What new small businesses need to know
Media consultant Jessica Pierce delves into 5 key issues and considerations when starting your own small business.
Starting a business of your own is a dream many people wish for. It has its merits – you get to be your own boss and financially it can be very rewarding. However, even the most experienced pros can make mistakes – and these can be costly. So, if you are about to embark upon your dream, get ready to roll your sleeves up and iron out these five key issues first.
"A business plan is important because it will identify any issues with your business venture"Jessica PierceMedia Consultant
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1. Create a business plan
If you have not yet created your business plan, make one. It’s important because it will identify any issues with your business venture. It will also serve as an excellent marketing tool for funding and attracting potential investors. A simple business plan should outline your service or product, your funding needs, budget requirements, the competition, and your target audience. It should also be honest and highlight any challenges your business might expect to encounter.
There is plenty of helpful advice online you can go to for business planning if you’re stuck, including this helpful toolkit put together by market-leading cloud account software provider Sage. The guide has been created to help new online entrepreneurs navigate the start-up landscape, including:
• An information-packed guide addressing typical challenges encountered by small businesses and potential funding sources for them.
• A business plan template to help founders outline a business strategy for success.
• A vital cash flow forecast template, to predict funds flowing in and out of the businesses over the next 12 months.
You can access the full guide and resources online, here.
2. Be realistic on your financial requirements.
Armed with a good business plan, you will have a clear idea of exactly how much funding you are going to need. There are two classic traps you must avoid: overspending or underspending. It’s a common mistake to either misjudge your spending and exceed your budget, or be frugal and spend too little and not give your business a chance to succeed.
Don’t forget about details such as insurance costs either – depending on your area of business you may need professional indemnity insurance, for example. It makes good business sense to estimate realistic funding for your business venture from startup and through the first year of trading.
The UKStartups website has a very useful Small Business Startup Tools List which can help you calculate realistic costs.
3. Business partners
You may choose to start your business on your own. However, most people generally need investors for funding or need to seek a business partner with the know-how to help launch the venture. However, getting too many people on board will dilute your profit, and complicate your business strategy. Your business plan should address the issue of partnership and involvement, and the potential impact this may have.
4. Identify your target market
Many new startups fall at the first hurdle because they do not fully understand their target audience. You must identify who your prospective customers are. Will they need your service or product? Is your proposed pricing strategy sensible? What is your USP? Are you planning to compete on price, quality, service, or all three?
5. Marketing is essential
If you do not budget appropriately for marketing then you run the risk of failure. You might have the greatest product or service on the planet, but if your potential customers don’t know about you, how are they going to buy? Understanding your potential customers’ habits and lifestyles will enable you to market your service or product effectively. Whether it is using traditional methods of print advertising, digital marketing using social media, or a combination of both, not doing any meaningful marketing will cost your business.
Starting up a new business venture is exciting, requires a leap of faith, and is an adventure of a lifetime. However, it can be challenging. By being prepared you can avoid the pitfalls and common mistakes some entrepreneurs make and steer your new business onto a path of success.