Congratulations on deciding to go into business for yourself. No matter what has triggered you to get here, this article will guide you through the stages of establishing a successful start-up business of your own. My free e-book, The Entrepreneurs Business Start-Up Guide goes into greater detail and offers tools to help you.
Step one: Initial considerations
Are you ready for this? The success of your business depends largely on your skill set and commitment. You will need to be honest with yourself on a range of issues such as your business acumen, financial status and personal qualities of entrepreneurship.
There is a good chance that you will need to dig deep to find the drive and dedication that got you started on this journey and calling on family and friends to get you through the early days may be necessary. The next few months are likely to be physically and mentally challenging, with long hours, hard work and financial uncertainty which means those closest to you will need to be behind you 100%.
Some good advice here would be to make sure you remember your ‘why’ and remind others! Perhaps a graphic representation of your motivations where you can see it, would be of help.
Reality check time. So, you’ve got the entrepreneurial qualities, the financial and emotional backup, but do you have the skills required, or do you need more training? Product development, people management, businesses planning, marketing, customer/supplier relations, sales, human resources and bookkeeping skills are all on you. Can you manage them, do you want to manage them, do you want to learn how to, or outsource them to professionals?
Step two: What sort of business are you?
The legal form of your business can have an impact on your personal risk in the business as well as make a difference to your financial returns. Consider whether your business is to be;
- Sole trader
You must register with HMRC (Her Majesty’s Revenue and Customs) and it is recommended to open a separate business bank account. It is important to note that the liabilities of the business also fall to you as an individual. You will need awareness around your finances to ensure that if you exceed the annual VAT turnover threshold in any 12-month period, you complete a VAT registration form.
- Partnership
Again, registration with HMRC is required and I recommended a separate bank account. Again, ensure you are aware of your personal liabilities. You will also need to monitor your annual turnover to ensure the threshold requirements are met with regards to VAT registration.
- Limited company
This is set up as a separate entity to you as an individual and can limit your liability, but not in every circumstance. As a compliance requirement, you must report your annual accounts to Companies House.
Your choice of structure will largely determine how your business tax and personal income tax liability will be calculated and paid. There is more detail on this step in the full e-book guide.
Step three: Planning your business
Writing a business plan is like writing your blueprint for success. The only difference is that you can add to it, change it and keep it as a live document so that you can capture your developing vision and planned strategic delivery on a regular basis.
Your business plan also plays an integral part of setting up and will be required by third parties along the way, such as the bank manager and investors. It also provides you with clarity when communicating to your stakeholders as you bring them on your side. Some people prefer to start with a highly visual tool such as a mind map or mood board, so their motivations are integrated with growth plans. Once this is done, there is a common business structure to follow to ensure all the elements of the plan are included:
- Business summary
- Description of your business
- Market analysis
- Products and services
- Marketing strategy
- Management plan
- Financial data
Remember, there are professionals you can call upon for help on any of these elements, such as market researchers and accountants. These professionals will help you stick to an annual review of your business plan as well, so you can stay on track or make changes as required.
Step four – Positioning
Market and product research is essential to make sure you are positioning the product or service you have to offer to the correct audience.
A SWOT analysis (strengths, weaknesses, opportunities & threats) will help you understand your business and becomes more powerful every year you complete it for comparison with previous years.
Solid market research provides a foundation on which to base your key decisions. This will include your customers, competitors and gaps in the market. It should be done on two levels – your own specifically designed research and using information that is already in existence. Your data should be largely quantifiable and make use of numbers, rather than qualitative.
Remember, the reason for market research is to ensure you have the right offering, to the right audience, at the right price and time. It is a common conversation with my clients to ensure their product development progresses in line with their market development.
You should aim to make it clear what your business does and what benefit it offers.
Step five: Promotion
And now for the fun part, telling people about your business! You are the human embodiment of your business and it’s true that people buy from people, so you’re now the first step to promoting it to the market. The marketing strategy section of your business plan will help you move forward with promotion and decide how and where you will appear;
Online: website, social media, paid for advertising, PR, emails.
In real life: Networking, leafleting, magazines, local advertising, business cards, stationery, speaking opportunities and exhibitions.
Once again, you only need to do what you are comfortable with or will to learn how to be comfortable with it. The rest can be outsourced, if you consider it necessary at all.
The key to successful promotion is to record everything you do, monitor your investment and return and amend where necessary.
The full Business Start-Up Guide goes into far greater detail including help with growth, tax, keeping financial records, and what to do with all the information once you’ve got it.
Download this, and three more free e-books in full, from my free business resources page.