Starting your own small business can be both difficult and rewarding and often a learn-as-you-go process. Making more smart decisions early on, will better the chances of success. Neil Large, partner in our corporate team, shares his top ten tips.
Address excuses: Countless people dream of becoming entrepreneurs, but they never do. They’re burdened with excuses and fears of failing. From money to time to responsibilities, you can make a million cases for not starting a business. Let’s face it, being your own boss is scary. In most cases, new business owners have a lot to lose with little insight into their chances of success. Worrying about the risks of business ownership is normal. But, excuses only slow you down from reaching your goals. If you really want to start a business, you need to address the reasons you think you can’t start a business and get rid of them. Find a solution to the issue rather than let it hold you back.
Absorb everything: Listen to what others have to say—friends, family, experts, even yourself. When it comes to things that have to do with your entrepreneurial goals, be a sponge. As you learn, start to work out the idea in your head. Write things down. Keep notes from all the resources you come across to develop a detailed plan. When you tell people about your start-up, read their body language. Do they like the idea? Or, are they just being nice and really think you’re going in the wrong direction? Encourage your listeners to be honest with you. The collective opinion you get from peers could be a reflection of how consumers will react. Don’t ignore the power of advice from experts and veteran business owners. These folks know first-hand what does and doesn’t work. Smart entrepreneurs learn from the mistakes other business owners have made.
Be a solution: Rather than starting your idea with what to sell, think about what it will solve. It’s a lot easier to gain a solid customer base when your business is fixing a problem. Your start up should fill a hole in a certain market or niche or solve an issue that small business owners face. Home in on why you are opening your own business. Understanding your motives will help you create a brand and market your company. Know what problems your target customers face and how you can solve them.
Keep it simple: Be careful not to let your concept snowball into something overcomplicated. You could end up with an expensive, elaborate end-product that nobody wants to buy. As a new business owner, try to start small and narrow your focus. Learn how to test your business idea. Create a simple, quality good or service. A successful business idea should fulfil promises to customers and exceed expectations. Cut unnecessary features that water down your offerings and cost you money. As a small business, you don’t need all the bells and whistles of a giant corporation. It will be easier to add to your business as it grows.
Count the costs: Once you start to develop your business idea, add up how much it will cost. You will need to factor in every business expense necessary to launch and operate. Come up with the most educated number you possibly can then time it by four. Yes four - you’ll experience unexpected costs of running a business around every corner. It’s better to be over prepared than short on funds when bills start to roll in. When you're thinking of the cost to start a business, don’t forget about your personal budget. Look at how much money you need to live and lay these expenses out in order of which ones you must pay to ones that can slide if the money runs out. Once you have a grasp on all your expenses, start to create a business budget. Research the market for start up business loans and grants before putting your money into the start-up.
Imagine yourself with zero money: There is a high probability that this will happen. Many start up businesses do not make it for the long haul. Over half of new businesses fail within the first five years of opening. How would you handle having no incoming money? It’s a good idea to come up with a “just in case the worst outcome happens” plan. You might need to get a job on-the-fly or temporarily live with your parents. You might have to go without comforts that you’re used to. Figure out how you would get by if your business plan went south. Look at your current sources of income. What do you earn from your current job? How long would your savings last if you quit? What unexpected things could mess up your plan (e.g. you write off your car or your boiler breaks)? Prepare yourself for all the situations that could happen if the business idea doesn’t work out.
Earn while you build: If you want to start a small business, don't quit your day job—yet. Launching a successful start-up is a process. Build your business in stages and gradually transition from employee to entrepreneur. As a new business owner, it will take some time to earn a steady income. Keep your nine-to-five and work on the business during off hours so you can earn during those tough, first stages. Once you have a healthy inflow of cash from your company, you can tackle business ownership full time.
Speak up about your business: One challenge many business owners face is that they don’t know how to sell. It can be intimidating to share your business with the world, especially when you’re new. If you’re worried what people will think about your business, you need to get over it. If you can’t convince consumers to buy from you and support your company, it’s difficult to make money. Not outgoing? Are you more of an introvert than extrovert? Fake it until you make it - you need to “put yourself out there” for the sake of my business. If you really want business success, you can’t afford to be shy and need to get out of your comfort zone. You might be afraid at first but just get on and do it, you will become more and more comfortable and confident as time goes on. Always be ready to speak confidently about your business, even if it makes you uncomfortable. As a new business owner, you will need to market and network constantly. From networking with clients to negotiating supplier payment terms, you must be able to communicate.
Structure and knowing the legal requirements: Starting a business is exciting. Structuring it correct and knowing the laws are not. But, you need to start the business with the correct legal structure and to understand the rules that come with operating a business. If you fail to follow relevant laws or regulations you could face steep penalties. As you hire workers, you need to follow employment laws. Consult with a business lawyer who can advise on different business structures and which is best for you, and also help you navigate through all relevant laws and regulations. You will also need an accountant to prepare business accounts and help you provide for business tax liabilities.
Balance passion with wisdom: One of the most important ingredients in a successful business idea is passion. Passion will consistently drive you to improve your process so your business grows. That said, don’t let passion take over all your decisions. Passion will move you forward, but knowledge will point you in the right direction. Conduct market research on your industry and talk to target customers to find out your business’s potential. Ask experts questions about launching a start-up. Reach out to professionals that can help you with certain areas of business, such as accountants, financial advisors and business lawyers. As your business starts to come together, think of it like driving a car. Let your passion hit the gas pedal and your mind control the steering wheel. That way, you can be confident about the direction you’re headed and sustain the momentum you need to get there.
For an informal chat, or to arrange a coffee meeting, to discuss any ways in which we might be able to help your business start-up, please contact Neil Large, Corporate Partner, on 07551 756 438 or firstname.lastname@example.org