Have a great business idea?
Having a great business idea is a fantastic start but to help you transform your idea into tangible results and a profitable business, you may be at a loss as to what to do next.
As with any big challenge you take in life, it’s easier to break it down into smaller goals and work through them methodically, all the while keeping mindful of your ultimate strategic goal.
When starting a business, we suggest starting with this 6 step process to help get you started.
1. Write a business plan
At start-up phase, the key to being successful is to keep costs low, and use the time you have efficiently and effectively. Many would-be business owners spend a lot of time focused on their business plan afraid to take the leap to trading. Spending lots of time working on the minute details of your business plan in the hope of setting yourself up for success, but avoiding failure is of course not guaranteed. Realistically, the smartest and most robust business plans are only really needed if you are seeking initial investment and funding to start trading. This does not mean that you have to limit your ambitions but we always recommend to our small business clients to start trading as soon as you are able, and don’t be afraid to test your market to see what works best.
2. Cash flow
Financial planning and cash flow forecasting are essential tools in the first year of trade. By mapping out the financials in the first year and maintaining a bookkeeping system when you start trading, you are putting in place good work practices for future success. If you plan to fund your new venture with your own funds, we recommend you forecast your cash flow realistically. The rule of thumb is to add a further twenty percent for extras or ‘incidentals’ to cushion any unexpected costs. This extra margin will help you forecast how long it will take you to be profitable, one of the major goal as you start to trade.
You will need to determine what legal entity works for your business, whether sole trader or limited company. As a sole trader, you can start trading immediately without any issue of paperwork or upfront costs. You also have a long lead time before you need to start reporting your business activities to HMRC for tax purposes and this is presuming your profit meets the minimum requirement before corporation tax is payable. However, as a sole trader, you are at personal risk, versus a limited company set-up, where you are in effect, an employee of your limited company with added tax benefits.
We suggest discussing this important decision with us further to see what works best for you.
4. Don’t mix business with pleasure
Whichever legal entity you decide upon, whether sole trader or limited company, we strongly recommend that all business transactions are kept separate from your personal expenses. A separate bank account is vital and this doesn’t need to be a business bank account which are often offered with additional fees. As long as your business transactions are clearly identifiable, it will make your life easier when reviewing your business cash flow at any time and ensuring you are staying within budget.
5. Your website is your biggest marketing tool
Regardless of your business industry, we recommend you set-up a website to advertise and market your start-up business. We suggest using popular domain sites such as GoDaddy, where you can check if your chosen website address is free to use and you are able to secure it for use. You can also include an online shopping cart service, such as Shopify. In both respects, the set-up and maintenance costs are very low and website builders such as WordPress can provide you with website templates to get you up and running quickly.
6. Test sales
Your business idea has now moved from an idea to a tangible business ready to be tested for sales. We strongly recommend networking if you are a service-based business and organisations such as your local chamber of commerce are a good starting point. Selling your wares as a product-based business will clearly involve selling to your chosen market wherever you can and evolving with customer feedback.
Written by Shaima Todd