Key points to consider before starting your own business
Ask yourself why?
Whether you are looking to go freelance as a limited company contractor, or would like to start a business with the plan to employ staff, before you begin, you need to ask yourself why you want to start your own business as this will help provide you with your ‘business mission’.
Here are some examples of great reasons to start your own business include:
- You have an idea for a product or service that will help to improve people lives in some way.
- You have an idea for a product or service that will help to improve business processes and efficiencies in some way.
- You have a passion or interest, and you have identified a gap in the market for it.
- You want the responsibility and autonomy that comes with being your own boss.
- You’d like to earn more money.
As much as money is the key driver to any business, it is important to have a product or service that you fully believe in. That belief will come across in your marketing communications and play a big part in engaging with people, and convincing potential customers to buy your product or service.
Research your business idea carefully and in-depth. What will you offer and to whom?
Typically, there are three natures of business: service, merchandising, and manufacturing.
- Service: Selling time and expertise to businesses, such as marketers; IT consultants; events planners; restaurants; salons; health spas.
- Merchandising: Buying and selling of goods, including retail, wholesale, trading and distribution. Examples include grocery and department stores, retail outlets, and online retailers.
- Manufacturing: The combination of labour, equipment and raw materials to create a saleable product, such as vehicles; electronics; clothing.
The importance of a mission statement
Earlier, we mentioned your ‘business mission’. Mission statements help business owners and employees see the meaning and purpose of their work. It provides clear reasons why their job benefits a larger goal and helps to keep the business on track.
Know your target customer
You’ve got your great business idea and you know what you’re going to sell, but do you know who wants and needs your products and services?
If you do not know which customers will buy your wares then you’ll struggle for success and profitability, which is why it’s important to study the business landscape to determine if there is a market for your business.
A point to remember is, ‘a product or service for everybody is usually a product or service for nobody’.
Write a robust business plan including financial forecasts for 3 years. Once you’ve done your first draft, have a look at what you’ve written and be honest with yourself and ask if your figures realistic?
Many people over-estimate how many sales they will make and underestimate their costs, leading to an unrealistic profit figure. For help completing your business plan, it is wise to speak to an expert. An account can usually help you put your business plan together.
Set your pricing based on your time, resources, cost of materials and competitor pricing. Will you be competitive, too cheap or too expensive? Where will your products/services sit in the market?
Will your prices be low and target high volume of sales, or will you be targeting the high end of the market, with higher prices and lower sales volumes? Remember, how you position your business could make all the difference between success and failure.
Get the financials right
Engage with an accountant. It is important to ensure you start off on the right financial footing.
An accountant can help you hone your business plan and your financial structure, including your invoicing, to ensure you remain solvent (especially in your first three years) and that your cash-flow remains strong enough to support your business and your personal financial requirements.
Insurance should have a key role in your business plans
Once you have registered your new business it is important that you insure it.
Research the cost of insurance online beforehand via various online providers. What types of insurance will you need and how much will it cost?
Remember, the cost of insurance is far less than the consequences of not being insured should something go wrong. With this in mind, purchasing business insurance should be at the top of your priorities.
Marketing your own business
Planning, registering, and insuring a business is only the start, and to coin a cliché “it’s when the hard work begins”.
You will need to create a plan for how you are going to win new business and generate repeat business, that’s where marketing helps.
- How will you promote your products and services?
- How much will that promotion cost?
- How will you deliver your products and services?
Online business services can be a lot cheaper than physical product delivery, but they come with their own costs such as:
- The creation of, and ongoing maintenance of a website.
- Apps for online payments.
This list is not exhaustive and should not be taken as business advice, but it should at least provide you with food for thought. For advice setting up a business, seek an accountant or business adviser.
If you have already set up your business and are looking for business insurance, you can get a quick online business insurance quote by clicking here.
Related Articles:Back to Knowledge Centre