10 things to do before starting your own business
Laying the foundations for success for your new venture
More people than ever are starting their own business in the UK. According to the Centre for Entrepreneurs, 657,790 new businesses were registered in 2016. But, before you rush off to register your new business, how can you increase your chances of success?
1. Realise the reality of starting your own business
It requires tireless energy, hard graft, unwavering determination, resilience, creativity and commitment. Success isn’t guaranteed and you’ll probably have to make sacrifices with your time and possibly income. Although it can be hugely rewarding, running your own business also brings legal responsibilities. It’s not for everyone.
2. Come up with a great business idea
Great ideas underpin successful ventures. Some turn their hobby into a business, others spot a gap in the market that isn’t being met or offer a solution to a problem. Inspiration can come from many places, but even if your business idea isn’t groundbreaking, starting your own business will require an idea that will set you apart from the competition.
3. Test your business idea
Just because you think your idea is the best thing since sliced bread, doesn’t mean it will work as a business. Will enough people want what you sell or be prepared to pay your prices? The only way to find out is to ask potential customers (and not just people you know) what they think of your business idea, product and price. Learn from your feedback and use it to improve your business idea (or realise that you need to come up with a better one).
4. Research your market
Once your idea is fully developed, carry out sound market research long before you form a business (starting by looking online) . Find out who your competitors are, what and how they sell, what services they provide and how much they charge. Then concentrate on potential customers. Who are your target customers? How do they buy and when? What will they pay? How could you provide them with better value?
5. Decide which type of business to start
Some businesses can only operate at certain times of year, others on a part-time basis. You might want to start an online business or one from commercial premises. Yours might be a mobile business. You might choose to sell to other businesses, consumers or both. And rather than start from scratch, you could buy an existing business.
6. Crunch the numbers
First work out – as accurately as possible – how much you need to start your business (aim to minimise your costs). Armed with your market research, set your prices and complete your first cash flow forecast by comparing your expected monthly sales against your anticipated costs. Honesty, realism and accuracy are essential. Will you generate enough profit? If not, fundamental changes are required, so take another look at your costs and sales.
7. Decide how to fund your new business
Now you know how much it will cost, how will you fund your new business? You’ll have to use some of your own money, but what if this isn’t enough? Although grants are rare, you might be able to get a start-up loan. Friends or family might be prepared to invest, although the risks must be considered. Thankfully, research suggests that most new businesses are started for relatively small amounts of money.
8. Create your brand
You might think this simply means coming up with a good business name, logo or strap line, but these (important as they are) are simply elements of your brand identity. Your “brand” is much bigger. It relates to your values as a business, the experience people have when they come into contact with your business and the impression it leaves.
9. Create a start-up business plan
As well as forcing you to make many key decisions about your new business, your business plan financials will need to stand up to closer scrutiny and prove that your business can be profitable (on paper at least). You’ll also need a sound business plan to attract investment from others.
10. Try to make a few sales
What better way to show that people will buy from you? Let people know when you plan to launch and why they should buy from you. Also get to work on your website, which should engage and professionally showcase your business, brand, products and services. Create social media accounts for your new business and start to use other cost-efficient ways to raise your profile and attract customers. You could plan a special launch event.