STARTING A BUSINESS

Whether you're thinking seriously about starting your own business, or you're already up and running, it's worth taking a bit of time to make sure you've done everything you need to do.
Knowing your market, your competitors and the potential demand for your product or services is the key to successful planning. Without accurate estimates of sales revenues, cash flow forecasting and budgeting will be next to impossible.
Throughout the process of finalising your ideas, you should be writing down notes and calculations, ready to compile a formal business plan. This step is an important one, as you need to consider all of the options available to you before proceeding. Will you be starting from scratch, buying, franchising or commencing your business by another method? Will you be preparing a formal business plan? What is your basic business model, high street shop, wholesale, working from home or perhaps trading over the Internet? What legal entity will your business take, a sole trader, partnership or limited company?
Before taking the final plunge, or even starting your business plan, it is imperative to conduct some form of market research. Market research is basically the process of assessing how large the potential market for your particular product or service is, and how much of that market you can expect to attain. It is not sufficient however to simply say that the market for product 'x' is £5M per annum and that you will corner 20% of the market. You need facts and figures, you must consider the competition, and be realistic.

Having formalised your ideas in your own mind, the next step is to prepare a business plan. You may feel that this is not necessary, but if your new venture requires any sort of finance either now or in the near future, a professional business plan is an absolute necessity to properly convey your new venture to your potential business partners. A business plan also helps give direction and focus to your business activities.
Starting a new business can be stressful enough without having to worry about, tax, national insurance, vat, health & safety, audited accounts, - or as it is commonly known 'Red Tape'. Of course, not every business needs to have all of these areas investigated before commencing business: i.e. you do not have to register or compile VAT figures if your turnover is less than £56,000, or National Insurance if you do not earn more than £77 a week.
The lifeblood of any business is its ability to collect cash and pay bills as well as pay employees, particularly its owners. Far too often small businesses are profitable, but they do not have enough operating capital to meet their current needs. Consequently, they may be forced to sell out to a stronger competitor, sell a portion of the company to investors at an undesirable price or close the doors and put the company out of business. None of these alternatives are typically what the owners intended when starting the business therefore the more effort that is put into cash forecasting the better will be the educated guess and the more accurate the resultant picture of the future operations of your business.
If you are thinking of starting a small business go and talk to your bank manager - don't wait until you need finance, overdraft etc. - let them see you in good times also. You must understand cash flow and profit to ensure survivability, and to enable you to plan medium-long-term targets.

Reading articles or books about starting a business is worthwhile, but nothing beats talking to other small business owners. Don't just look at your competitors who are bigger/better than you - look at those that are smaller/worse than you - see what you are doing right, and also what not to let happen

It is also important to make time to visit customers: invite them to your premises if they will gain from the experience - customers like the personal touch. Getting customers can be the hardest part of starting any business. If you cannot sell, you must have someone who can. Even the greatest of products will not sell themselves. Paying commission on number of sales completed is the way many start-ups tackle this issue.

Finally, business owners should set examples to staff - if you do not give 100% your staff are unlikely to give you 50%, but do not demand 101% from your staff - let them choose to give it to you as a mark of their respect for you and your leadership.

 

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