Start-Up Business Guide
Starting a business can be exciting yet very daunting, but it is undoubtedly a turning point in your life. You may have many questions and this simple ‘Start-up Business Guide’ is designed to help and assist you through the process.
There are lots of advantages that you will enjoy when you start your own business, including being your own boss, choosing your hours, making your own decisions, earning your own money and nobody telling you what to do or when to do it. It all sounds great on the face of it, but it is you and only you that will make your business venture succeed or fail. Forget your “protective bubble” or “basic salary” as starting a business means that you truly control your own destiny and future success. In order to achieve the rewards and flexibility you are looking for you need to be prepared for the long hard slog ahead that will be required to build up your business at start-up.
A ‘GOLDEN RULE’ FOR START-UP ENTREPRENEURS IS “DO NOT PROCRASTINATE”
REMEMBER “THE BEST WAY TO GET SOMETHING DONE IS TO BEGIN!”
HOW DO I START A BUSINESS?
START WITH AN IDEA
All business start-ups begin with a business idea. You then need to know if your idea works and this means testing it. You’ll need to fully understand your target customers’ needs. A great starting point is to talk to your target audience and ask them, “What would make this product or service more desirable?” This will give you a clearer understanding of your potential customers wants, needs, desires and help you realise the benefits you can offer to them.
Your job as the start-up entrepreneur is to work out the most cost effective way of delivering a product or service to your customers and to test the price on your target audience. Get feedback that will be valuable in moving your business forward, ensure your customers are happy with the price and find out what they don’t like and how you can improve on it. Make sure that you are able to make good returns and acceptable profit margins.
It’s also a good idea at this stage to research competitors to make sure that you are one step ahead and offering something that adds more value to your target customers.
YOU SHOULD BE ASKING:
- Is my idea better than my competitors?
- Does my idea improve on what competitors are offering?
- Am I cheaper than my competitors and do I offer a better service?
- Do I have a USP?
A Unique Selling Proposition is one of the basics of effective marketing and business which has stood the test of time. It is an invaluable tool to ensure you stand out from the crowd and to give customers a reason to want your product or service over others. HOW TO DEFINE YOUR USP – PDF DOWNLOAD
There are many different ways to obtain funding to start a business, but we’ll stick to the most simple.
START-UP LOANS (SOFT LOANS)
Business start-up loans, also known as soft loans, are a special type of business grant where the repayment terms are more generous than under normal circumstances for finance. These more flexible terms could mean lower interest rates, zero interest or even longer loan terms. There are lots of different business start-up loan organisations that offer soft loans, but the most commonly used and prominent is the Government Funded Start-Up Loan Scheme.
GOVERNMENT BUSINESS START-UP LOANS
The Start-up Loans Company is a government funded initiative that provides start up support in the form of a repayable start up business loan together with a business mentor for entrepreneurs across the UK. The scheme offers business start-up loans of up to £25,000 at 6 % fixed rate of interest.
START UP LOAN CRITERIA
To take out a government business start-up loan, you must be a UK resident aged 18+ and if you are already trading you must not have been trading for more than 12 months. You must also be eligible to remain in the UK for the duration of the loan. Your loan amount and duration will be assessed by your allocated delivery partner and application. Loans tend to be set at between one to five years and currently offer a 6% fixed rate of interest. A free mentor is available with every successful application, which you can access on acceptance of your loan.
The free mentoring is a very important aspect of the government start up loan scheme. Business start-up mentoring can increase the survival chances of new businesses. In 2013 in the Guardian newspaper, an article appeared from Amanda Jobbins, Chief Marketing Officer at Sage Group. In the article, she said “business start-ups need mentoring and support from advisers, at least as much as they need financing: There is evidence that mentorship can and does work. 70% of small businesses that receive mentorship survive for five years or more.”
SOME ADVICE FROM THE START-UP LOANS SCHEME
“A lack of support and advice is one of the fundamental reasons for business failures. There is no doubt people starting their own business are usually good at their jobs, but they don’t always realise they have to be good at a variety of other things as well – HR, financial planning, legal, admin, marketing, branding – the list goes on. I always urge people to hire experts in those areas but as the founder of a start-up you still need to have a good breadth of knowledge. Whichever sector you are operating in, there will always be plenty of specialist investors for you to target. Whether you are in the business of providing a product or a service, whether you are launching in the UK or expanding overseas, I passionately encourage you to find yourself an expert. Get this right – and you are giving yourself a head start.” James Caan, Serial entrepreneur and former Dragons’ Den investor and chairman of the UK Government’s START UP LOANS SCHEME.
Government grants are an alternative start up business funding option, www.ukbusinessgrants.org the ‘business finance support finder‘ is a really useful online tool that can help people who want to start a business to find relevant funding. The tool lets you search on many criteria including location, business size and type of business.
Business start-up grants are hard to come by and the whole process can be stressful and complicated. There are many different schemes, each with their own set of criteria but as we say many are very long winded and hard to get your hands on. This is certainly something you would probably require some kind of guidance or support in finding the right grant and applying for it.
Bank loans are commonly used by start-up entrepreneurs to get funding for a new business if you do not qualify for a government start-up loan. You simply borrow an agreed amount of money over a set term and make set monthly repayments. When paying back the loan, you will be repaying the amount borrowed as well as the interest. Usually your loan repayment and amount of interest you will have to pay will depend on:
• Amount borrowed
• Loan term (how long you borrow for)
• Whether the loan is secured or unsecured
• Whether the interest rate is fixed or variable
In order to qualify for a bank loan to start a business, you would need to present a full Business Plan and a realistic Cash Flow Statement. This will give the bank confidence in your ability to repay the loan and interest. Sometimes a bank may ask for security against the loan, and this is usually your home or your car. They ask for this security in the event that you are unable to repay the loan. We strongly recommend that you think very carefully before you agree to any personal guarantees to secure a loan as the risks can be very high.
COMMERCIAL BUSINESS LOANS
One other option you could consider for getting start up business finance is to seek commercial business loans and commercial investors. Usually, this is portfolio of investors who can offer quick access to finance for entrepreneurs, while investors have the potential to get better returns on their capital. This method of directly connecting investors with businesses that are vetted is much simpler than involving banks. This option is more often used by existing businesses looking to expand but there are investors who like the risk and reward of start-ups.
PLANNING AND DEVELOPMENT
Before you start any new venture, you may have to develop and change your business idea/s based on the information and feedback you have gained from researching customers’ wants, needs and desires. This stage is all about dealing with problems and resolving any issues which may have arisen in the research process.
The best way is to test your product or service on your target audience again and again until you get it right. You need to ensure your customer’s are happy with what you are asking them to pay, you are meeting all their needs, you are generating suitable profit margins and there is sufficient desire and demand for what you have to offer.
WRITE A BUSINESS STRATEGY
When you look to start your own business, you may believe that a business plan is adequate planning for your new idea, but a business strategy is equally as important. Your business plan is more about targets and objectives, but writing a business strategy means that you have taken care to consider how you will reach your goals in digestible and clear stages. The most successful businesses have a business strategy and this clearly shows that the business entrepreneur knows how to transform their ideas into a successful and profitable business reality. The strategy takes you from a person with a dream to a business entrepreneur with a business success story.
WRITE A BUSINESS PLAN “EVERY BUSINESS SHOULD HAVE A PLAN”
A Business Plan is written document which describes your business, informs us of your goals and objectives and explains to us exactly how you are going to achieve them. Many people think that the purpose of a business plan is to assist with start-up financing and to impress potential investors but the reality is that “every business should have a plan.” Not only will it help you reach your goals and objectives but it will keep you focused and guide you through the process. It should define your strategy, your growth potential and should include full financial information. A good business plan is your plan to succeed as “failing to plan is planning to fail.”
Your business plan is “your road map to future success.”
Please download our user friendly templates to help you get started.
- Guide to writing a Business Plan
- Guide to writing a Business Strategy (Coming soon)
- Business Plan Template (Coming soon)
- Cash Flow Forecast Template
- How to define your USP
- Key Performance Indicators