What to think about when starting up a business

How to start a business

Starting a business is exciting. So many possibilities and often a dream you have had starts to come to life. Yet, if you’ve never started up a business before how do you go about it?

Here we share some key considerations for you to think about when you are starting up or you’re in your first years of trading.  

Focus on your business

The public often hears about overnight successes, especially the Unicorn businesses (billion-pound businesses) because they make great eye-catching headlines. Yet as incredibly successful as these businesses are, these are the rarity. For this reason, remember to focus on your business journey as it is unique to you.  

Move forward step by step

When starting up a business, people have different approaches. Some business owners dive in headfirst without looking. Then, there are business owners who stay stuck in analysis paralysis and never start. You might be a mix of the two—and that’s right where you need to be.

The best way to accomplish any business or personal goal is to write out the steps it will take to achieve the goal. Some steps may take minutes while others take months. The important thing is to always take the next step, and then the next, and so on.

Considerations when starting up your business

1. Determine Your Business Concept

If you’ve dreamt of running a business and you know exactly what you’re going to do, and it’ll be profitable, then you are onto a winning start. 

However, if, like many, you don’t know what you’re business will entail think about these questions:

• What do you love to do?
• What do you hate to do?
• Can you think of something that would make doing those things    easier?
• What are your strengths and skillset?
• What do others come to you for advice about?
• What’s something you’ve always wanted to do, but lacked resources for?

By answering these questions, it may can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, consider if it’s potentially profitable. 

Your business idea also doesn’t have to be the next Gym Shark or Tesla. Instead, you can take an existing product and improve upon it. You can also sell a digital product which can be cost effective to provide.

 

2. Research Your Competitors and Market

Your start-up or existing business will not operate in isolation, and so you need to understand the wider marketplace and who your competitors are. 

If you ever apply for funding from third parties, the potential lender or partner will want to know what sets you (or your business idea) apart from competitors, so we suggest getting prepared and doing your research.

Primary Research

The first stage of any competition study is primary research. This involves obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want.

Secondary Research

Utilise existing sources of information, such as census data, available from the Office of National Statistics, to gather information. The current data may be studied, compiled and analysed for your needs and it should complement your primary research.

Conduct a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or service might perform when taken to market, and it can also help you make decisions about the direction of your business. 

 

3. Create Your Business Plan

A business plan is a dynamic document that serves as a roadmap for establishing a new business or giving an overview of an existing, growing business. Spending the time to write your business and reviewing it every few months is important to keep your business focussed and aware of the challenges and opportunities that may affect it going forward.

When writing a well-rounded business plan, include the following sections:

• Executive summary
• Company description
• Market analysis
• Organization and structure
• Mission and goals
• Products or services
• Background summary
• Marketing plan
• Financial plan

Our Business Advisors can support you by reviewing your business plan and helping you identify your next steps to starting and growing your business. 

 

4. Come Up with an Exit Strategy

It may seem odd to think about an exit strategy whilst you’re starting up your business. However it is important for any business, starting up or growing, and that is seeking funding, because it outlines how you’ll sell the company or transfer ownership if you decide to retire or move on to other projects. 
There are a few different options to consider for exiting a business, and the best option for you depends on your specific goals and circumstances.

The most common exit strategies are:

• Selling the business to another party
• Passing the business down to family members
• Liquidating the business assets
• Closing the doors and walking away

5. Develop a Scalable Business Model

As your small business grows, it’s important to have a scalable business model to work to so that you can accommodate additional customers without incurring significant additional costs. Digital businesses are easier to scale, usually, because the increase in costs to scale after initial set up are comparatively low.

 

6. Start Planning for Taxes

One of the most important things to do when starting a small business is to start planning for taxes and when they must be paid. Taxes can be complex, and there are several different types of taxes you may be liable for, including but not exclusively, national insurance contributions of employees, income tax, value added tax and corporation tax. 

 

7. Choose Your Business Name

Make it memorable. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company nor offensive (see Companies House website for information). 

Consider protecting your business name as a trademark too, which can become be a valuable brand asset for your business. 

8. Get Your Finances in Order

When starting up a business its important to get your finances in order and systems in place to manage revenue (income) and payments (costs), including any taxes payable. 

Consider getting a business bank account to keep financial transaction separate to your personal ones.
It is easier than ever to manage your accounts, thanks to the accounting software (Xero/Sage) and accounting apps available. Business banks offer their own solutions too. Shop around and see which option is most suitable for your start-up business or growing business.
 

9. Fund Your Business

Starting up and growing a business requires funds (money). There are many ways to fund your business—some are simple to obtain, others more complicated and require planning and preparation. Two categories of funding exist: internal and external.

Internal funding includes:

1. Personal savings
2. Credit cards
3. Funds from friends and family

External funding includes:

1. Small business loans
2. Small business grants
3. Angel investors
4. Venture capital
5. Crowdfunding

Small businesses may have to use a combination of several sources of capital. It is always advisable to talk to a Business Adviser (Business Growth West Midlands offer Business Adviser services for free to West Midlands based businesses) when looking at raising funds to ensure you are making the right choice for your circumstances. 

 

10. Market Your Business

If you’ve got a fantastic product or service that the world needs, how are you going to let people know about it? 
Through marketing. We suggest that marketing is included in the development of the business and not an afterthought due to its importance on the success of your business. 

Create a Website Early On

A web presence is essential for all businesses. Creating a simple website doesn’t take long when using WordPress, Shopify, Wix and other web platforms that offer templates for your webpages.

Set up a Google My Business account and page too - it’s free and helps to get your business noticed when people are searching online.

 

11. Scale Your Business

To scale your business, you need to grow your customer base and revenue. Many start-up businesses struggle to this stage, but with strong foundations your business can scale. Business Growth West Midlands’ Business Advisers can help you to prepare your business to scale. Just get in touch for support.

Scaling is possible by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.

 

12. Build a Team

As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors or freelancers. This can seem daunting at first. However, a business is its people, so the more human resources you have available the faster your business can grow and scale. Ask our Business Advisors for support with taking those first steps to recruiting your team.

Starting-up and growing a business is exciting, inspiring and a challenge. You don’t have to do it alone as our Business Advisers are available to support West Midlands based businesses move forward, grow and thrive.

Send your enquiry for support to us today to boost your business’ start-up journey and future growth.