Starting a small to medium-sized enterprise (SME) with ambitions to turn it into something big and successful, is something most of us have considered, but where do you begin?
Starting a business is often a long-held ambition, but many say the hardest part in realising the dream, is the initial decision to ‘go for it!’
Reaching that decision can be triggered by anything – in the current, difficult economic climate, it is for many the only option, having lost their job. Tough times also present opportunities.
Once you have made the decision, and even before then, there is much to do. Perhaps performing these necessary tasks will inform your decision on whether to start-up your new business or not?
The various steps to starting a business are many and varied and in this article we look at two broad areas to focus on. These are:
- Researching your business and the market
Researching your business and the market
So, you’ve made the decision, what next? Assuming you know the sort of business you are going to run, and have decided on your company image, you now need to focus on some key matters affecting your future business and the market: Is it growing? Do I understand it? What can I do differently to my competitors? What do my competitors do well? And so on.
Focussing on the business and the market is vitally important for your enterprise going forward, not least the need to establish goals for you to work towards. Your goal might simply be to make money, but you will still need to consider how you intend to achieve this and how your product or service will fit into the market etc.
Carrying out research and focussing on potential competitors and similar products or services for example, will highlight the strengths and weaknesses of your own business – and may even help improve what you propose to offer. You’ll need to discover whether your idea could work and thrive and survive, especially so if the market is changing.
By talking to other people too – those who have run a small or similar business – you can learn valuable lessons on what to do and what not to do and gain some very useful ideas you may not have thought of. It also provides a useful networking opportunity.
There are many practical things you need to do as well, such as finding a good accountant to get advice on the sort of business you should be (sole trader, partnership or limited company) and for ongoing services too, especially if you don’t plan on doing your own bookkeeping.
You will also need a business bank account to keep the company’s financial affairs separate from yours, so shop around for good deals – most banks offer free business banking for the first year or two. Banks are also a useful source of advice.
In addition, banks, building societies and other financial institutions, provide the most common source of finance for businesses, if they can’t be self-funded – have you thought how you will pay for stock, premises, staff, insurance, marketing, furniture, computers etc?
If you are setting up a partnership you’ll need the services of a solicitor to draw-up the partnership agreement. Solicitors could also provide legal advice necessary for a new product perhaps (such as obtaining a trademark or patent), as well as advice for a raft of other possible needs. For more information on choosing a solicitor, read our related article in the legal advice section.
You may also need various forms of insurance.
You’ve researched the business, its market and even the competitors. Now you need to turn this knowledge into the business plan.
A business plan is a document, usually written, that details a business, its purpose and goals, strategies, the environment it will be operating in – including competitors – financial forecasts etc and how all this will be achieved.
The business plan is an important document, not just for you but also for others who might have an interest in the business going forward, such as banks and investors. It will also help measure the success of your business.
It doesn’t need to be long but it does need to be thorough. You need to be precise about the business’ product or service you are offering, who your potential customers or clients are and how they might buy this service or product (shop or online for instance). Another crucial factor is the price of the product/service.
Often the business plan includes a section on marketing – how and where are you going to attract your customers? You will also need to detail projected budget expenditure, such as likely overheads and other costs related to your business.
A SWOT analysis (strengths, weaknesses, opportunities and threats) included in the business plan will help you identify prospects and challenges likely to affect your business going forward, in a simple, visual manner.