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This year has seen a decent rise in the number of new companies starting up with many of us taking stock of our jobs and our work/life balance, but it remains a sad fact that more than half of these new businesses will fold within the first three years. Some of the critical issues are poor planning, lack of advice, ineffective marketing, and lack of capital.
Below we look at the key points you need to consider when setting up your new business, and we offer a few useful tips to help you ensure your business is one of the success stories.
Starting a new business
Is your company viable?
Before you start any new business, you need to know if your product or service is wanted, saleable and viable. Regardless of your brilliant idea, if there is no market for your product or service, your company is doomed to fail before you start. So, before you invest in your new idea, do your homework and some basic research. The absolute basics are:
Check out your competition
If you cannot offer something different, better or cheaper than your competitors, then it is unlikely your business will work. Think clearly about what it is that makes your business different from others and define your unique selling point (USP). This is as important if you aim to keep your business small or start a business with high growth potential. You need to be very clear about what it is that will make you different.
If your product or service is already in the marketplace, you need to think about price or service or your marketing strategy. Be clear on what specific benefits your company will offer your clients which your competitors cannot.
Know your customers
It’s pretty evident that without a solid customer base, you’re unlikely to see any profit. Therefore, one of your first jobs is to define your target market very clearly. Think about who you will be selling to, how you can help them and why they need your product or service.
Understanding what your customers want will help you fine-tune your business offering, allow you to develop a strong marketing plan and help you make decisions about your business’s future.
Know your sector
Before you finally take the plunge and start your business, make sure you know your sector or marketplace inside out. Do some research around the industry trends, growth potential and buying patterns. Study industry trends, purchasing patterns and growth potential. You could even survey some prospective clients to identify any gaps in the market.
Last year, saw some very different trends due to the enormous changes around how we all had to live. We saw companies growing fast which may not have done in normal times such as online retail, delivered subscription boxes, the increasing interest in sustainable products, online platforms like Zoom or Asana, pet products and home-workout equipment. No-one could really have predicted these trends which came about due to the pandemic, but the best companies will be continually looking at industry trends. They will be agile enough to quickly switch their products and services to help their customers with their changing needs.
The pandemic has also changed how businesses will work in the future. It looks likely that there will not be the need for so much office space and home working equipment may be needed more, online platforms are growing, so the demand for digital services continues to grow. Retailers and businesses are looking at investing more and more into digital services. Make sure you look at the various online business trend reports, say from the ONS or the business organisations like the Federation of Small Businesses, or Chambers of Commerce before you jump right into your new business.
Do you have a business plan?
Now you’ve done the research, you need a little time to get your ideas onto paper. How detailed your business plan is will depend on your funding needs and business. If you are looking for a business loan, then most banks or funders need a detailed plan. If you are funding the business yourself, then not so much. Either way, it is worth doing, however tedious it may sound as planning is at the heart of most successful start-ups.
You should consider the three Fs at the very least!
A good business plan will help you clarify your ideas and clearly define your goals and objectives.
You will be able to see any potential risks, minimise them and prioritise your essential tasks. You will be able to develop your plans for the future of your business.
One of the biggest obstacles for most new businesses is a lack of capital. If you need to secure financing, you will need to demonstrate to your potential investors that your business is viable, needed and carefully thought through. If you can show a sound strategy, then you are more likely to get the injection of cash you need to start.
Setting out your budget, cash flow, and expenses will help you clarify and plan for your future. You will be able to think about various scenarios, say fast growth, or consider fundraising rounds with more clarity. It also helps give some transparency to your business finances which shows good corporate governance. Careful management will help you grow faster and more sustainably.
Make sure you have the right systems in place.
Every successful business has the right systems and procedures in place from the off. Here’s what you should consider:
Your accounts must be in good order if you want your business to thrive. Make sure you get some expert help and advice before you start trading as it will save you time and money. They will help you ensure you meet all the necessary regulations and help you keep more of your hard-earned cash. A trusted finance team can assist you as you grow with auditing, tax and payroll services.
Every industry has its own compliance needs, whether they are particular rules or regulations. Failure to comply could result in stiff penalties. Don’t wait for things to go wrong before seeking advice; get your legal and compliance stuff sorted at the outset to avoid complications later on.
The last year or so has seen an increase in cybercrime, so it’s more important than ever to protect your business from online threats. A data breach could have disastrous effects on your organisation. Protect your digital assets and safeguard your clients’ data with a robust cybersecurity package.
Setting up your own business can be an exciting, rewarding venture; but in today’s crowded marketplace, you need to tread wisely and carefully. If you do your research, plan accordingly, and get the right support systems in place, there’s every chance your new business will flourish.
If you are about to start a new business or have just started one and would like some specific advice, please contact us or call 01440 821991. AccountAbility-Plus offers friendly, expert business support services focused on helping you start off on the right foot and help you grow your business without the growing pains.