Setting Up A Business? Ask yourself these questions
Thinking about leaving the rat race and starting your own company? You aren't on your own. There are 5.7 million SME's in the UK at the time of publication, and they underpin the UK economy, and according to the Business Statistics from Parliament Statistics report from 2018, 96% of those are micro businesses with 0-9 employees. So there's a good chance of carving out a niche for yourself.
It's also worth noting that these businesses can also fail, and it's a good idea to protect yourself, if you can, against the complete loss of income which might even lead to you becoming homeless, so if you can have a backup plan, or an escape route, that might be a good idea. It makes having a go at starting a business a bit less risky, and hopefully a bit less pressured.
1. First thing you need is an idea. A commercially viable idea. By that I mean that your idea has to be something you can sell, or a service you can offer that will generate revenue for you. It can help to put together a business plan, with strengths and weaknesses and to identify who your competition are and how you can differ from them in your offering.
2. It's a good idea to think about who your potential customers are. Who needs your products and services. Are they male/female or both? What age range are they? Are they local, or nationwide? It's a good idea to have a target market, but don't limit yourself to being so specific in your customer targeting that you miss out on customers from other areas that you didn't think would be interested. When you have an idea of your potential customer base, it's a good idea to think about where they hang out - and how you are going to reach them.
3. You're going to need to make a profit on what you do. Not in a horrific money grabbing, un-ethical kind of way (unless that's the company profile your thinking of starting) but if you have costs and bills and what you sell doesn't cover those costs, you aren't going to be able to cover those costs long term. If you don't cover your costs and make a little extra (profit) then you won't have any money to pay yourself. Short term, for example at the beginning of setting up your company, your costs could be high and you might want to plough your profits back in rather than take a salary to help your company to grow. As long as you factor that in and have money coming in or stored to use up while you get through the growth period, you'll be ok. Leave yourself short and you might end up in a pickle very quickly.
4. Any business is going to need a place to operate from. A phone number, a business address or home address will allow you to have a company bank account and a reference point to add your company into the Google business listings. Even if you are going to be fully internet based, you'll need a web address at least so that people can find you. And if you don't feel you do need an address for the services you are offering, where will you be working from, what will you need (i.e. an internet connection) and how will you fund it?
5. It's a good idea to have some way of processing your company transactions. You might need to generate invoices, receipts and store information about the expenses you have incurred, because you're going to need to talk to the tax man. The more robust your data collection, the easier to file your tax returns.
6. When you have your products or services sorted, you need to know how you are going to make them, and/or distribute them. Will you send via courier, or Royal Mail, or direct downloads online? Is there a cost involved? Will you pass it on as a separate shipping charge, or add it to the prices of your product range so that you can offer free shipping. If it involves a download, do you need to make sure the files are as small as possible, or can you provide a link so that it doesn't clog up any email systems?
7. It would also be a good idea to look at a payment gateway. How are you going to process the payments that are coming in? Will you have a separate bank account? Will your provider pay you straight away, or will they hang on to it before passing it over, and if they do hang on to your money, will that create a shortfall in your cash flow? What fees do they take to process payments - try to find a reasonably priced provider who doesn't withhold your payments.
8. Getting a new business off the ground is probably going to require a lot of time, and a lot of effort on your part. Holidays, evenings off and weekends might be a thing of the past for a while until things really get going. Can you cope with the loss of time and freedom? For some this might mean waiting until the kids are in bed before doing some tasks, or working all day, and then also into the night until you can afford to take on some help. Not that this is the end of the world, or impossible to achieve, but it's a good idea to have in the back of your mind that the more you put in, the better your business will do. Results might not be instant either, it might take a while for some of your marketing efforts to come to fruit.
9. Marketing your company will definitely make a difference to what you achieve, so should always be up for consideration. Keeping costs down initially is a bonus, so social media, emails, Facebook posts are a great way to get out there for little to no cost. There is however a time factor involved in learning how to do social media, and making sure that you are doing it well. But I do think this one is worth it in the grand scheme of things.
10. Getting an online presence sorted is a very good idea, as we don't really use the Yellow Pages as a nation anymore. Nowadays you need to be listed on Google to be found or Facebook/Insta or any of those that allow you to have an online doorway. Price/time/skill and determination are some of the factors here which may or may not help. You could also run Pay Per Click campaigns and do little tests to see which adverts and landing pages have the better results for you. The good news is that there is absolutely tonnes of help online which can be accessed freely. You might find that your bank has some great ideas and even free courses you can attend, and even if these aren't related to you directly, they are a good source of ideas from the lecturers and other listeners alike, plus it helps to get you into the right mindset of buzzing around looking for ways to take steps forwards with your company.
Local councils may have some advice for business start ups and may even provide funding and financial help in your area. This isn't always the case, but it is always worth asking the question. You never know what doors that might open for you in a way you totally were not expecting. So, food for thought, try to gather information and move forward with your idea, don't cripple yourself with doubt and worry about what might happen and let that stop you from even trying to have a go. The next article in this series will look at more specifics of how to be a successful business startup.