Starting a business from scratch is a great idea and takes a lot of careful planning, consideration, and determination in order for it to succeed. It may seem like a daunting and huge amount of work but it can pay off when business owners make the right decisions and follow them through.
If you’re excited at the prospects of starting your own business, whether it’s as a sole trader or private limited company (PLC), there are a number of considerations you need to take into account before you start trading.
The following will help give you some insight into the essential tasks that should be done in order to take your business from a concept to the market.
Make a strong business plan
Every successful journey starts with a well-thought plan of where you want to go and takes external influences into account that might occur. Your business plan should do exactly that.
It should identify your business’ strengths, weaknesses, opportunities, and threats (SWOT analysis) to give an accurate picture of where your business will lie in the current economy and foreseeable future.
As well as providing you with guidance, a business plan is also required to gain financial investment, whether it’s from private lenders, the bank, and even your friends and family. You should therefore provide as much factual information as possible, based on your market research, in order to convince people to invest in you and your ideas.
Forecasts of profits, how much money you will need, management details, and the benefits for stakeholders involved also need to be included in this report. However, avoid making your business plan unnecessarily long and make it as concise as possible, using appropriate headings, sub-headings, and other easy-to-consume formatting and language.
Get this right and memorise it so that you can secure investment and direct your business effectively.
“Attack by Stratagem”
– Sun Tzu, The Art of War
Be realistic and employ the right people
One of the largest costs for a business are the employees, which is why many top-end companies invest so much time and money into whittling down masses of candidates to find the single, perfect employee for a role.
As a small business you won’t have the same kind of HR resources so hiring the right people is largely reliant on your own knowledge. You can of course help ease the process with the professional expertise of a recruitment company to avoid applications from inappropriate candidates but the final decision will still be made by you, the business owner.
Because of the great cost involved, be realistic with your employee requirements i.e. make sure that you can meet customer demand and hire the people required in order to supply your products/ services. Don’t just create jobs because it would be nice to have that role within your company. There’s nothing worse than paying someone to do nothing.
Invest wisely in insurance for your business activities
Employers need employer’s liability insurance
Some businesses have to invest in employer’s liability insurance in order to comply with the Employers’ Liability (Compulsory Insurance) Act 1969.
However, some businesses are exempt:
- Companies with no employees;
- Family businesses with closely related employees;
- Public organisations.
For a full list of who doesn’t need to take out employer’s liability insurance, check out HSE’s guide for employers. Failure to comply with this law could result in a fine of up to £2,500 per day that you aren’t insured.
Other liability insurance
As we mentioned earlier, planning is crucial to a business’ success. Being able to foresee eventualities and having precautions in place will make the process of dealing with problems more organised if they happen. Liability insurance provides this.
There are many types of liability cover available to businesses that can protect themselves and their employees’ activities from financial threats if they are sued and claim for compensation.
For example, companies within the building and construction trade may need public liability insurance for builders. An adequate policy would protect them from the costs of compensation claims made by members of the public who are injured or have their property damaged as a result of work carried out.
Almost every eventuality can be covered to help businesses avoid the damage of a costly lawsuit, which would most likely cripple a company without adequate insurance if they were proven liable and guilty.
In addition to liability insurance, there is also a wide range of business insurance available that covers buildings, plant, and more. Get a comprehensive policy that fits your operations and you will be able to manage your level of risk much better.
Set your benchmarks and measure your performance
Some new business owners can be so keen to go out and start making money that they forget to set themselves KPIs (Key Performance Indicators) as smaller goals that will help them achieve their overall goal.
Setting KPIs will allow you to see whether your business is performing on track or if it is lacking in some areas that need improvement.
The nature of your KPIs will vary depending on what type of business you have so decide what measurements are important so you can accurately report on your company’s performance. Also, remember to include comparisons to your competitors where possible, as well as comparisons to your past.
Reporting based on a set of goals like this will allow you to identify what needs attention, which you should immediately react to in order to stay competitive.
Be inventive with branding your company
Branding your company with a strong, memorable, relevant name is important because it will often create a first impression for stakeholders and be part of what dictates your brand design.
Think carefully about your industry, how your competitors have branded themselves and add some creativity to it. Also, look at some of the most successful brands and how easy it is to pronounce, spell, and envision their names e.g. Apple, Google, Audi.
Alternatively, you could become a “does what it says on the tin” type of business and be clear e.g. The Painting and Decorating Company. Be wary that you may be criticised for lack of imagination though, which isn’t great if your company relies on being creative.
Above all, enjoy what you do
Going into business takes a lot of time, money, and dedication so being happy with what you’re doing is important because it’s going to be a huge part of your life.
Enjoy your new startup and pay attention to some of the considerations we’ve made and you’ll be on your way to success.