Are you planning to start your own business? Being an entrepreneur appeals to many people. You choose what you do and where you work, with almost unlimited earning potential for successful business owners.
With the possible rewards come risks. You’ll be entirely responsible for the business and its success. Starting a company can seem complex and overwhelming, while you’ll also have to wear many hats within the business – especially in the early days.
That’s why it’s vital to have a plan and learn some skills. In this blog, we’ll show you what you need to know when starting your own business.
Understand Your Skills, Weaknesses and Time
To understand your business, you first have to understand yourself. You should make a list of your skills and weaknesses. Your skills should include services that your business might offer, but also hard and soft skills that will contribute to the running of your company.
For example, if you’re well organised or good with numbers, you’ll be confident in those areas. If you haven’t got experience working with numbers, it might be a good idea to take an accounting or bookkeeping course or hire an accountant. Successful business owners play to their strengths and get help with their weaknesses.
You should also know how much time you can dedicate to the business. You might have to put in some long hours, especially when you’re just starting. By understanding how much time you can commit, you won’t overstretch yourself.
Conduct Market Research
Once you’ve planned your time, you can start looking into business ideas. This starts with market research. To carry out market research, you should consider:
- What service could you sell?
- Do people want to buy that service?
- How much will customers pay?
- How much competition is there?
- Are there any gaps or niches within that market?
By doing this, you’ll start to get an idea of what you could offer and where your customers will come from. You’ll also begin to see markets that have too much competition or that won’t be lucrative enough. This will help you to create a viable business idea.
Write a Business Plan
Once you’ve identified your market, it’s time to write a business plan. This is one of the most crucial steps of all as it will keep your business focused and on track. If you plan to get funding, it’ll also help justify your company to investors.
If you haven’t created a business plan before, it’s a good idea to get some help. You should consider a course in starting your own company which will teach you what you need to know. You might also find an experienced business mentor to help guide you. However you do it, it’s vital to get the business plan right.
The business plan should include an executive summary, products description, marketing strategy, and financial forecasting.
Decide a Business Structure
The next crucial decision is your company’s structure. In the UK, you have a few options:
- Sole trader: you’ll be personally responsible for the entire business.
- Partnership: you’ll run the business with another person or multiple partners.
- Limited company: you’ll be a director but legally separated from the company.
There is no right or wrong answer here, it all comes down to your circumstances. Many entrepreneurs register as sole traders at first. Then, when business starts increasing, they register a limited company.
There are different levels of personal and legal responsibility with each – some like the protection of a limited company, while others prefer the simpler sole trader model. You should register your company with the appropriate institutions, such as Companies House.
Know the Numbers
A good business owner will know their numbers inside out. This is crucial to maintain your company's health. You'll also have to report accurate numbers to investors, accountants and banks.
Don’t know your overheads from your gross profit? It’s a good idea to look at business courses that can help. You should have a clear picture of your revenue and your outgoings. Crucially, you should also know your break-even point, which will help you to decide the price of your services.
Then, you should make a habit of keeping track of company sales and expenses – don’t leave it all until the last minute. This will save you time and stress at year-end when calculating profit and taxes. Remember to keep all your receipts!
Choose a Name
Coming up with a business name can be tricky. It should describe your service, be as unique as possible, and show the character of your company. It’s also an important factor in marketing and protecting your company. To come up with a business name, consider:
- Using your name or initials
- Using your location
- Combining words to create a name
- Describing your business service in one or two words
There will be some trial and error involved in the creative process – you might even ask family or friends to help.
Open a Business Bank Account
Finally, you should open a business bank account when you are ready to begin trading. For limited companies, an independent business bank account is a legal requirement. After all, a limited company is its own entity, so everything needs to be separate.
Sole traders don’t have to open a business bank account, but it can be helpful. You’ll track income and outgoings more clearly without confusing your personal finances. It also sets you up for the long term, saving you from migrating to a business bank account if you become a limited company.
Continue to Learn
Business ownership brings many challenges - you’ll create a business plan, carry out research and balance the books. But the potential rewards are enormous. To succeed, an effective business owner will use their existing skills while continually filling in any gaps in their knowledge.