Starting a Business in 7 simple steps

I’d need to understand food hygiene and health and safety.

I’d need to monitor fluctuating prices for ingredients.

The unique selling point (USP)

What makes your chosen business different from the others out there in the same sector or marketplace? Consider what might make your potential customers buy from you rather than your competitors: what makes you different, and is there a genuine need for your product or service?

Have a look around at the competition and use the internet or business sections of your local library to research your competitors. Consider different ways you might differentiate your business. For example, you could offer:

high quality customer service.

fast or free delivery on goods.

cheaper prices.

additional support packages, such as free telephone support.

highly qualified staff.

creative or new services.

Is there a need for your business?

Have you spotted a gap in the market? Maybe there’s no one else providing these goods or servicing your potential marketplace. A word of caution here: the gap may be there for a good reason. Maybe it’s not a financially profitable offering because the marketplace for these goods or services is just too small, or the manufacturing or shipping costs are very high. Research the need for your business and check out whether it has been tried before and if so, why those businesses failed or moved out of the market.

You’ve chosen the idea – what’s next?

Vision

You should create a vision for your business. Your vision is what you describe to people when explaining your idea, and it should be easily understood by those you want to sell to. It can be big and aspirational or it can be succinct and to the point. It should be your inspiration for the future of the company. It’s worth reading about the vision your competitors have or the vision behind brands that you really like; this will give you an understanding of what might work for your business. For example, when Bill Gates first started Microsoft, he envisioned a personal computer in every home and business.

Aims

The aims of your business are more practical and operational than your vision. They’ll change over time as your business grows. Your aims will usually be two or three things that you hope your business will do. An aim might be something like ‘sell 3,000 cupcakes in the first year’ or ‘supply my goods to a leading manufacturer in my industry by a specific date’. Having aims keeps you focused on what success looks like in a more manageable way than a vision, which might take years to fulfil.

Choosing a name

You’ve managed the hard part. You’ve come up with an idea that fulfils your passion and is potentially profitable. You’ve got a vision and aims. Now you need to think about a name. This helps to make your idea real so you can start sharing it and getting feedback on your concept. There’s no science to this. You need a piece of paper, a pen and maybe a few friends, but start writing whatever comes to mind. Here are some things to consider.

Do you want a business name that says what it does on the tin?

Do you want to stand out with something less conventional or even radical?

Do you want to fit in with your competitors or is there an industry norm?

When considering the above, think about your industry sector, competitors and customers. This should help you to weigh the advantages and disadvantages of each. Once you’ve got a few names you like, ask people what they think; you can change your mind right up until the minute you register the business.

Different business types

Product- versus service-based business

Product-based businesses sell ‘things’ to their customers. They may sell to ordinary people like you and me: this is called business to consumer (B2C). On the other hand, they could sell to other businesses: this is called business to business (B2B). Popular B2C product-based businesses are retailers selling clothing, homeware, books, music, etc. In fact, the list is endless. B2B product-based businesses typically supply products that other businesses or institutions need as part of their own production process, for example, widgets, machinery, medical equipment, wholesale clothing and IT equipment.

Service-based businesses utilize your skills, time and talent. Think cleaning companies, day-care and consultancies. Service-based businesses can also be B2C or B2B.

Some businesses can sell both services and products, for example, cafés and restaurants. We see more and more of these service-based businesses acting as retailers, selling goods alongside core service. We discuss this further here (#ub9a4291f-a418-4e58-b1a7-3695ec99fdb1).

Both types of business might require start-up capital but if you’re a product-based business, it’s likely that you’ll need to purchase goods and pay for distribution or premises, whereas many service-based businesses can be started on a shoestring.

Business to business or business to consumer

When it comes to choosing between business to business (B2B) and business to consumer (B2C), you might not have to. Both markets might be profitable and keep you busy throughout the year. Consider offering your services direct to customers and businesses. Take, for example, a café that supplies offices or offers large-scale catering services and caters for walk-in trade as well.

If you can service both markets, you’re providing yourself with a much broader target market, which could help the business to succeed in difficult times. For example, if you were setting up a florist but found that a competitor or a local branch of a supermarket had set up over the road and was beginning to undercut your prices, you might be thankful that you’d started supplying to weddings and venues and built a relationship with the local funeral directors.

Setting up an online business

These days, starting a business online can be a low risk entry point. You don’t even have to build your own website any more as third-party sites such as eBay™ and Etsy have created direct-to-market opportunities for people with products ready to ship. Starting online could be a good option if you’re selling popular consumer items such as fashion or homeware. It’s especially good if you need to test out how your market works and what people are willing to pay for, all without expensive overheads. There are a number of online business success stories, from Net-a-Porter to Notonthehighstreet.com (http://Notonthehighstreet.com) and the global giant Amazon.

Location, location, location

Thinking about your location and business base isn’t something that should be left to the last minute as it can make all the difference to your business thriving or even getting off the ground. If your clients or the industry you’re working in are based in a different town or city to you, it’s worth considering having an address or virtual office in the same area as this helps with credibility.

Here are a few things you should also consider.

Global versus localWill your business sell its products or services internationally or more locally in your neighbourhood or community? You might do both, which will take more effort and money, so think carefully before you decide upon world domination.

Footfall on the high streetIf you’re setting up a physical shop, where’s the best location for what you do? Do you need passing trade or do you work by appointment? If empty premises catch your eye, spend a few days counting how many people pass by at different times during the day as this will be your footfall if you had that space.

CostsIf you have premises, you’ll incur a number of costs, such as business rates, and you’ll need public liability insurance (see here (#litres_trial_promo)). Factor all of this in when planning as it adds up. Some areas have business incentive schemes; speak to the local Chamber of Commerce wherever you end up.

Networks and support

You know the old adage: ‘It’s not what you know, it’s who you know’? Well, here’s an updated version: ‘It’s not what you know, how much money you have or how brilliant you think your idea is, it’s who you know that will be the difference between success and a hard old slog’. While that’s a bit of a mouthful, in business it’s true, and you’ll find over time that networks and making connections might be even more important to your business than money.

Although in the UK the Government-backed business support environment has shrunk somewhat over the last few years during the economic recession, there are still organizations out there that can help you to get your business idea off the ground. In the UK, look at organizations such as the National Enterprise Network, UK Trade and Investment, and Chambers of Commerce. Most of these will have local branches and some offer access to finance alongside advice.

Networks and networking

As you start working on your business, the opportunities for growing your network will increase and you’ll make connections all the time, for example, with suppliers, customers or other local businesses. It’s important to seize these opportunities and find out if there are any networking events that might be available for you to attend in your industry sector or your local area.

Networking tips

Play niceIt’s important to play nice when networking as bullish over-sellers who take without giving are often shunned or seen as people not worth doing business with.

Give moreGive more than you get in order to create a strong group of business connections that will take your call night or day and help you to win contracts, sell products or just listen and share advice when times are tough.

Stay connectedIt’s nice to check in with people from time to time without asking anything of them. Drop them an email or give them a call for a chat or to arrange a coffee. Alternatively, there are some great social media tools that help you to stay connected with the people you meet out and about. LinkedIn® is a great way of sharing and staying in contact with your network, as is Facebook, depending on the sort of business you run. Find out what works for your industry and get online.