Our 12 step guide to starting up a business the right way

Many people dream of starting a business one day.  Being successful with your own company can allow you to live a more independent and rewarding lifestyle. But, perhaps the biggest killer of any new business is the fear of failure. Well, luckily for you this doesn’t have to be the case.

With years of experience launching new businesses in a wide variety of industries, we have put all our experience into a handy 12 step guide to starting a business the right way. So, without further ado, here’s your first step …

Our 12 step guide to starting your own business up

9th August 2018

Estimated reading time: 15 minutes, 43 seconds

1. Decide if this is the right business idea for you

Before you even get started by investing time and money into your new venture, you should first assess whether this is indeed the right business for you. Many people get hung up on an idea that they think is good and will make them millions, before actually taking time to think it through.

You might well find that the very nature of the business model isn’t best suited to your strengths and passions. To help with this step, you should ask yourself questions such as:

– How much time a day do I want to spend on my venture?
– Do I like to work remotely or in a fixed location?
– Do the skills I possess, truly make me best to operate this business?
– Do I love the idea?
– Could I see myself doing this everyday, for weeks and months on end?

2. Carry out in-depth market research

Again, before putting any money into the business, you need to invest some time and effort into market research. Proper market research will allow you to:

– Validate whether there is demand for your business
– Understand what competition exists
– Find ways to make your business stand out above the rest

Ultimately, market research is a crucial step in starting a business as it gives you a complete overview of the market and will help show you where you fit in. This step is also crucial in helping you to back up what you discovered in step 1. For example, you might really like the idea, but are not 100% sure how you will monetise it.

Well, market research allows you to discover new angles and opportunities and ways to monetise the idea. As mentioned, a crucial part of market research is allowing you to see how you can stand out. It’s worth noting that, undercutting the competition by reducing prices is not necessarily the way to go.

In fact, most successful businesses are focused on providing the best service possible, and then charging a fair rate. Add value, don’t cut prices. Market research can be done cheaply and fairly quickly in this modern day. As well as heading out and speaking to people on the streets, also use Google. If, for example, you type in “dog hairdressers in London”, you will find that many people are searching for this and that there is heavy demand for that service.

3. Set up the right type of company

Once you’ve validated your idea and found that it’s the right business model for you, it’s time to actually set up the company. This means registering the name of the company, as well as any directors, with HMRC. This step can be fairly confusing, so you will need to do your research. Here is a quick overview of the 3 main business types:

Sole trader. This is when just one person owns the entire company and is willing to take on all necessary responsibilities. You have unlimited liability and the success or failure of the company will come down to how you operate it.

Partnership. This is when you and one or more partners all collectively own a business. Any partners are responsible for paying bills and keeping the business legal. When the business makes money, each partner takes their respective share of the profits and pays tax individually.

Limited company. A limited company is one whereby all owners of the company only risk the amount of money they have invested in the business. The company can be limited by either guarantee or shares. A limited company can also then be made public or kept private.

Picking a business structure
Each type of company requires you to perform certain legal tasks in order to keep it within the law. So you should research them in greater depth. However, generally speaking, forming a limited company is less desirable these days than what it might have been in the past. A number of crucial perks have been done away with.

Such as the dividends allowances and reductions in capital gains tax you might have previously benefited from. You actually tend to find that a limited company offers little in the way of added financial benefits, but instead requires you to spend more time on accounting and paperwork. The only real benefit is that, if you wish to one day sell the business, you only pay capital gains tax on 10% of the sale.

You will also need to consider registering for VAT. You can do so voluntarily if your business has a turnover of less than £80k a year, but must do so if you take in more than this. Becoming VAT registered can be beneficial, depending on the nature of your business. For example, if you offer b2b design services and have revenue of less than the threshold amount, then by registering for VAT you only need to pay 11% to the government but can still charge 20% to customers.

Create a business plan

4. Write up your business plan

A business plan is a crucial business tool that honestly could make or break the success of your new venture. A business plan is essentially a framework of everything you know about your business up to that current point. Your initial plan will include all aspects of strategy and daily tasks needed to run the business.

This includes things like marketing, ownership, sales strategies, legal responsibilities and so on. What you should also be aware of, is that a business plan isn’t something you write out once and then forget about. Instead, you should use it as an ongoing tool to help you focus your strategy and maximise results.

If anything within the business changes, you should update the plan to reflect this. By keeping it fresh and flexible, it can be a massive aid, especially if you are running the business alone. For good examples of business plans, you can check out this site.

5. Establishing a financing plan

The next big hurdle you will need to deal with is how the new business will be funded. When analysing the market and drawing up your business plan, financing is something you should have already come across. Most new businesses tend to make losses in their initial months, so sorting out suitable financing ahead of time is crucial. Here are some aspects of financing you should consider.

Will the business be self-financed?

If the amount of money required to start the business is well within your means, then there is nothing stopping you from financing it all yourself. There are benefits to this, such as not being answerable to anyone else or needing to give up part of the company. Just make sure that you understand the risks involved and it is possible you could lose all of your initial investment.

How much financing will the business need?

As mentioned already, the business may require different rounds of financing for many months in order to keep it going. It’s not worth starting the business today and only having enough money to keep you going for a week or two. Instead, sort out financing as early as possible, allowing you to make strategic, long-term decisions.

How will you access investment?

There are a number of different ways to gain access to business financing. Certain ways can be more beneficial to certain businesses. Here are some financing options for you to consider:

– Speaking to family and friends
– Getting a loan from the bank
– Seeking grants from the government and/or other organisations
– Getting angel investment from wealthy investors
– Issuing shares in your company to the public

Starting up a business with a good book keeping system

6. Implementing bookkeeping systems

As the owner of the company, it is your responsibility to keep a close eye on the finances. This means putting in place bookkeeping systems. This will allow you to effectively track all costs, revenues, taxes and profits. To do this, you have two main options:

1. Hire an accountant. An accountant is a specialist in all forms of bookkeeping and does this for a living. As such, you no longer have to worry about learning any of it yourself and can simply pass over any financial documents to them to be sorted and processed. They can also help you to limit your taxes and maximise profits whenever possible. However, this can be costly.

2. Using online bookkeeping software. This is becoming increasingly popular as online bookkeeping systems are very affordable nowadays, and provide an advanced array of tools. For lowly fixed monthly prices, you can get a helping hand and will be able to offload many of the complex accounting calculations. For more info, check out this awesome guide to bookkeeping systems

take your business online, Ultimate Fitness Birmingham Website design by us

7. Taking your business online

These days, the internet provides a cost-effective way for all types of businesses to increase their sales and to gain exposure. And there are two main aspects of taking your business online that you need to be aware of:

Getting a website

Your website is essentially your storefront on the web. It is a place for people to find you online and to discover more about your business. It is up to you what your site includes. You can have a range of pages and features, such as:

– Contact information
– Opening times
– Products, services and prices
– An online store
– Online reservation tools

Ultimately, it’s up to you. And when you get a site built, you have two options. You can either build it yourself or have someone build it for you. Site builders like GoDaddy allow you to, rather cheaply, build a simple site that includes basic pages with information about your business. Just be aware that the finished look of your site will be quite basic and limited.

Alternatively, you could hire a designer to build one for you. This does, of course, cost more money, but is usually much faster and will allow you to have a site that is built to a much higher standard. This added quality is usually invaluable in helping you to attract more customers and improve your business’s credibility. We offer a number of affordable web design packages that help you access a top quality site at a very reasonable cost.

We can also then assist with the ongoing maintenance of your site. Including hosting, dealing with any issues and adding new content. Examples of sites we have built include:

Ultimate Fitness Birmingham
JRM Cellar Conversions
Medico Beauty

Creating a social media presence.

Social media channels are the perfect compliment to a brand new website. You use them to further promote your services amongst friends and the greater public. You can also use them as a tool to help improve your perceived experience and authority within your chosen industry. This can, in turn, dramatically boost sales.

For an example of someone using social media to generate a massive increase in sales, look no further than Kylie Jenner. Her impressive followings and ability to leverage her audience has allowed her to build a cosmetic line worth close to $1 billion in just 2 years. Social media channels you should consider using includes:

Facebook
Instagram
Twitter
Snapchat
Linked
Pinterest

NOTE: We set up social media accounts for all customers choosing to buy a site through Element Media. We offer this service at no additional cost.

8. Looking for premises

Depending on the nature of your business, you may or may not need physical premises. Nowadays, many businesses are more service-based. If this is you, then think about whether or not you really need a physical location. For example, if you design websites, do you really need an office? If you need to meet with clients, then pick a nice coffee shop or elsewhere and then work from home the rest of the time.

This allows you to drop costs significantly and gain a competitive edge. If you do need physical premises, never rush into signing a contract. Instead, you need to spend some weeks looking for exactly the right spot that fits your needs. Also, set a tight budget and stick to it. Having large rates to pay each month could cripple your ability to grow. Another important thing to do is never sign yourself in for a long, 5 year lease, and never guarantee it personally.

9. Begin networking

A key component of success in business, regardless of industry, is networking. You should always be on the lookout to meet new potential clients and to expand your presence in the market. Networking is also important if you’re looking to gain a deeper understanding of your market through those who are already successful.

This means trying your best to find a mentor. A mentor is someone with deep experience in your industry and can help guide you and stop you from making costly mistakes. Networking for clients and mentors can be done both online and offline. You can attend industry meetings on a weekly or monthly basis, whilst simultaneously following people and engaging on social media channels.

A simple way to find groups of like-minded individual online is by heading to Facebook and typing in something like “{your industry} support group”. This works for all kinds of businesses, and people online are often more than happy to help you grow by sharing their knowledge, experience and contacts.

10. Finding staff

Many new business owners get confused and overwhelmed when it comes to the task of hiring new staff. However, in this modern day and age, there are so many great tools to help you, that you really don’t need to worry. In fact, finding talented employees is faster and more affordable than ever before. It would take too long to go into the entire topic of hiring staff here, but there are some important points to consider now:

Are you looking for full time or freelancer?

If you’re looking for full-time staff, then it’s easiest to get started by drawing up a job specification and posting it on job boards online. These include sites like Reed, Indeed and Jobsite. You will soon start to get plenty of applications and can gain a deeper understanding of the quality of applicants near you, and how much you should be paying.

Alternatively, if hiring full-time staff right now is beyond your budget, you should look towards freelancers. These are individuals who perform specific jobs for a range of clients and work remotely. They can help with everything through from graphic design to video editing. They can even help you to find full-time employees!

A great place to start is on sites like Fiverr, Upwork and Peopleperhour. One key benefit of hiring freelancers, or even temporary/agency workers, is that you shouldn’t need to worry about their taxes. Instead, they invoice you for any work done and you simply pay them and they handle the rest. They are a crucial asset in helping low budget businesses to gain traction.

11. Marketing your business

A well-structured marketing plan should be a core component of your business plan. And again, it is a topic that could involve endless discussion. But here is a brief overview of 4 key marketing techniques you should consider:

1. Social media

Remember those social media accounts we discussed above? Well, you should be active every day on each one, publishing new content and finding new ways to engage with potential customers.

2. Paid digital advertising

This involves you paying small amounts for tens, hundreds, and even thousands of people to click through sponsored links to your website. You can engage in paid digital advertising through a number of avenues, with perhaps the best being Google AdWords, Facebook, Instagram and YouTube.

3. Content marketing

A content marketing plan is when you regularly publish new content and information to your website and social media channels. You can then share this with email subscribers, and also attract lots of new users through Google. This means learning SEO, or hiring an experienced freelancer to help you with this. It is also a service we offer here at Element Media.

4. Source free publicity

The best marketing you can get is of course free publicity! Speak to friends, relatives and anyone else who will listen and encourage them to spread the word about your business. Also, speak to local radio stations, newspapers and TV networks. If you have an interesting story behind your business, they will likely be happy to publish a story about you.

A top tip from personal experience

You should think carefully before offering any discounts, especially on websites like Wowcher and Groupon. These websites involve you needing to constantly discount your products or services, which eventually devalues your business as a brand. You also get people who flick from one offer to another.

Using these sites only benefits Wowcher and Groupon and would then damage your business. Instead, build a business on a solid foundation. So we would recommend competing on quality as opposed to price. This allows you to build a much more profitable and stable business in the long run.

Final thoughts on starting a business the right way

After having started a number of businesses in different sectors, there is one simple truth that you must learn:

You only get out of your business, what you put in.

What this means is that, if you want your business to be a success, you need to carefully reread the previous 12 steps and then create your own tailored plan to see each of them through. Then, once your business is up and running, you need to be willing to put in the time and effort to persevere when times get tough and to earn your success. This means:

– No paid holidays
– No calling in sick
– Only earning when you work
– Building a support circle around you
– Fighting to maintain some semblance of a work/life balance

Success very rarely comes easy in business. However, once you reach a point where you start to turn a profit and can enjoy the comforts that come with being more financially secure, you will thank yourself for the effort you put in. So I encourage you to pursue your dream and start a business. And I just hope that these 12 steps will help get you started on your path to success!

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