Tips & advice for starting a business
Are you in the process of starting a business and looking for advice on the best way to go about it? Read our comprehensive guide.
Tips for starting your own business
1. Before you start your business, you should consider two factors: is the business you’re starting something that you enjoy doing? If not, you’ll struggle to commit the time and effort that running a business requires. You also need to ensure that there is a viable market for your new business through thorough market research. No customers means no business.
2. Effective branding is crucial- choose a strong trading name and image. Which is the best name out of these 3 which all do exactly the same business?
- A & B Services
- Midland Technologies
- Rapid Computer Repairs
When determining your brand identity, you need to consider whether or not you want to position yourself as a friendly, local company or do you want to present a national, corporate image.
3. Choose your business premises wisely. Are you planning to start from home or will you need something larger? Does your council have a list of special cheap accommodation for new businesses? Most do.
For more advice on starting your own business, read our in-depth guide.
Financial planning for your business
Proper financial planning is vital to ensuring that your business is viable.
1. You must work out how many customers you will need for your business to be profitable.
For example, your income is 100 customers per year paying you £250.00 = £25,000
You have the following outgoings:
- Outgoing Rent - £5,000
- Insurance - £1,000
- Car Payments - £2,500
- Petrol - £2,500
- Total cost - £11,000
Outgoings of £11,000 leave profit for you of wages £14,000 you now know your target is 100 customers, or 2 per week minimum.
2. Keep your personal outgoings (mortgage/bills etc.) out of the company expenses or you will confuse the calculations.
3. Can you work out profit mark ups? You must know what your product/service costs you, to calculate your sale prices.
For example, your materials and services cost the following:
- Materials £50
- Labour & to assemble 2 hours @ £5.00 per hour £10
- Advert Production of Leaflet Brochures £3 each
- Office overheads £5,000 - 100 units sold £50
- Delivery / Postage / Packing £12
- Total cost £125.00
a) 50% Profit mark-up = Selling Price of £187.50
b) 100% Profit mark-up = Selling Price of £250.00
Which price do you sell at? How does your price above compare to competitors?
- 100 Sales at price (a) only bring in £18,750
- 100 Sales at price (b) bring in £25,000
To bring in £25,000 at price (a) you need 133 sales = A Third More Sales for the same income.
Developing your business
1. Understanding your customers and their needs is crucial to developing your business. In order for your business to succeed, you need to cultivate customers who are loyal to you and will buy repeatedly from you. If customers only bought from you once, find out if they were dissatisfied and why – this is the route to improving your service.
2. Don't stand still. If your customers bought from you because you offered something new then they will go to a competitor just as easily. Come up with new ideas, offers and services to keep them interested.
3. It is important to remember, however, that few businesses can live on repeat business alone; develop a strategy for gaining new customers. Give yourself a target for how many new customers you want each month. If you make the target high you will get disillusioned if you don't reach it, so keep it realistic.
Marketing your business
1. The key to marketing your business effectively is being able to empathise with your customers. By understanding their wants, needs and pains, you’ll be able to effectively communicate the way your product can benefit them.
2. If your product is excellent at meeting one need in particular, especially when compared with your competitors, this becomes your USP. It is what will encourage new and returning customers to choose you above the rest, so it’s important to emphasise that USP in your marketing materials.
Whatever your business, these steps are a solid place to start. It’s important to persevere. Many very successful businesses succeed because the owners did not give up when the going got tough.