The fact that more than half of new businesses in the UK don’t survive beyond their first five years may be down to a wide range of factors, but it certainly indicates that you should not skimp on planning if you are looking to start your own business.
1. Your business idea
Don’t start a business on a whim. That supposedly incredibly innovative idea may have already been tried unsuccessfully (due to the lack of a market) or successfully (by a company that you may not be aware of, but which has already cornered the part of the market you were aiming at).
2. Your USP
If there’s already a lot of competition out there, what makes your business an attractive and worthwhile addition to the sector? Does it cater to a different end of the market, or emphasise an especially personal customer service? Your unique sales proposition (USP) should clearly outline the key benefits to your target customers that they cannot get from another company.
3. Your target audience
You’ll get nowhere if you try to appeal to everyone; you need to be precise about this one. Consult the audience that you reckon would be receptive to the business that you have in mind, and ensure that everything your business does is geared towards their needs and expectations.
4. Initial funding
Ideally, you will have enough money to start out without the need for external assistance. In reality, a bit of help is often required. Whether you turn to the ‘bank of mum or dad’, seek a bank loan or keep an eye out for an investor, your funding plan needs to be carefully thought-out and (preferably) not too risky.
5. The business plan
Every business needs a business plan; indeed, prospective investors will demand to see it. Even if you are funding everything yourself, a solid business plan can give you that crucial reassurance that your business idea has the strongest possible chance of working out well.
6. Whether to set up as a sole trader or limited company
This is not an insignificant decision, as it will make a big difference to the amount of tax that you pay and your legal and financial responsibilities.
7. How and what to pay yourself
A balance needs to be struck between paying yourself enough to survive and not indulging in personal luxuries when that excess money instead ought to be ploughed into the business. The bank and any investors will want to see your outgoings clearly detailed in your business plan, so stick to a sensible level of remuneration.
8. How the business will be promoted
What’s the point of a great business that no one knows about? You will need to think carefully about marketing methods ranging from advertisements in the traditional printed press to social media and SEO. Which of them make the most sense for your firm?
9. Tax and accounting
Don’t dismiss an accountant or tax adviser as an inessential bean-counter; these are the people who know how to keep you on the right side of the law, while also achieving the most favourable tax arrangements for your business.
10. Your route to market
How will you start selling to your customers? Will you be a modest eBay business at first, or will you aim to attract business mainly through networking events? Much depends on whether your firm is a business-to-business (B2B) or business-to-consumer (B2C) one, as well as its industry.
11. What people to work with
The right business partners can make all of the difference. Are there companies in complementary sectors that you could work with? Could you do with a business partner whose area of expertise differs significantly from yours?
12. Your business name
There’s a lot in a name, so give this aspect a great deal of thought. What kind of name best sums up, in a memorable and brand-relevant way, what your business does? Do you want to emphasise the local aspect with your business name, or are you looking further afield? Is your name a distinctive one that will pop up first when someone searches for it in Google?
13. Those other knotty legal factors
Your business could be halted before it even begins if it doesn’t comply with the law. If you’re opening a bar selling alcohol, for instance, have you spoken to the local council first about whether any special licenses will be needed to do so?
What technology would make a difference to the effective running of your company? Are there certain mobile apps or cloud solutions that could boost productivity, for example?
It’s the ultimate cliché that your company is its people, but it’s true. Don’t just consider skills and experience; also give thought to candidates’ longer-term aspirations and how well they would fit in with the intended day-to-day culture of your business.
Will you be able to informally train your staff ‘on the job’, or will you need to seek more specialised courses? Is there any extra expertise that you could do with acquiring yourself?
Various forms of cover, from employers’ liability insurance to public liability insurance, may be necessary, depending on how your business operates and what it does.
18. When to start
Don’t necessarily quit the day job straight away; you may need that stable salary for now while you build up your business in your spare time. Wait until your firm genuinely needs your full-time attention.
19. Your online presence
It’s not a case of ‘just having a website’ anymore. You’ll also need to consider the appropriate social media presence to have, for example, and how your site will be optimised for SEO.
20. Work-life balance
Many of those starting out in business aren’t prepared for the sheer hours of hard graft that are required for many weeks, months and even years to achieve success. What are your expectations for your new business in terms of work-life balance, and how realistic are they?
Having an experienced mentor to turn to for advice can be invaluable when you are starting out for yourself, especially if you have never run a business previously.
22. Company location
Is your business a customer-oriented one that absolutely must be on the high street? Where are businesses similar to yours generally based? What are your requirements in terms of affordable rents and transport connections for your commuting staff?
23. Your business bank account
The best source of a business bank account isn’t necessarily the bank that you already use as a consumer. When considering a particular bank, scrutinise its sign-up incentives as well as its overall ‘fit’ for your business.
24. What the competition is doing
There are certain things that your competitors will do well, and certain things that they won’t; look closely at all of them. Consider how your business could fit in among its rivals and offer something truly distinctive.
25. Your business communications
How will you be principally communicating with clients, customers and other stakeholders? ‘Just having a telephone’ isn’t necessarily enough; you may want to create a PIN-less calling account, for example, for making cheap calls to India and other countries that you intend to do business with regularly.
Use this article as your introductory ‘cheat sheet’ when looking to start a business, and you can help to maximise its chances of success, while minimising the likelihood that it will end up a mere statistic.