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Starting up your own business: Be your own boss, make more money, fulfil your dreams… there are numerous reasons why people decide to start up their own business.
A guide to help you start forming your business idea into a business reality will follow, divided into easy-to-use sections:
Individual attributes and skills It’s a huge decision to start your own business. And one that should take lots of consideration. You should be positive that it’s what you really want to do-and that you’ll be able to see it through.
A fantastic product is not the be all and end all. And hard work alone won’t always be enough. It is tough starting your own business and not necessarily for everyone. But the benefits – both financial and personal can be extremely gratifying.
As well as examining your business idea closely, you should examine yourself closely and understand the impending personal and financial impact starting a business could have on you.
Perhaps most importantly, are you enthusiastic to learn? Because you should not expect to know everything right from the beginning. And you will not get everything correct. But if you are able to learn from your mistakes, and acknowledge your own weaknesses, success will be that much easier.
There is no sole “secret to success”. However, there is a general list of individual’s attributes and skills that we have found in many successful business people, listed below.
Questions to ask yourself
Check Points
Be dedicated to seeing your business through both successes and hindrances
Have a scrupulous understanding of the financial side of your business
Be prepared to consider and make the most of change
Your days will seldom be 9 to 5
Keep control of your time, your business and any staff
Know your customers and how to account for their needs
Be passionate and certain of your own success
You’ll need to generate opportunities for yourself
The huge decisions will be yours, and only yours
Expertise within a specific area could be a real advantage which sets your business apart.
Carrying out your business plan Fashion Enter understands that temptation will arise to start up your own business as soon as possible. But you should resist the urge until you have completed a business plan. You will be reassured about the prospects for your idea when you see its path mapped out clearly. And whoever needs convincing about your business idea will also be reassured by your professional, detailed approach.
A carefully considered business plan will also amplify your chance of success. You’ll be able to see straight away where any possible problems could arise. Being able to address these obstacles as soon as possible will make them much easier to overcome.
Your business goals Providing yourself with a clear direction to take, and creating goals to achieve will keep you determined in the early days of starting your business. Your goals could turn out to be either too ambitious or too modest. Do you fancy yourself as a market leader? Or would you just prefer to earn a decent living doing what you enjoy?
Within the business plan you should consider both short-term and long-term goals. They should be both achievable and pragmatic. If you need further advice, your local Enterprise Agency or Business Link can offer their assistance.
Researching for your Business Now that you have taken a closer look and familiarised yourself with the business plan, its time to concentrate on your business idea. Will you be selling a product? Providing a service? Will you be targeting consumers or other businesses? What price do you intend to charge?
All of these questions need to be taken into consideration before you start a business. At this point, you need to carefully plan and research. What you find out now will be invaluable when launching your business, and marketing in the future.
You will need to consider the following:
Know your product or service Your first point of research is into your business idea itself. It does not have to be entirely original, but whatever you will provide will have to stand out from other competitors. Is anyone else selling anything similar? What makes yours better?
Once you have a clear idea of what you’ve decided to sell, and why you would buy it, you’ll find it that much easier to convince others to do the same.
Decide your price Pricing is vital. Are you aiming to be the cheapest around? Or are you looking to be more exclusive and expensive? Of course you need to charge a price that will cover business costs, and hopefully provide a decent profit. By establishing the price your competitors charge, you’ll get an overview of what your customers are willing to pay for your product/service. But take into consideration that the more competition you encounter, the lower the prices will have to be. Try to avoid competing on price alone as consumers will still be looking for quality.
Know your market It’s important to know as much as possible about the market you’re about to join. You need to be convinced that you will genuinely be able to compete. Can you see an existing demand for your product or service? How great is the competition? And is this a growing market or is consumer demand slipping? The last thing you want to do is enter yourself in a market where demand is falling.
There are many resources that can help you gather as much information as possible.
Your local business support organisations, like Business Link or Enterprise Agencies, will be able to provide you with useful information.
You can consult trade publications, industry organisations and market research companies in order to find out the size of your market and what state it is in. Your local library and the internet will also enable you access to more valuable resources for gathering present information on your chosen market.
Know your competitors Unless you are offering a brand new product or service, you will have competition. Your business will only succeed if you can attract customers away from the competition. By researching issues like the structure of pricing and business profile of your competitors, you will be able to identify their weaknesses and use them to your fullest advantage.
This can be achieved by visiting your competitors’ shops and ringing them to compare what kind of service they provide. Then you will have a better idea of what you need to do to provide a better service and product than that of the competition.
A careful look at the competition may also reveal a gap in the market that you had not noticed previously. And that will give you the advantage of entering the market in a stronger position with your unique offering.
Know your customers It’s fundamental to identify your customers from the beginning. Who will be your target consumers? And how will you reach them? If you note the key characteristics of your potential customers-their age, sex, income, interests and hobbies, etc – it will aid your marketing and planning decisions. The more you know abut the kind of people you wish to target, the easier you’ll find it to market your product/service to them successfully.
For example you could visit the premises of your competitors and acknowledge the type of customers that are using a similar product/service. You could also interview your friends and family about what type of customers they think would use your product/service – they may offer you valuable, objective ideas you have not thought of before.
Your business location – home or away? Once you’ve verified the “what” of your business market, you will need to consider the “where”. Inevitably your decision will be based on what your business will be.
Make sure you look closely at any possible locations. There will be many issues to be considered:
Working from home For many new businesses, starting at home is the easiest and least expensive option. Ensure that this arrangement suits you. Family members and home issues can tend to be all too distracting.
You will need to contact your mortgage lender, home insurance provider, landlord or local authority to find out if there are any restrictions on running a business from your home.
Naming your business This might seem like the simplest decision to make but do not underestimate the importance of naming your business. It will need to instantly reflect the kind of image you wish your business to have, and stick out in customer’s minds. You should also certify that whatever name you choose will not restrict potential future growth. Likewise, take caution that the name you’re thinking of does not belong to another business within the market. You should look in the Yellow Pages or Thompson Local to confirm it does not already locally exist.
Test out any names you are considering on your friends and family. Their objective opinions should help direct your verdict, as these are the sort of people who could be your potential customers.
Decide your business type and ownership You know that you want to turn your idea into a business. But what type of business do you want it to be? It can be a bit confusing, working your way through all the formats your business can take. It can also be difficult to decide which one is right for you.
There are provided brief summaries of the different business types and ownership opportunities available, with advantages and disadvantages below. This should help you decide which the right path for you to take is.
Starting from scratch Building your own business from scratch can be extremely rewarding. As your business expands and becomes a success, you will know that it was all because of you. But with this greater reward inevitably comes a greater risk, having to rely completely on yourself can also by overwhelming. You will have to go the extra mile right from start as nothing will be in place until you put it there.
Buying a business With a formation already in place, past performances to view and an existing customer base, the benefits of buying a business are obvious. However you will need more money up front for the purchase but a lot of the initial obstacles will have been taken care of for you. Take into consideration that this isn’t always a positive thing. When you purchase a business you also buy the current reputation, and that could easily be a bad one. You will also need to confirm that the previous owner isn’t opening competitive business.
Buying a franchise Becoming a franchisee is an ever more popular way to start your own business. You claim the independence of being your own boss and support the reputation of an already established company behind you. There will be limitations to your role as “boss”, however. Habitually you won’t have the freedom to change the service or product. And pessimistic publicity surrounding any other franchise will also directly affect your business. You will also need to choose your method of business ownership: sole trader, partnership or limited company.
Sole trader If you have decided to work alone, your best option is to become a sole trader. It is the easiest way to own a business that will minimise your legal costs. You will need to let the income tax and social security authorities that you will be working for yourself. As a sole trader, all the profits will be yours but of course any debt that you take on will also be your responsibility.
Partnership If other people are involved in your business idea, you should consider starting up as a partnership. It is very similar to being a sole trader, except that all of the costs and profits are shared between the partners. A partnership can also enable the responsibility and work to be equally shared, which can ease the pressure off. We do encourage that you draw up a partnership agreement to protect your own interests as an individual.
Limited company There is a more complex form of business ownership. As the director of a limited company, you will not be personally responsible for the debts of your business, as a company is detached from the owners. You will receive a salary just like any other employee. Running a limited company involves very specific rules and regulations, and will probably need the assistance of a solicitor or accountant. The initial set-up costs will be greater, due to registration fees with Companies House and submit regular financial statements.
Producing preliminary resource plans You should be feeling more confident about the potential your idea has and the ability to make it work. You should now consider the initial resources you’ll need to start up the business.
Money Will you need start-up funds to launch your business? More often than not, you will have to wait quite a while before your new business starts to bring in any income. And you may still need ready cash to buy supplies and pay any wages. Do you have sufficient money to overcome this period? Or would you prefer to borrow money right from the word go. These are the essential financial questions that you need to be asking yourself.
People Depending on the size and nature of your business, you may be looking to employ staff straight away. Bear in mind that this will inevitably increase your initial costs. If you think that you may need part-time help, consider approaching an agency for temporary staff.
If employing other people is a necessity, there are employment law requirements. You’ll need to be aware of, like tax, the minimum wage, discrimination, National Insurance and your legal responsibilities as an employer. For more thorough advice on employment law we advise you speak to a solicitor.
Ready to start your business You’ve come up with the business idea, you’ve considered it carefully and you are certain that you can make it work. Your business plan is in order, and you’re ready to take the first steps towards setting up and running your own business.
By Emily Tullett
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