Recently one of my daughters asked if a friend of hers could meet me to talk about setting up her own business. Of course I said yes, but it got me thinking. I’m sure many people are thinking about doing this, but don’t know where to start. There is a lot of information out there. But is it accessible? Does it make sense?
This article is based on the initial questions I was asked.
The real question when thinking about starting a business is “what don’t I know” or the “don’t know what you don’t know”
This article cannot replace a professional adviser, nor a comprehensive book, but it should help you start your thinking process, and some of the factors you need to be thinking about.
The basics of starting a small business
You have an idea for a business. The first question you need to know the answer to is…
Do People want what you are offering…
For the price you want?
You need to do a little of what is called market research. Ask potential customers:
- Do they want the service?
- What would they pay for it?
- Then the killer question… If I offered that service at that price, on a scale of 1-10 where 1 is unlikely & 10 is where do I sign up, how likely are you to buy from me?
You see many people will easy they want as service, but won’t buy. Asking a 1-10 gives them the option of saying won’t buy without actually saying no! A score of less than 8 probably means they don’t want the service from you.
The second question is can you sell enough at $$$ to meet your income requirements for living?
Getting started in business
Once you know there is an interest and a demand for your business, not its time to get serious.
There are a few things you need:
- A separate business bank account
- A brand/name or identity
- Ideally an accountant – they should cost you less than they save you!
- Insurance – public liability
- Local trading licenses if required
- Register with the tax office to be self-employed.
- Save 25% of all income towards tax & other surprise costs
Registering a company name
Having a registered (ltd, Inc etc) company does make you look more professional, but it will cost you several hundred pounds a year to administer if trading. A good idea once you have your ideal business name thought of is:
- Check the web domain is available
- Check with companies house if the company name is available
If both are available, register the company name, even if you are not going to use it. It will protect you when you grow! Register the web domain as well.
If you can afford a designer hire one, otherwise ask a friend with a good eye for graphics to come up with something for you. A good logo needs to work in both colour and black and white.
These need not be expensive, but they are important. If your business is an appointments based business, have space on the back for clients to record appointment times etc. Or use the back to give potential customers hints & tips. It’s worth the extra cost.
Use twitter, Facebook, and if relevant location sites like fore square. Remember these channels may be free but it can take a lot of time, and unless you have a clear plan of what you will and won’t use them for will become an expensive distraction.
Get any customers you have to start recommending you to their friends & mentioning your business on social media. Find simple, yet cost effective ways of rewarding them.
The biggest mistake many people new to business make is not doing enough marketing. It does not matter if your work load is high or low. Marketing your business is about next month. And it quickly come around when the work stops!
Never rely on just one type of marketing. Use several different ways. Social media, referrals from existing clients, adverts etc. In other words – “real world” old fashioned marketing mixed with digital – never one in isolation – balance!
Always expect returns from this activity to be much lower than you first expect, but without it people wont even know you exist
Like it or not people just wont buy from you. You need to “get out there” and sell. If you cannot do this can you partner with someone who can.
No sales = No business!
Your customers will expect consistency, for this reason, always under promise and over deliver. It could be argued that few people “like” McDonald’s - but we go there because we trust that what we will get is what we have experienced before. Consistency trumps quality every time. Understand this need in people and use it to competitive advantage. It’s the reason most people choose McDonalds over Burger King!
A USP is your unique selling point. What is it you can you will do that is different from your competition? Don’t say you are friendlier, this is about tangible things. Having a criminal record check (CRB) on staff, offering free snacks, coffee etc may count. Be creative, but make sure it adds value to your customers, and is not a real cost to your business.
Never under price. Never run a business on being the cheapest. People won’t value it. Make sure you know what it costs you to provide the service, and always make sure there is profit. Or it’s just not a business.
Remember the times you are working need to pay for the times you are not. It also needs to pay for admin and marketing time. For example if you work 10 hours at £10 per hour, that is an income of £100. But if you then need to do sales, marketing act, then that hourly rate drops considerable.
Get a mentor
It’s hard on your own. As I said earlier, you don’t know what you don’t know. A mentor can help – NOT A COACH
Selecting a mentor
Your mentor needs to have “been there and done it”. So check them out. Has their business been running for 5+ years? Did they sell the business, or did it go bust or are they still running it.
If they are in a big business, they are unlikely to understand the needs of a very small start-up. Equally someone that has a “coaching qualification” may be in one of the schemes where they have access to “business advice sheets” but do not have the real experience… AVOID these people.
Chemistry – make sure you can get along with the person. Do you trust them? Do you respect them? – But you do not have to like them!
A qualification in mentoring or coaching might be a useful bonus – but it will never replace personal experience and “pain” for every business person makes mistakes – get them to share theirs. See how they really learnt from their mistakes. If they have no “horror stories” then they probably did not do it themselves!
Whatever your start-up business – good luck
Starting out in business – it’s a maze out there. what do you need to do when first thinking about starting your business