Starting up a business can be a daunting experience. But following a few simple steps can help ensure you give yourself the best chance of making it a success, writes Christopher Allen.
Starting a business can be a challenge, especially if you haven’t done it before. It may prove to be a minefield as there are a number of activities a business owner will need to undertake, such as registering, identifying costs, marketing and filling annual returns. It is worth testing the market prior to launch, in order to understand what works well. This can be done by speaking with potential customers, suppliers and competitors to minimise risk.
Unfortunately, as every business is different, there isn’t a one-size-fits-all approach. However, there are a number of practices a business owner can undertake in order to minimise risk.
Have you identified the reason you are starting a business? If your idea is based around a hobby or an interest, that’s great, as it might not seem like work. However, if money is your sole motivation, I would suggest going back to the drawing board to re-evaluate.
When times get tough – which they will – you will need to be driven, determined and able to use your expertise to get through. We all need money to survive and pay the bills, but it shouldn’t be the only reason you are starting a business.
It’s important to have a plan – it will provide you with an outline for how your business will operate, and set out your revenue projections. The plan should be subject to change as the business develops and takes form.
From experience, I’ve noticed that many start-ups either don’t have a plan or spend too long trying to create the ‘perfect’ plan. I would suggest creating a simple business plan and amending it on a regular basis. The real planning takes place when you start getting your hands dirty.
Starting a business will inevitably involve spending money on items
such as equipment, professional fees and vehicles. I’d suggest creating a list of the items you require and then categorising them into ‘urgent’ and ‘desirable’ items. For example, if you are a freelance personal trainer, it is important to purchase public liability insurance and business cards. Items such as an exercise bike or a vehicle can be acquired once your profits and client base increase.
I regularly advise businesses to operate on an organic basis, which involves using free or low-cost services, such as logo-makers and website builders, before spending. There are a number of free gifting websites such as Freecycle and Gumtree where members give away items ranging from office equipment to beds to punch bags.
Another factor to consider, if your business involves buying stock, is that purchasing high levels of stock can have a negative impact on your cash flow. In most cases it is cheaper to buy larger quantities of stock. However, if you are unable to sell the items, you could be left with deadstock, which could be costly. You might want to purchase smaller quantities of stock initially, and then buy more once you have sold the original stock.
A business partner can bring a number of advantages – they may share best practice, provide additional capital, or be able to help with a specific task. Equally, they could hinder the business if you have a difference of opinion that leads to deadlock.
Choosing a business partner shouldn’t be rushed and should be carefully thought through. It can be compared to entering into a relationship, as there are different factors to consider. Can you work with them in a business setting? Are they trustworthy? How can they add value to the business? How much are they worth?
There is no such thing as the perfect business partner – everyone has different skillsets and attributes. However, it is important to find a partner who has experience and who you can work with, as you may be spending most of each day with them.
A good way to identify whether you can work with someone is to work on a small project together. This should allow you to understand their work ethic – and whether they can do the work.