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5 Things to Consider When Starting a Business

5 Things to Consider When Starting a Business

Understanding the basics of starting a business

 

Even if you’re brand new to the world of entrepreneurship, it doesn’t mean that starting a business is a far fetched dream – you just need to understand the basics of starting a business. Consider this foundational knowledge the bedrock upon which you’ll build your business. 

 

1. Having a plan

 

A business plan isn’t just something you pin on your wall and look at longingly – banks and potential investors will want to see a comprehensive business plan before deciding whether or not to contribute towards your enterprise. Your plan is important – for the first draft, you can focus on these areas.

 

Having a good business idea

 

Does your business idea involve offering people something new? Or offering something familiar in a new way? Whatever it is, you need to feel confident that your business will draw enough customers to guarantee a good return on your investment, and stand out in the current market. If you haven’t got an idea yet, take some time to research and seek inspiration.

 

Understanding the time and money investment

 

Speaking of investment – you need a rough idea of how much money it will take to get your business up and running, and keep it running before you start to earn that money back. This might involve taking out loans or convincing investors to help get you off the ground. Whichever method you choose, you’ll need to detail how you’re going to get the money together.

 

You also need a timeline for how long you expect all of this to take. Keep in mind, it can take a few years for a business to become profitable – do you know how much money you’ll need to support yourself if you won’t make a profit for 24 months? What if an unexpected delay throws a spanner in the works and delays your launch? While having belief in your business is paramount to making your dream a reality, it’s also useful to prepare for the worst-case scenario, especially when time and money are involved. 

 

Knowing yourself and your customer

 

It’s fine for your plan to be ambitious, but it should also be within your limitations. Set goals that you know you will be able to achieve with the right amount of hard work, and outline exactly how you will get there. This will make your plan more appealing to banks and investors.

 

This also extends to identifying your customer base. In an ideal world, the whole world would want to be your customer, and the money will be piling high before you know it. However, realistically, there aren’t any services or products that will appeal to everyone across the board. Honing in on an ideal customer profile will also make your business easier to market, as you’ll know exactly whose attention you’ll want to grab.

 

2. Having the right support in place

 

While opening your own business might feel like striking out on your own, in reality it will involve the input of lots of other people. This will range from friends and family, to mentors and professional services. You’ll also need to have the right knowledge to be able to support yourself, which might involve undergoing training in preparation for starting your business.

 

Will you need anyone to help in the business?

 

You might be planning to enlist the support of your family or partner to get your business going, or you might need to hire employees and external professionals such as accountants or consultants. Whatever kind of team you need, try to figure out the roles you’ll need to fill as soon as possible, as they’ll need to be detailed in your business plan.

 

Considering your own strengths and weaknesses is a good way to identify the gaps you may need to fill with the help of others. However, you might be able to fill in some of these gaps yourself with the appropriate training. 

 

Skills gaps and training required

 

Depending on the nature of your business you may need to seek out some courses or qualifications to bolster your business-running abilities. You might feel like you need to improve your leadership skills, or deepen your understanding of marketing. Knowledge is power, and the more you learn, the more your business will benefit.

 

Attending seminars and webinars where experienced entrepreneurs share their experiences and insight can also be useful – not just for gathering information and research, but also for networking. Connecting with individuals on a similar journey to yourself will help to make starting a business feel less daunting.

 

Having the right space

 

If you intend to run your business from your home you may think that you’ve already sorted your business space – but do you know the rules and regulations that surround operating a business from your premises? It may seem more achievable than being able to afford a separate space, but that doesn’t mean there aren’t permissions and licences involved. 

 

Your home might not be suitable for the type of business you want to run, so you may have to look for an office or shop space. Consider these questions:

 
  • What kind of place will you be able to afford? Home might be the only option for now, but what about in the future?

  • What legal requirements will you need to be aware of for any space that you occupy?

  • Will a physical space see enough foot traffic to draw interest while you’re getting your name out there and can bring customers to you?

 

Having the right equipment

 

Most enterprises require some form of specialised equipment, whether you’re a dog walker or a construction worker, there will be tools of the trade you’ll need to have to get your business started. Consider these questions:

 
  • How much will this equipment cost?

  • How will you strike a balance between high-quality equipment, and equipment you can realistically afford?

  • Will members of your team need training to be able to use this equipment?

  • When is your equipment likely to need replacing?

 

3. Understanding legal requirements and regulations

 

Starting a business involves navigating a complex web of legal requirements and regulations. Failing to comply can result in fines, which may then lead to legal action and ultimately the closure of your business, so it’s important to do your homework on legal considerations. 

 

Registering your business

 

Whether you want to operate as a sole trader or opt to register as a limited company, you’ll need to go through the appropriate registration process. The way in which you register your business will have important implications for your finances.

 

For sole traders, there is no legal distinction between your personal finances and your business’ – be it amazing profit or potential loss, it is all your responsibility. You and you alone are responsible for your business, even if you have employees, and you are technically self-employed. 

 

If your business is a limited company you will be liable for only the amount you’ve invested, as your business will be considered its own legal entity. You’ll have to register with Companies House and will need: the name of your company (which must be unique); your business’ address; and the details of both directors and shareholders. By forming your company with SUAZ, we’ll take care of the hard work for you. We’ll register your business with Companies House on your behalf and even cover the £12 filing fee. 

 

Obtaining necessary licences and permits

 

There may be a variety of licences and permits required to run your business. Failure to acquire the right licences might result in fines, so it’s important to think carefully about what you might need to obtain permission for. 

 

Examples of some of the licences and permits associated with businesses include:

 
  • Business licence – to operate your business in accordance with government guidelines.

  • Personal alcohol licence – to be able to serve alcohol.

  • Street display licence – to place advertisements on the street outside your premises.

  • Environmental permits – permits relating to anything that may impact the surrounding environment, e.g. waste disposal.

  • Music or entertainment licences – allowing you to use copyrighted material and host live performances.

  • Building permits – to allow any renovation or construction work that might be needed for your business.

 

Understanding your tax obligations

 

Again, your tax obligations as a business owner will depend on how you choose to register your company. If you operate as a sole trader you will have to fill out your own self employment tax return, and as a limited company you will need to register for Corporation Tax. 

 

Keeping on top of your finances, staying compliant with tax laws and hitting all of the required deadlines will stop you from running into legal issues. If this sounds like a lot of work to you and like something you’ll need help with, you might consider enlisting the help of a specialist. This will then be a further cost to consider, but might be able to save you valuable time and headspace. 

 

4. Understanding the financials for your business

 

Financial management is a key part of running a successful business. Ultimately, do you know how your business will make its money? Are you confident that this will be enough to (eventually) cover your running costs? Do you have a budget with estimated income and expenses? Are your bookkeeping skills up to scratch? Hopefully all of these questions have occurred to you, but if not you still have time to consider them.

 

Let’s take a look at some of the ways in which you can source funds to get your business started.

 

Bootstrapping your business

 

To bootstrap your business means to fund it entirely yourself, with minimal reliance on outside sources. Whether it’s your hard-earned savings or a sudden inheritance, it means you’ll have more control over your finances and keep you free from debt. For many people bootstrapping simply isn’t possible, but for those with the necessary capital it can lead to healthier long-term financial stability, and encourage financial discipline.

 

Applying for business loans

 

Most people looking to start their own business will be considering applying for business loans. They’re a traditional way to finance a business that involve you borrowing money from a lender and paying it back over an agreed period of time, with interest. The two main categories of business loans are secured loans and unsecured loans. The difference between the two is that with secured loans there is some form of asset the money is borrowed against – usually property. Unsecured loans don’t need an asset as security, but will typically have higher interest rates.

 

To apply for a business loan from a lender or a bank you will need to pass some eligibility checks – many of which you can gauge the likelihood of passing online beforehand. You will also need to present your business plan, to illustrate your business’ potential and paint a picture of how you intend to run your enterprise.

 

Seeking business grants

 

Grants are a great way to help fund your business as they don’t typically need to be paid back. Depending on your circumstances you may be eligible for a variety of different grants. Here are some of the pros and cons of this form of funding: 

 
 

Pros

Cons

Not having to worry about repayment

You may not meet every grant’s eligibility criteria

There are lots of grant opportunities available

Applying for grants is highly competitive

They give your business a level of recognition which is great for customers and investors alike to see

Filling out applications may be time-consuming and difficult

Grants reward creativity and innovation, not just profitability

One grant isn’t likely to be enough to fund your business

You don’t have to give up any equity in your business to receive a grant

Some grants will dictate how the funds they allocate can be used

 

Attracting investors

 

If you don’t have a problem with sharing ownership of your business, acquiring investors might give you the boost you need to get started. In order to attract investors you’ll need to do the following:

 
  • Develop a compelling pitch that highlights your business and products’ unique selling point (USP). A pitch needs to make investors feel like passing up on involvement in your business would be missing a big opportunity.

  • Attend networking events that might put you in the same rooms as potential investors, and make sure you’re making the most of online platforms that can connect you to helpful people.

  • Look into appropriate angel investors – investors who, as well as contributing their own money towards new businesses for a small stake, will provide mentorship and guidance.

 

Utilising crowdfunding

 

Creating an engaging campaign to launch on a crowdfunding platform can convince total strangers to part with their money in support of your vision. It’s a popular and easily-accessible way to raise money for a variety of causes, including businesses. With crowdfunding it’s especially important to tell the story of how your business idea came to be, as people reading about your cause will want to be able to relate to your journey.

 

You can even offer rewards based on your business for different levels of donation e.g. if you’re hoping to open a bakery, people might be able to donate in return for baked goods. You get cash, they get cake, and early access to your amazing products – everybody wins.

 

5. Preparing for launch

 

If your business currently only exists in the form of an idea, getting ready for launch might seem like a lifetime away – but you can never be too prepared. A successful launch can set the tone for the rest of your business’ life, so it’s a good idea to take it seriously. Here are some things you’ll need to have ready well before your launch date in order to set sail as smoothly as possible.

 

Creating your brand identity

 

First impressions matter. How do you want your business to come across to potential customers? Friendly and down to earth? Slick and authoritative? You want your business to be able to stand out in a sea of competitors, and one way of ensuring that is by having a strong brand identity.

 

Everything down to the fonts used on your website and the colours in your logo will help to make up your brand identity – so choose wisely!

 

Setting up your business website

 

You have to be at least a little bit tech savvy to launch a business these days – even if that savviness means you know you’ll need to hire someone to create your website! Your website should be attractive, easy to navigate, and anticipate the thoughts of potential customers who visit it. Are they looking for contact information? For details on your history and your products? Or maybe to place an order?

 

Deciding to sell your products or services via your website is a wise choice, even if you operate out of a physical space as well. The UK has the most advanced e-commerce market in Europe, leaving only a tiny percent of the population who don’t buy anything online at all. Don’t miss out on that market! People can visit your business from the comfort of their own homes.

 

Developing your marketing strategy

 

Speaking of markets and marketing – people can’t support your business if they don’t know it exists, and if you wait to advertise your business until after it has launched then you’ve already missed the boat. 

 

Decide which channels will be best for marketing your business – this will depend on the demographic of your target market. For example, if your ideal customers all tend to be very active on Instagram, don’t waste money advertising in newspapers – meet them where they are. Pick marketing tactics that will complement your business, and put a strategy in place well before you’re even thinking about launch day.

 

Navigating your business launch

 

There are lots of ways to approach launching your business. You don’t necessarily have to dive straight into hosting a nerve wracking and expensive grand opening event. Why not try a soft launch or beta phase, where you can work out any kinks in your operations and gather feedback from your first customers. This can provide you with valuable information to make any last-minute improvements before a full-scale launch.

 

There are two things (well, lots of things, but let’s focus on two in particular) that are important to consider during your launch:

 

Customer support

 

You’re a new business – people will want to ask questions, and may need more information to understand your product, services, or website. Be prepared to provide exceptional support straight from the offset and you will be rewarded with loyal customers.

 

Plan for continual improvement

 

If you can see that something clearly isn’t working in your business plan, you don’t need to stick to it. Be prepared to accept feedback and embrace change based on market trends – adaptability is key.

 

Knowing when to ask for help

 

There are many advantages and disadvantages to starting a business – the pros include the flexible lifestyle and development of personal skills, and the cons mean the potential for financial risks and excess stress. One way to mitigate these risks is to know when to ask for help.

 

Help might come in the form of family and friends to lean on, or legal counsel to help calm your fears about contracts and intellectual property. Entrepreneurship is challenging, so when you realise that you can’t go it alone and find yourself seeking help, don’t think of it as a failure – think of it as taking the next step towards achieving your goals.

 
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