Five key questions
Most start-ups think that I will be surprised either by their lack of business knowledge or the fact that they know what to do but haven’t done it yet. Well, both are pretty common and broadly speaking the questions I was asked came back to five key ones:
- How do I start my business?
- How do I find customers?
- How much should I charge?
- Where do I start?
- How can I do everything?
Addressing these five key questions will help you turn your business idea into reality. Find out how below:
Q1. How do I start my business?
Top Tip #1
Build a business plan
It’s the process of business planning that’s important as it helps you to focus and prioritise.
On an on-going basis, your business plan should be viewed as a working document to facilitate a structured approach to managing and growing your business. It doesn’t have to be ‘perfect’ until you need to present it to support an application for funding or investment. Then the content should be reviewed in light of the intended audience, just as you would adapt a covering letter for a job application and tweak the emphasis of certain aspects of your CV.
If you don’t know how to put a business plan together then there are plenty of resources and templates online. Don’t forget to check out what’s free through:
- Enterprise Nation: webinars; online resources; events; member offers.
- Your local business bank manager. Many of the high street banks offer a range of services to new businesses including free business banking (sometimes for up to two years) and free online guides and business plan templates. Some banks want to see your business plan as part of their application process in which case it is a good idea to use their suggested template.
- Your local Chamber of Commerce. If you live in the London Borough of Merton, then I highly recommend you get in touch with the Chamber and ask about Merton Business Support Services.
- The Federation of Small Businesses.
- Local business networking and support groups.
Whilst free is often attractive, a DIY approach is rarely best. Every business (big or small) benefits from independent and objective review.
Q2. How do I find customers?
Top Tip #2
Do your research
You need to do research in order to understand your market place:
- who your customers are, where they are and how to reach them;
- is there a demand for your product / service and how big is the potential market;
- who your competitors are, how you differ and how you will stand out from your competitors; and
- internal and external risk factors broken down into operational, political and regulatory, economic, social and cultural, and technological.
There’s no point making a plan if you haven’t done your research. The more in-depth your research is, the more informed your business decisions will be, the less risk you will be taking on and the more chance you will have of success. However, as with all things in life, there’s a balance to strike. You need to do enough research to validate whether you have a viable product or service to sell, understand how best to sell it and how to manage and minimise risk.
The results of your research will feed into your business plan and, guess what? This isn’t a one-off task, it should be an on-going process and one which you specifically task yourself to regularly review. This is the only way to be sure that you are always playing to your strengths, addressing your weaknesses, maximising your opportunities and minimising threats to your business.
If you haven’t got a degree in marketing, don’t worry. Again, there are plenty of resources online for example: The Marketing Donut.
Q3. How much should I charge?
Top Tip #3
Know your numbers
If you've watched Dragons Den or The Apprentice then you will have heard the phrase “know your numbers” repeated time and time again. Why? Because a business plan without numbers is not a business plan and you can’t create a pricing strategy without having done your research and knowing your numbers.
First things first: work out your cost of sale and profit margin. Then find out what your competitors are charging and what your potential customers are willing to pay. Pricing is one of the most challenging aspects of running a business and one which you continually need to test and review.
Once you have done your numbers and demonstrated that your business is viable and sustainable, then guess what? You need to stay on top of your numbers. You can’t proactively manage what you don’t monitor and you can’t monitor your business if you don’t measure it. If you don’t like dealing with numbers then find someone who does.
At StartUp 2016 we heard the phrase “Turnover is vanity; profit is sanity” from amongst others entrepreneur, Lara Morgan. Yes, turnover is vanity and it’s more important to focus on profit than turnover because, as mentioned above, your business needs to be viable and sustainable. However, there’s a third element to the saying which is “cash is reality” - sometimes quoted as “cash is king”. If you can’t manage your cash flow then you will very quickly go out of business.
When you do financial forecasting remember to include the real cost of resources. Start-ups often forget to include a cost for resources which initially may be ‘free’ (for example, roping in friends and family to help out and the cost of their own time). In order to model whether your business is truly viable in the longer term you need to include and place a value on such resources.
Lastly, if you are seeking investment funding, then you will need to demonstrate that your business is scalable. Your forecasts can’t be based on your best guess. You will need to validate the assumptions upon which your forecasts are based and the only way to do this is by having done your research and having a solid base of qualified and quantified data.
Q4. Where do I start?
Top Tip #4
Think big, start small
Typically entrepreneurs can see opportunities everywhere they go, but those who are successful know how to focus on one thing at a time whilst keeping the bigger picture and other opportunities still in sight. You need to prioritise. If you try to have a go at everything, you will more likely burn out before completing or achieving anything. Instead take the think big but start small approach.
Work out what your minimum viable product (MVP) or service is and focus on getting that right before attempting anything else. Your minimum viable product should also be your minimum lovable product. This means thinking about it from a customer perspective – will they buy your MVP? If not, then you haven’t got your MVP right.
Not everyone is good at thinking big and starting small, so find the right people to help you. Once your business is up and running you will need to spend time working on your business rather than in the business. Getting the balance right can be tricky especially in the early start-up stages. If this resonates with you then take a step back and work out what your priorities are.
Q5. How can I do everything?
Top Tip #5
Build a team
Even if you’re a solopreneur, you will still need support to run your business even if it’s just moral support from friends and family or a network of like-minded business owners.
Be open minded and creative in your approach to building your team and be sure to play to everyone’s strengths, in particular your own. Again, prioritise. Create an action plan and prioritise what resources you need to implement your business plan and achieve your goals.
Lastly, don’t forget to look after your team, make time for pleasantries and show your appreciation. The return is worth it.
So you’re going to be busy, which is where Business Clan comes in! We help with all of the above and more. Contact us to find out how we can help you start-up in 2016 - we'd love to hear your ideas and challenges. Alternatively call us now on 033 0133 0543.
Delia Porter, MD & Founder