A seven step guide to starting your own Business

When you have made the major decision to start your own business you can get caught up with excitement of it all and you just want to begin trading as soon as possible. But hold on and take a step back, preparation is key and it is important to plan correctly from the beginning before you go hurtling headfirst into what promises to be an unforgettable venture. Here we have a seven step guide to help you when starting a small business.

1. Assessing the validity of your business idea

To start with, if you haven’t done so already, you need to evaluate your business idea to see whether it can be turned into reality and is not just a pipe dream. An important consideration here is whether your offering solves a problem for prospective customers or is an improvement on an existing product or service.

Other questions you need to answer include: Will your prospects pay the required amount for what you are offering? Have you researched your market and competitors? Have you got the time, money and resources to achieve this? If you are nodding your head to these questions then we can move on to the next step. If you aren’t then all is not lost because a few tweaks to your idea can put it back on the right road.

2 .Write a one page business plan

Basically, what you are looking to do here is outline what your business goal is and explain briefly but accurately how you intend to achieve this. The plan doesn’t need to be comprehensive as you can always add to it at a later stage, because just like a business it is continually evolving. There are numerous templates online you can use and these are the key sections for this important document:

Value Proposition – In a couple of jargon free sentences explain why customers would use your product or service.

Problem solving – Here you should elaborate on the problem you are solving. What is unique about it and why hasn’t anyone done this before?

Target market and competition – Who are your prospective customers and your competitors? This section is proof that you have carried out research.

Sales and marketing – A sales and marketing strategy is crucial for the success of any business. How are you going to raise awareness of your business? What digital platforms are you going to use to communicate with your target market?

Budget – Work out what your revenue will be by forecasting sales and then determine your fixed costs and include any expenses. The number of sales required to make a profit will depend on your margin.

Team – You need to mention the most important asset any business has. Just a couple of sentences about each member, their roles and responsibilities.

Milestones – Set key dates explaining what you want to happen, why and how you are going to achieve this.

Funding – You need to ascertain how much money you need and exactly what it is for. Write down the repayment terms including amounts and dates.

3. Market Research

This is a vital component of the planning stage before launching any business. You need to identify your customers and find out as much about them as possible. Examples here include knowing where they live, their socio-economic status, where they shop and what social media they use. It is also definitely advantageous if you know the size of the market you are targeting. Another method of finding out valuable information is by carrying out customer surveys. Competitor analysis is important and remember to include everyone who is a potential threat and carry out a SWOT analysis on your main competitors.

4. Produce a Sales forecast

It is advisable to do several sales forecasts in the first year of business; one with a conservative estimate, another with a mid-range target and a third with your best case scenario sales figures – the one where everything goes according to plan.

There are several different ways you can forecast sales. As mentioned earlier it is important to identify the size of your market and this is useful for sales forecasting. Once you know the size you can work your way backwards from this figure to the number of those you can reach, followed by the percentage that you perceive as being winnable clients. Competitor analysis will also give you insight into these figures.

If you don’t ask you don’t get so speak with business owners in a similar field to see how their sales fared in the first year or two. Also, you can ask an expert, someone who specialises in the sector you are planning to operate in. Alternatively, speak with an accountant or bookkeeper who has clients similar to your business. They should give you some free advice in the hope of enticing you as a client moving forward.

5. Create a Budget

We touched on this briefly earlier but we’ll delve a little deeper now. Your projected revenue can be derived from working out your selling cost and projected sales. To find out your projected costs just estimate what you will spend on overheads such as rent, utilities and licences; also include tools, machinery and IT as well as supplies and labour. You can then bring all of this together in a Profit and Loss (P&L) Budget and this as the name suggests will show whether you are making a profit. Point to remember is that most businesses do not make a profit in the first year of trading and sometimes longer.

6. Arrange Finance

There are numerous ways of raising finance and this will vary depending on where you live. Some local authorities offer grants for new businesses and although unlike loans they don’t have to be paid back there is great demand for them and you are restricted in what you can use the grant for. Debt equity is the main source of financing and this involves borrowing money and paying it back with added interest. Another method is equity funding where in return for financial investment you give the investor a share of your business; an angel investor is an example of this type. A popular method of raising funds for new businesses is crowdfunding.

7. Start trading

The day has finally arrived where you can launch your business and look forward to the excitement and challenges that are all part and parcel of running your own business. This is where you implement your sales and marketing strategy and then start to reap the rewards of all the work and effort you and your team has put in over the preceding months – but remember only from now does the hard work really begin.

To find out more about starting a business please click here.