Starting a business is usually the result of a dream, a hobby, identifying a gap in the market or knowledge and experience gained from working for someone else, of course in today’s climate there is also the need for some to replace lost income as a result of redundancy.
These are all valid reasons for starting a business but be warned, enthusiasm, whilst important, will not get your business to where you want it to be, good planning is an absolute necessity.
At some point before setting up your business you will seek proper advice from professionals, but it is also sensible to seek advice from others within the business community as they have already started their business and can give you invaluable guidance based on experience.
Doing your homework is also a must as you need to answer numerous questions about what your business is going to look like before approaching a bank or an accountant for instance, does your product or service have a market, is it cost effective, will it make a profit and is there room for growth.
The things you need to look at before you move forward (Foundation Work):-
Product/Service – what?
Market – what is the market size, is there room for another provider, who is the competition, what price does the product/service currently achieve
Suppliers – consistency, quality, volume, expertise, geography, price, payment terms and technical support are just some of the areas to be considered. Also, should you rely on one supplier, will you need to hold stock or can you rely on them to deliver and should delivery be direct or via your business?
Costs – you need to be accurate about costs, it is unwise to guess your margins. List all the stages in the life of your product/service from supplier price to delivered/installed with your client.
Sales Price – Don’t be tempted to look at your competition and try to undercut them. Look at what you are offering, the quality of service or product, the after sales support, etc., consider value for money not necessarily volume.
Staff – is this something you can achieve by yourself or will you need to employ people to make it happen, is out sourcing an option that can be considered?
Location – do you need office space or can you work from home to reduce overheads, do you need storage facilities and if so how big and do you need to be located close to your market?
Marketing – what does your client look like and how will you attract them to buy from you?
Financial requirements – can you finance the business from personal funds or do you need to approach a bank or financial institution to make it work? You will need to consider costs, restrictions and what sacrifices you are prepared to make (business or personal exposure).
With the knowledge gained from looking at your potential business the next thing will be to put together your business plan and a cash flow forecast. Be very honest, consider the negatives as well as the positives.
Your business plan is both a compass and a road map. It will help you identify potential issues before they become a problem, it will assist when talking to potential investors and it is a strong management tool. If you are building a house you work to a plan, starting with the foundations and in many ways a business is the same.
A Business Plan is not something to be produced at the conception of your business only to be put it into a dark recess of your office, rather it is something you should be referring to on a regular basis, whether that is weekly, monthly or quarterly. By continually referring back to your plan you can gauge how well your business is doing, is it in line with projected figures and if not why not? Is there something that needs to be changed to get it back on track.
We can guide you through this process, assisting with the Foundation Work and working with you to produce a credible Business Plan.
Potential advice you receive from accountants and solicitors will be on the basis that your business is going to be a success and given the right determination and proper planning - why not? They are the right people to give proper advice on taxation, payroll, employment, property, etc.
We will look at all of these areas with you, not to offer accounting or legal advice, but to look clearly at the positives and the negatives. Setting up your business is partly about protecting you; do you understand the consequences of signing a personal guarantee with a bank for instance or the right way to set up your business?
Building good foundations will give you the best chance to grow your business into something, strong, credible and profitable, as Plato said "The beginning is the most important part of the work".
Remember that failing to plan is planning to fail.
A properly formulated Business Plan will include:-
Company vision - business idea, goals, what the business does, legal requirements
Running the business - staff, location, equipment, suppliers, risks
Marketing - market research, customer profiles, competitor profiles, managing risks, pricing, promotions and advertising
Finance - start up costs, profit & loss forecast, cash flow forecast, sourcing finance, payment terms (suppliers and customers)
Executive Summary or Introduction - business name, location, key personnel (including their skills)
If you would like further information on business planning click on the link button below and you will be taken to the relevent section on the Business Link website. You will also be able to download a business plan template.
"From little acorns...."
"big Oak tree's grow"
Paul Thomas trades as TISolutions - FCA License FRN 686104