You may decide that the market is flooded with too much competition, or in fact that there isn’t actually a need for the product/service you are pitching.
Your best starting point would most likely be your prospective competitors.
Start off by getting a feel for the big players in your market. List the top 5-10 market leaders in your proposed industry and take a look at their end of year accounts. If you are based in the UK, you can do this for free here.
Make sure you analyse a few years’ worth of activity and see if there is any trend across the different firms – indicating a market shift in activity. Ask yourself if you feel there is room to compete in this space? Are you offering something different? If you are simply trying to get a piece of the action with the same approach you are going to likely need a significant amount of marketing spend.
These days, nearly every business has a digital offering. With the rise in digital payments, customers find it easier to buy products digitally than with its cash alternative, this is due to the emotional conditioning of actually handling over physical money.
This well-known psychology behind consumer behaviour has led to the huge rise in popularity of firms like Paypal.
Most businesses will either require digital ecommerce, or they will simply need a decent online presence. Thankfully, you can use this fact as part of your analysis. Take a look at where these businesses appear online, analyse their digital performance and conduct your own keyword research.
This is the term used to describe the research you perform, in order to identify the phrases consumers, enter into search engines to find and buy products. Most terms are very competitive, but this is very dependent on the types of industry you are entering. You can get some additional assistance from specialist agencies who offer link building services.
Take a look at what additional marketing activity these customers are doing, try to price up their content marketing, social profiles and traditional marketing methods such as TV and Print. This may give insight into what these firms are spending to compete in this industry.
Something most start-ups forget to price up correctly, are all the legally required financial products you need to protect yourself. Depending on the industry you are in and the type of interaction with your customer, you may need a number of policies.
If you run a shop front or have customers visiting you, public liability insurance will almost certainly be needed. If you are in any type of advisory role, such as a financial advisor, you will almost certainly need professional indemnity cover.
These products are prime examples of legally required insurance policies and can cost thousands per year. For an existing business, you would do well to shop around each year when you receive your business insurance renewal. Do not auto-renew as your invitation to the following year of cover may well be far more expensive than a competitor.
Also, as businesses grow and adapt, your level of cover may now be unsuitable and in some situations, it may no longer be valid.
Depending on the legal status of the business, you will be able to balance your profit margin by claiming back some of your business costs.
Business mileage – providing the journey is done for business purposes (such as visiting a client, or going to a wholesaler) you are entitled to claim back the first 10,000 miles at £0.45p per mile and £0.40p thereafter. That equates to an allowance of £4500 if you do 10,000 business miles per year. That means, due to profit/costs you in theory are able to earn an additional £4500 in income before that revenue is taxable.
Usage of your home facilities – if you use office space at home, have converted the garage into a store room, share the broadband or phone line you may be entitled to claim back some of your rent/digital services against your end of year accounts.
Family assistance – if your partner or family member works for you in any capacity, consider paying them a wage. If they work for you, they are also entitled to tax-free income each year. Do speak to your financial adviser for up-to-date advice on the above.