Whilst starting a business is a good idea in principle, even with all the preparation in the world, it’s success can be unpredictable. Think of it like football. Even with the best strategy, players and performance, all it takes is one slip up, a “red card” and you could be removed from the game. Although there’s never been a better time to start your own business, it’s important to play it safe and avoid the “red card”.
Statistics show that nearly 75% of new UK businesses fail in the first three years, and a third of those fail within 6 months. If you’re considering starting a new business, our guide will help improve your chances of beating the odds and achieving your business goals.
In order to make it easier for you, we’ve put together our top 12points to improve your business’ likelihood of success:
- Limited Company or Sole Trader?
Which type of company you choose will affect the tax you pay and the amount of legal and financial responsibility on your shoulders. As a sole trader you will be able to take all the post-tax profits, but at the same time, will also be liable for all financial dealings related to your business. Being a limited company and a sole trader both have their own pros and cons and you should research which is going to be the best option for you.
- Do Your Competitor Research
Before entering a market, it’s absolutely crucial to find out who’s doing what and compare it to what you’ve planned. By studying your competition you can learn from their mistakes as well as uncover invaluable customer research. Find out about how they operate and replicate what works for them whilst improving on what doesn’t. Just by looking through their websites you should be able to get an idea of pricing, products they offer as well as the depth of service offered.
If there’s one main competitor who currently dominate the market, focus on their weaknesses or who they don’t cater to. In order to develop your own market share, it’s up to you to provide a better service that caters to their disappointed customers. Alternatively, if the market space is saturated, there could be a good opportunity to launch a brand that becomes the only choice for consumers.
- Identify Your Target Audience
A product that appeals to everyone,may appeal to no one. Therefore, you need to focus on your specific audience and build your business around them. Ensure you’re targeting the right people by mailing out questionnaires, speaking to your potential customers through social media and taking their feedback on board. Get into your customer’s heads, involve them in the development of your business, keep testing new things and don’t lose sight of where you came from. Speaking to your customers makes them feel valued, which breeds loyalty and, in turn, increases the likelihood of repeat business and recommendations.
- Paying Yourself
It might not be your first priority, but you need to have a plan for how you’re going to pay yourself, especially during the early stages. Whilst you may have the best intentions to put all your profits back into the business, you’ll still need money to live. You may have to consider cutting back on luxury spending, but figuring out what you require for the bare necessities and factoring this in to your business plan will save you a lot of pain as you establish yourself.
- Name Your Business
Whilst it’s not the be all and end all of starting a business, you’re still going to want to think long and hard about a name. Building a brand around a name can make it difficult to change at a later date and you’ll need to be able to find a relevant web address. Consider what your business name needs to say about your brand or services.It can be a simple case of “does what it says” or reflect aspects of your brand identity, or perhaps be geography-centric, if you’re focused on serving or a local area such as ManchesterCatering Ltd. Look at your competitor’s names and consider if it needs to be practical or branded.
- Publicity and Marketing
There’s no point in having the greatest business idea of all time if nobody knows about it. So, how will you get your business name out there? Instead of having a huge marketing budget, start small and concentrate more on building relationships. Utilise social media platforms and network hard to build a reputation with not just potential customers, but also with local journalists, suppliers, other retailers, and local business organisations. Start a blog related to your industry niche, be active on Facebook and Twitter, offer to write articles for your respective subject, get people reviewing your service or product and consider having a launch party.
- Have a Web Presence
Did you know that more than 50% of small businesses don’t have a website? Most want one, but they either think they can’t afford one or don’t have the required skills to put it together by themselves. However, having a website is much easier and more affordable than it’s ever been. You don’t need an all-singing, all dancing, custom built behemoth, simply having a synopsis of your product/service information and contact details, could add more benefit than you’d think. Start thinking about how your business could benefit from having an online presence and what features you need as a bare minimum. You could even consider selling products from your website. By accepting credit card payments, businesses could sell some stock online, allowing you to send products internationally. However, you would have to be cautious about PCI compliance when handling credit card information to prevent data breaches.
- Consider Your USP
Customers will stop buying from other businesses in favour of yours only if you offer something different. Your Unique Sales Proposition or Unique Selling Point (USP), defines what is special about your service or product and what customers can’t get anywhere else.
Carefully craft your USP. It can be your product that’s unique, after-sales support, your price, but whatever it is, make the most of it. Maybe – just like Tom’s Shoes, which donates footwear to people in Africa after every sale; you appeal to consumers’ increasing demand for ethical trading. Find your own angle and then make sure everything you do is beneficial for you and your customers equally.
- Make a Business Plan and Stick to It
Business plans are incredibly effective at helping decide the fate of your business. Don’t view it just as a formality, but use it to ensure that every aspect of your business model works well. With a business plan in place you will be able to tell what’s working well and what’s not and make the necessary changes.
- A Route to Market
In principle, finding a route to market is simple, but make sure that you’ve figured out how you’re actually going to sell to your customers. Consider all the available options, from market stalls to eBay or mail order, to a retail unit, to picking up business at networking events or even social media. Think about the obvious place to start. It’s incredibly tough to write a business plan until you have worked out your business’ platforms and found your route to market.
- Legal Issues and Licensing
Before launching a business, it is crucial to do your due diligence to find out if you require any special license to do business in your market. For instance, if you are selling alcohol, you’ll need a license and there’ll be plenty of legislation to adhere to. If you don’t, you could be fined, or worse, face criminal charges. There are a number of other legal obligations to keep in mind and it’s best to get legal advice before entering the business arena. You should also ensure processes such as sales or supplier agreements and terms and conditions are legally contracted to avoid issues later down the line.
- Funding Options for Your Business
Ideally, you’ll have enough money to self-fund your new business. However, for the majority of people starting up this isn’t an option. If this is you, you have the option to seek financial help from a bank or from an independent business finance provider. The latter is generally considered the better option as some business fund providers offer far more flexible funding options suitable for businesses with a lower interest rate. For a business to sustain in a fluctuating economy, especially as a start-up, it’s also important to have back up funding options. Almost all business failures come about due to poor financial management and whether you intend to use them or not, you should know what finance options are available and at what point you may need them. A number of funding options, such as cash flow finance and invoice finance are offered by reputable business finances provider which can help your business thrive. Plan and do your research into funding options and finance providers before going ahead with any of them.
Starting a business is a huge step that will likely transform your life, either for the better or worse. It’s crucial to research everything you can before starting out to maximise your chances of success.