You have finally plucked up the courage to start your dream business. It’s a daunting decision for anyone but, rest assured, you are not alone.
In 2017, over 589,000 start-ups were launched in the UK. That’s 67 start-ups per hour.
Taking the leap of faith into start-up life is one of the hardest challenges you will ever face. It’s an adrenaline-filled adventure but can be worth every ounce of the risk.
Taking the plunge
For Matt Jonns, CEO of ucreate, there was no other option than to work for himself. ‘I worked in my Dad’s music shop from the age of 12 and straightaway knew that I wanted to create something of my own.
‘I saw the joy it brought my dad; the look of pride on his face and the knowledge that he owned his own fate.’
So, when Matt was 19 and the opportunity arose for him to run the music business full time, he couldn’t say no. ‘With little hesitation I dropped out of university and prepared for the next phase of my life.’
Matt didn’t just want to continue the business; he wanted to transform it. ‘Taking inspiration from Amazon, I shifted the business to an online marketplace with warehousing facilities, a sales team and a music school,’ he explains.
This is not a typical founder journey. In fact, with the average age of a UK founder being 47, it’s far from it. But as Matt says, no matter your position, one consistent piece of advice always applies: ‘Work out the opportunity cost before you start.’
Some factors to consider are:
Your knowledge of the industry: Are you an expert in the field? Do you have an existing network you can tap into? Do you know the market and your competitors?
The opportunity in the space: Are you providing a scalable solution? Is the market saturated? Are there similar companies already in existence? If you are starting a small lifestyle business this is less important, but it’s still vital that you have an understanding of the space.
The impact on your life and those around you: Are you in a place to risk making less money for a while? Are you willing to sacrifice your social life? What will be the impact on your family?
And the golden question…
How/will it generate revenue? Your idea must be profitable. If you can’t generate revenue, you can’t exist. Too often we see founders relying on investment for survival. Although great in the short term, this process is unsustainable and will be the downfall of their business.
Removing your blinkers
A study by CB Insights last year found that 42 per cent of start-ups fail due to lack of need. ‘I often see founders caught up in their own idea,’ Matt says. ‘They build a product based on personal assumptions rather than what the market actually wants. Nine times out of ten, these are the start-ups that fail.’
The solution? To objectively evaluate an idea before committing to your business. There are now hundreds of free tools and hacks online that can help you validate your business idea. However, for a more robust approach, you can join a start-up studio, which can provide you with unrivalled insights into business concepts and get you ‘investor ready’ within a matter of weeks.
The best founders continue this flexible mentality, throughout their business. ‘If their business model stops working, they create a new one,’ Matt says. ‘Great companies like Instagram, Groupon and Paypal wouldn’t be here today if their founders were afraid to pivot.’
You don’t need to know how to code to build a tech business
Matt believes there’s a common myth in the start-up world that the top tech businesses were all created by tech wizards. ‘Coders who built their product from the ground up one line of code at a time. Then boom! success, money, fame.’
However, the truth of the matter is far different, he says. ‘Take Brian Chesky (Founder of Airbnb), Sean Rad (Founder of Tinder) or Michael Dell (Founder of Dell). All three of these founders didn’t code their own business. Yet, all three built some of the most valuable tech businesses of the last decade.’
These three powerhouses are more than just a snapshot of the success of non-tech founders. They are definitive proof that it doesn’t matter if you lack tech expertise, as long as you bring other attributes such as vision, ambition and desire, you can have a successful tech business.
Is a utopian start possible?
Start-up life is unpredictable and addictive; part of the reason so many people love it. But this unpredictable nature means that founders you will face a few curve balls on your journey.
When Matt started his business, his first customer didn’t have the funds to pay. When he started prior company Umbrella Music, he had issues with web development. ‘These challenges are part of the start-up landscape.’
Ultimately, it doesn’t matter if you bootstrap or gain funding, if you outsource your work or do it all yourself if you find a CTO or team up with a start-up studio. You’ll always face unexpected surprises and hurdles that are out of your control.
‘Great entrepreneurs roll with the cards they are dealt. When life doesn’t go their way, they learn a lesson. It shapes them and their business. So a utopian start probably isn’t possible… But there wouldn’t be world class start-ups if it was.’
See also: Five top tips for launching a global business
10 tips to help launch your business
Many people think of making a new start by setting up in business for themselves, but are not sure where to begin and so never do. Check out these top tips to get a better idea of what you need to do to get started.
There are many considerations when starting up a brand new small business and most essential of all is the planning,’ says Mark Thompson, Head of commercial product development at Norwich Union.
‘From meeting your financial needs and understanding tax implications to knowing your consumer and insuring yourself against potential pitfalls, every single aspect of running your business must be properly thought through. Once you have your plan of attack, only then should you consider your launch.’
1. Do what you love
You’re going to devote a lot of time and energy to starting a business and building it into a successful enterprise, so it’s really important that you truly deeply enjoy what you do, whether it be running fishing charters, creating pottery or simply challenging yourself to be a success.
2. Write a business plan
The main reason for doing a business plan first is that it can help you clarify exactly what is needed to convince yourself and, more importantly, your bank manager and partners that the business can succeed
3. Don’t become dependent on your business from the outset
It may be a long time before your new project makes any profits. Having savings or another job while you’re starting out means money in your pocket while you’re going through the business start up process.
4. Insure your business
You’re entering uncharted territory so a comprehensive plan and advice from an insurance company will make you feel more secure
5. Get clients or customers first
Don’t wait until you’ve officially started your business to line these up. Make sure your target market exists. Make the contacts. Sell or even give away your products or services. You can’t start marketing too soon.
6. Do the research
You need to become an expert on your industry, products and services, if you’re not already. Joining related industry or professional associations before you start your business is a great idea.
7. Get the money lined up
Save up if you have to. Approach potential investors and lenders. Figure out your financial fall-back plan. Don’t expect to start a business and then walk into a bank and get money. In order to secure finances from outside to start your business you will need to provide a concise and professional business plan
8. Be professional from the start
Everything about you and the way you do business needs to let people know that you are a serious professional. That means organising business cards, a work phone and a business email address, and treating people in a professional manner.
9. Get the right professional help
Just because you run a small business, it doesn’t mean you have to be an expert on everything. If you’re not an accountant or bookkeeper, hire one (or both). If you need to write up a contract, and you’re not a lawyer, hire one. You will waste more time and possibly money in the long run trying to do things yourself that you’re not qualified to do.
10. Get the legal and tax issues right the first time
It’s much more difficult and expensive to unsnarl a mess afterwards. Does your business need to be registered? How will the form of business you choose affect your income-tax situation? Learn what your legal and tax responsibilities are before you start your business and operate accordingly.
