Starting a business from scratch is a huge commitment that takes drive and determination to succeed. Impressively, a record number of nearly 660,000 start-ups were founded in 2016 – that’s a staggering 80 new businesses launched in the UK every hour! 2017 figures are coming in slightly lower at around 589,000 new commercial enterprises, but still.
If you have a dream you would like to turn into a commercial reality, you’re clearly part of a wider entrepreneurial trend. And whether you’re thinking of setting up a sustainable retail shop or a cutting edge fin tech company, the one thing you’ll have in common with every other start-up owner is the burning desire to make a go of it.
Time for a little reality check. Did you know that although only 9% of small businesses fail in the first year of trading, 40% won’t make it past the 5-year mark? Building a successful business is a continuous uphill battle, and it pays to put in solid foundations in the early years to help you overcome the many challenges and establish a successful enterprise. Here are 9 essential questions to guide you.
What’s driving you?
Put simply, there are two types of business people – those who thrive on developing their own ideas and turning them into a successful commercial reality, and those who are motivated by making lots of money. If you fall into the latter category, ask yourself if the quest for riches is enough to sustain you through the lean years, and if you’re willing to put in the hours and sheer hard graft needed to create a robust base for your growing business.
What’s your business idea?
To determine whether your idea has the potential to be commercially successful, it’s wise to test your concept rigorously at the outset and before you’ve committed time and resource to it. Is your business product led or are you providing a service? What makes your proposition stand out from the competition? Define and research your target market thoroughly and refine your business idea as necessary. Try it on a small scale – pop-ups or events, selling through social media or directories – to assess interest.
Have you written a business plan?
A business plan is the strategic document that shows the way from concept and vision to real world implementation. Once in place, you should revisit it often to make sure you’re on the right track to achieving your business goals. You’ll need a business plan if you apply for a loan or grant, and it can act as a credible introduction both to your business strategy and to you as an entrepreneur. Free business plan templates and expert help on how to write one are freely available here.
What’s your business structure?
When you set up your own company, you have three options of how to register your business with HMRC for tax purposes. As a sole trader, you’re personally responsible for accounting, debts and liabilities. As a limited company, your personal finances are separate from those of the business, and a bookkeeper or accountant can help you manage your business reporting. If you’re working with other business partners, a formal partnership arrangement may be the best option to share responsibilities, debts and liabilities.
How will you finance your start-up?
Funding your new business can take many forms – from using your own savings to obtaining a start-up loan from a UK bank, crowdfunding via platforms such as Kickstarter, government grants for budding entrepreneurs, and even venture capital funding. Work out how much funding you require, based on your business plan, then carefully assess all the suitable, available financing options to see how they could help develop your business in the short and longer terms.
Are you legally compliant?
Before you can start trading, make sure that you have complied with all regulations relevant to your business. This will include business insurance, employment and PAYE reporting regulations, various tax liabilities (income, corporation, VAT, etc.) and any industry specific licences or permits, particularly if your business activity involves catering, events, health, financial or technical services. Finally, you need to be up to speed with IP and copyright law, as well as the latest requirements for data protection and GDPR.
Can you do it all alone?
While many start-ups are founded by individual entrepreneurs, there’s a limit to how much you can do on your own. It’s only a matter of time before you need additional resource, or delegate specific tasks. For specialist skills you don’t have, ask around your business network for help with website design or bookkeeping, photography or digital marketing. Make use of additional staff as and when you need to, using the latest scheduling software to help you flexibly plan your workforce needs in advance.
How will customers find you?
Whether you’re a physical office or shop, or an internet based business, your customers must be able to find you. When considering suitable commercial premises that give you access to your ideal customers at a price that you can afford, working from a home office or hiring shared office space may be a good way to minimize your start-up costs. Crucially, you’ll also need to find a great domain name for your website, plus an effective search engine optimization strategy to put you on the first page of Google.
What’s your branding and marketing strategy?
Marketing and branding are essential tools to help you connect your product or service with your target market. Starting with your business name and logo, through to the look and feel of your website, product packaging and beyond, you should be aiming to create a distinct identity that will engage potential customers and drive business activity. Reach out to local press, social media and digital marketing platforms to embed and reinforce your brand message on a regular basis.