Starting a Business – The Simply Business guide
First steps towards starting your business
Starting up as an entrepreneur can be an exciting experience where you will be able to pursue long-held aspirations andbe your own boss. But before taking that first step, there are a few things to bear in mind and much preparation should be made before taking that leap into the unknown.
“Starting a new business is both exciting and rewarding, but it is also full of challenges. The level of commitment that you will need should not be underestimated,” says Steven Sharpe. “The success of your business will partly depend on your attitude and skills. This means being honest about a range of issues – your knowledge, your financial status and the personal qualities that you can bring to your new business.”
Step 1: Making sure it’s the right thing to do
Before giving up the day job and the company perks and blowing your life’s savings, it’s worth having a long hard think about whether or not starting up on your own is really the right thing to do.
Business Link outlines a number of areas that should be considered, the most significant of which is the financial insecurity that starting up in business can cause. In addition to having to dip into savings, it may be necessary to use your home as collateral against a loan. There is also the chance that holidays might have to be abandoned during the early years of the business. And the perks given from a previous employer – such as a pension, sick pay, holiday with pay – will all become a thing of the past.
Financial insecurity on this basis can lead to increased pressure on personal relationships. So before starting on the road to self-employment, it is worth checking that the most important people in your life are prepared to travel down that road with you.
Step 2: Having what it takes
The second stage of the process is to ensure you have the right skills and qualities needed to make a success of the business.
Business Link highlights research showing that the most successful individuals in the world of business possess a number of core qualities, including self-confidence, sound judgement, open-mindedness, commitment for when the times get tough and the ability to be resourceful and show initiative.
And in addition to these qualities, it is also important to have a number of business-related skills so it is worth considering which ones you do or do not have before committing to the entrepreneurial process. Some of the questions you should be asked could perhaps include “how good are my financial management skills?”; “can I manage people?”; “what marketing skills do I possess?” and “what are my sales skills?”
Many of these business skills can be learnt but only if you also have a deep understanding and knowledge of the industry you wish to enter. Once you are sure you have what it takes to run a successful business, you can move on to the third stage of the process.
Step 3: Market research (or ‘will you make any money?’)
In order for your business to succeed it must be viable financially and there must be a market for whatever the business will be selling, whether it’s a service or product.
There are many different ways in which market research can be conducted, including informal chats with family members or friends, speaking to contacts, polling consumers who purchase competitor’s products and even consulting demographic and economic data.
The research does not need to cost a substantial amount of money, but it does need to be done. “A common misconception is that entrepreneurs who fail simply lacked sufficient funding or did not put the right team in place. In many cases new businesses fail because they have not spent enough time on researching their business idea and its viability in the market,” said Business Link.
Step 4: Finding the funding
If, after taking all of these other things into account, starting a business still seems like the right thing to do, the next step is to consider how you will fund it.
Do you have savings that can be invested and if this won’t be enough, how much money will you need to borrow as a way of financing the venture? Drawing up a detailed financial plan will help you to find the best solution.
Above all, it is important to realise that a business is not going to be a financial hit in the short term and managing cash flow is vital. For businesses that are paid via invoicing, keeping control of cash flow could be as simple as taking out a Factoring facility. Less risky and expensive than long term debt, Factoring ensures that you always have the money you are owed up front.
There are many things which will claim a slice of your finances, including essential items such as business insurance. Make a list of these upfront so that you’ll know how much start-up funding will be needed and then what you expect your monthly expenses to be.
Business loans are few and far between right now so making sure there finance is there before any new venture is launched is a priority. Start with Family & Friends.
There are many more steps to be taken on the road to starting a business once these four initial stages have been accomplished and you are sure of the way forward. But the first ones are usually the most important and should not be avoided.
Contact us to help you get started or move to the next level.