your business.
Calculate the costs
The next step is to calculate the costs of your business so you can figure out the appropriate selling price which would help you make a profit. Typical costs of starting an online shop include the cost of sourcing the products, delivery fees, maintenance fees, and promotion fees, if any.
Sourcing the product
How much does it take to get the product to your door so you can deliver it? In the mask example, you wouldn’t have to do this because the online company sends them out, and would just give you a percentage of every mask you sell. However, if you’re sourcing and delivering the product yourself, you need a clear idea of how much it costs to buy them, receive them, and distribute them.
Typically, costs decrease the more you buy, but you shouldn’t overestimate how many items you can sell.
Delivering to your customers
Some shop owners on Instagram or online websites physically deliver their products to their customers by doing a handoff at an MTR station. Others may send the products by post. Whatever your mode of delivery, remember to take the costs into consideration.
In the planning stage, you should also have an estimate of maintenance and promotion costs. For example, if you want to build a website that already has a secure e-commerce option built in (so your potential customers can buy online with a credit card), you should do some research about how much it would cost per month. For reference, Wordpress (a popular website management system) costs HK$200 per month for an e-commerce-enabled site.
If you plan to promote your business, for example on Instagram or Facebook, get a quotation of how much each ad costs and add it to your expenditure list.
Business registration and profits tax
According to Hong Kong tax law, a person’s basic tax allowance is HK$132,000 per year. If you are making a yearly profit of more than this, you should register your business with the Inland Revenue Department (or ask your parents to do it for you if you are under 18). It costs around HK$250 per year. The tax is 7.5 per cent for the first HK$2 million of profit, and 15 per cent on profits above that.
Learn the basic financial concepts, such as how to create a budget and save money, with our resident money guru