Whether it’s by force or choice, you may have to start your own business at some point in 2023. Over 500,000 new businesses were registered in the UK in 2020. The number could be close to a million if you consider how many unregistered companies are starting. This trend is set to continue in 2023.
In this article, I will explain some of the critical things you need to do to start your own business, even during an economic recession.
You don’t even have to start with a business idea. In this blog, I will take you through the whole process, from developing a viable business idea to growing your startup.
1. Why Do You Want To Start Your Own Business?
Let’s start with your motivation. This will decide what type of business is best for you to run.
- Do you want to be comfortable, or do you want to be filthy rich?
- Do you want to work alone or manage a team?
- Do you want to work from home or have premises?
- Do you want to run your business for the rest of your life?
- Can you start your business with your own money, or do you require investment?
Are You An Entrepreneur Or Business Owner?
The title “Entrepreneur” can mislead sometimes. People assume that you need to be an entrepreneur to run a business.
The Wikipedia definition of an entrepreneur is
“a person who sets up a business or businesses, taking on financial risks in the hope of profit.”
Does this sound like you?
The key word in this sentence is “risk”. Risk separates entrepreneurs from business owners.
Most entrepreneurs will take far more risks when they start a business.
Are you a risk-taker?
If the answer is yes, you have what it takes to start your own business based on a vision.
If the answer is no, this prevents you from starting your own business. You need to pursue a business idea that is not so risky.
Putting Risk Into Perspective
A former client, William, was an accountant, and he wanted to start his own business. He was very nervous about leaving his firm but needed a change.
Because he was so nervous, I assumed he wanted to start a business in a different field. But he wanted to start his accountancy firm in his hometown to spend more time with his family.
We researched the other accountancy firms in William’s hometown. We found a niche area for his new accountancy firm to specialise in. We then wrote a business plan to identify any risks in his business idea. This gave William the confidence to pursue his dream and start his own business.
William was not an entrepreneur, but he is now running a very successful and growing business, employing 15 staff. He started and grew his business because he reduced the risk of his business failing.
The point of this story is you do not need to be an entrepreneur to start a business. People who lack the classical entrepreneurial traits need to find a business idea that isn’t so risky. Just because the business idea isn’t innovative or difficult, it doesn’t mean it will not be any less successful.
2. Finding & Testing A Business Idea
Many people want to start their own businesses but haven’t come up with an idea yet. There is no predefined process to come up with a business idea, but here are a few steps you should take:
To start your own business, find a profitable business idea:
Most people who want to start their own business haven’t started yet because they don’t have a profitable business idea. One of the daunting tasks you have to accomplish to create your own business is finding a business idea that will earn you money and not lead you into bankruptcy in just a few years.
But this is primarily a mental barrier you can easily overcome if you know where to look: your strength. Because after you start, your business will likely dominate your life. So you need to ensure your business is not entirely out of your expertise so that you can go for the long haul.
Do a quick self-evaluation test and find out your strength. Ask yourself:
What skills do you have?
Now, think about the skills and knowledge you have acquired. We always pay for some expert knowledge, like programming lessons, instrument lessons, cooking lessons, language classes, and college courses. You can use your expertise and become a teacher too.
What you are good at?
Maybe you give excellent relationship advice, or you have excellent taste in fashion, or people think you are an excellent dancer. Turn what you are good at into a side business.
What do you already pay for?
Now, if you don’t want to play to your talents or strength, you can look to things you already do. Example: walking your dog, looking after your friend’s or sibling’s kid, cooking your meals or cleaning your house. These are the things you already do without any fees anyway. Use these free-of-charge activities to turn them into your little side business.
What do you do at the weekends?
Now, I know you must be thinking that “I stay in bed all day long!”. I remember staying in bed and watching Netflix may be comforting. Still, it would be best if you also did other weekend activities. For example, maybe you go shopping, hit the gym, or tend to your little garden in the backyard of your house. You love to do these activities, and you are incredibly comfortable. So use your hobby to turn them into great business ideas and start your own business.
After this self-evaluating test, you should have at least 10-12 business ideas that you can use to make some money. Even if you are not feeling it, don’t worry. You can always come back to your list and pick something else.
Do It By Yourself
If you love your work but dislike the company you work for, then maybe you should start by yourself.
Can you:
- Improve customer relationships by providing a more personal service.
- Deliver the same service or products over the internet?
- Deliver an improved service to people in your local area?
- Utilise your existing contacts within your industry to start your own business.
What Is Hot
What are the hottest products and business practices at the moment? If you think the market has not reached its peak, jump on the bandwagon. You do not need to be the first person in the market to be successful.
Think of how you could improve existing products or services.
Can you predict what will be the next big thing? Use Twitter and Google Trends to see what is trending locally, nationally and worldwide. Finding out the next trend can be an absolute goldmine for the first few.
Find A Pain
There is a potential business in solving the simplest of problems. Think of the issues you would like to be addressed. It’s also worth speaking to your friends and family about items they wish they could answer.
To test and see if this problem is experienced by many:
- Use Google’s keyword tool or UberSuggest to find out how many people are searching for a solution
- Scan reviews and questions on Quora.com and product reviews on Amazon.
You will get a better idea of how many people are actively searching for a solution to their problems.
Find a Gap
Have you been on holiday and used or seen a product or service you wish you had in your local area? If this is the case, you have found a gap in the market.
To find a market gap, you should consider what products or services you wish you had but could not find. Use Google and local directories to check if a similar business exists. Even if there is the same company, visit their website or call them to find out what goods or services they provide and try to differentiate from them.
Are You Willing To Do What Others Are Not?
Over the past decade, personal services have been one of the fastest-growing sectors in the UK. A great example of this is the growth of car valeting businesses. Think of other routine tasks that people find time-consuming or dislike doing.
Find A Niche
One of the startups’ most significant advantages over large businesses is their ability to focus and capitalise on niche markets. A niche is best explained as a sub-market within a market.
Entrepreneurs who focus their products and services on niche markets can grow their businesses quickly and be highly profitable.
The key for entrepreneurs is identifying a niche they can exploit.
Analyse other businesses in the market – do they attract a wide range of customers or a few targeted ones?
Use this data to decide how to change your product/service best suit this niche market. Identify areas where customers’ needs are not already being met and try to find a competitive edge by adding features or a value-adding service that is unavailable. Conduct research to see if there is a group of customers that your competitors are not targeting and could enjoy your product or service.
You need to focus your whole business on the niche market and initially consider diversifying your portfolio of products/services to reach this market. If this proves profitable, focus on your business activities around the niche.
3. Testing Your Idea
Even if you are in a hurry to start your business, conducting a practical or theoretical feasibility analysis of your business is always advisable. Spending two weeks gathering information from potential customers or researching the market could save you a lot of money.
A feasibility test’s most crucial element is determining the size of the market and your potential customer value. You are halfway to building a real business when you focus on giving the customer what they want.
There are two ways of proving that your business will work.
Minimum Viable Product (MVP)
Many entrepreneurs spend months, and sometimes years, developing their businesses. The main problem with this is they are missing a vital component that every business needs: customer feedback.
There is no value in holding onto a product until you think it’s complete, and when it’s launched, people do not understand or like it. It is much more valuable to launch a functional product and let your customer your customers decide what features they want, dislike and would like added to the business.
If you do not have a trading history and require investment to start the business, the best option would be to put your business plan aside for 4 to 12 weeks and develop a Minimum Viable Product (MVP) of your product/service and try to test the market. The MVP lets you understand if you have a product that will sell as expected, and the feedback from their first customers will allow you to improve the product.
The MVP should be a functioning product without all the planned added features. Remember, the primary purpose of the stage is to prove that there is a market and gain valuable feedback from your customers.
For example, if you plan to launch a new social networking website, start a blog and Facebook page about your idea to attract and engage people with your business. Suppose you plan to develop software as a service (SaaS), either develop a prototype online or deliver the service manually in person, over the telephone or using a teleconference service.
This concept also applies to services; you need to scale down the service appropriately to prove that people buy it.
For instance, if you are a beautician and want to open your store, a great example of a prototype would be treating your customers from your home or in their homes.
Feasibility Study
The second way of testing if your business will succeed is by conducting a feasibility study. This is a more traditional and theoretical way of accessing the strengths and weaknesses of your business. Still, it can be almost as effective as testing your product with actual customers if done correctly.
The main components of a feasibility study:
1. Unique Selling Point (USP)
A unique selling point (USP) is crucial to your business’s success. Ideally, it would be best if you tried to distinguish your business from the competition by providing a product or service that customers can only get from you. Even if you are in a market with several similar competitors, you can still distinguish yourself from the competition through a process or the delivery of your product or service to your customers.
2. Competitive Advantage
Proving that your business is better than your competitors is crucial; you must explain why your product or service will beat the competition.
The main ways to beat the competition:
Price – are you cheaper?
Convenience – are you based locally on your target market?
Quality – is your product faster or more efficient?
Guarantee/Warranty – Will you guarantee your product or service for longer than your competitor
Barriers To Entry
You must assess how difficult it will be to enter your chosen market. If you are trying to enter an already crowded market, it may be difficult for your business to succeed without a huge investment. You must develop a strategy to overcome these challenges and enter the market.
On the other side, you must be cautious when entering a market that is easy to break into. When you launch your business, you will immediately come under threat from others who want to imitate your success.
3. Market Environment Analysis
You need to prove in this section that a market exists or will exist for your product or service. Some market research is essential here. If you cannot afford a market research company, it is possible to research your market yourself.
Google – search engines contain lots of useful information, but be prepared to spend a long time looking for what you need.
Libraries – most local libraries contain trade journals and local information you may find useful. If you live in London or are planning a trip there, I recommend visiting the British Library; the Business & IP Centre or the City Business Library is a fantastic resource for researching your business.
Social Networks – Use a service to send mail-out surveys to via email and your social networks to find out what people think of your idea. A couple of well-written tweets during peak hours may also generate valuable feedback.
4. Technical & Operational Requirements
In this section, you need to cover the basic requirements your company will need to operate. It’s always best to plan the first year and then look at the next two years on a summary level.
Things to mention:
- Offices
- Staffing
- Developers / Programmer
- Distribution
- Logistics
- Administration
5. Financial Information
Making money is the most important part of going into business, be very careful when working on this section.
You will need:
- Startup Costs
- Revenue expectations for the first year
- Ongoing expenditure for the first year
- Cash Flow Statement for the first year
If you find it challenging to plan revenue and spending, downloading the annual statement of a startup company in a similar sector may be a good idea.
5. Finding The Perfect Name
One of the many problems new entrepreneurs run into is picking a great name for their business. Name selection is often a frustrating experience, and while it’s a good idea to ask people’s opinions about names, this isn’t the best way to come up with a good one.
Let’s go through a few steps you should take when coming up with a name.+
Step 1 – Brainstorm a List of Names
Come up with a list of titles related to your market and see where they could fit as a potential name. If you’re still lost, look for successful competitors and use them for inspiration. Pay particular interest to the style of names used in the industry; you want to ensure your name seems credible to potential customers.
Step 2 – Use Online Name Generators & Domain Checking Services
There is no point in coming up with a great name if all the domains for that name are taken. You must synchronise your decision to what domains are still available.
Many websites not only help you find a business name; they also provide you with a list of available domain names.
Step 3 – Narrow It Down to a Few Decent Names
Now the mind-numbing part is combing through the list of names.
Try to avoid the temptation to get caught up in this stage. Every startup name will have pros and cons.
Step 4 – Find Out Which One Is Perfect
Everybody thinks they should get their naming advice from friends and family. This approach is ok, but you would get more out of the process if you asked your potential customers which name they prefer. Set up a survey on Survey Monkey and promote the poll through your social networks.
6. Business Plan Writing & Funding
For this section, go to the posts:
The Definitive Guide To Writing A Business Plan
How To Get Your Business Funded: A Definitive Guide
7. Turning Your Business Into Reality
This section concerns how to turn your dream into reality and the practical elements of starting your own business.
Trading Entities / Business Types
Which legal status you choose for your business depends on the business, how many people own and /or work for the business and your plans for the business.
Read the following article to figure out which business structure is best for you.
Sole Trader Or Limited Company? Which One Is Best
Intellectual Property
If another business can copy or steal your ideas, inventions, contacts, designs or knowledge, your business is at risk. Protecting your intellectual property is crucial for the sustainability of your business; potential investors will be reluctant to invest in a company whose assets are not protected. Intellectual property can be divided into four categories: Trademarks, Designs, Patents and Copyrights.
There are five main ways to protect your business’s intellectual property.
Trade Marks
You need to register your business’s logos, pictures and designs to allow you to take action against anyone who infringes on them. You can register a trademark easily worldwide with one application.
Designs
By registering the design, you can protect the distinctiveness of how your product looks or feels, including shapes and colours, materials or contours.
Patents
Use a patent for a new invention, process, product or technology that can be made. You must not disclose your work before you apply for a patent, as it will invalidate the application. You must apply for a patent in every country you want to trade in.
Copyright
Copyright is an automatic right; you do not have to apply. You can protect yourself by using the copyright symbol. However, obtaining external proof you created the work or document is a good idea.
You can sell the copyright to your works and control how it is used to an extent by using your ‘moral right’.
Contracts
Ensuring that your business retains the intellectual property that your employees make is vital, this should be written into all employment contracts. Within employment contracts, you should also ensure your employees cannot take your clients with them when they leave the company. This is particularly common in the service sector, where relationships are key to the business’s success.
When working with external businesses, including consultants, ensure you have a non-disclosure agreement.
Your business plan should include a section stating your current intellectual property and how you are protecting it or intend to.
Technology
Ensuring your business has an effective IT Strategy is crucial to your startup. Technological advances have allowed startups to compete on a level playing field because they have the tools and solutions only larger businesses can access. However, the same technology is also accessible by your direct competition. Your business’s competitive advantage could depend on how adequate its IT infrastructure and strategy is.
Every business produces data, and your IT strategy’s foundation is how you want to store and manage it.
Key things to consider
How will the data be organised to be useful and accessible to your employees?
How will your system enable communication and collaboration?
How will you protect yourself from data loss or downtime?
Most businesses IT infrastructure contain the following components:
- Document management system
- Financial management (accounting) software.
- Human Resources Software
- Project management, manufacturing or costing software
- Supply Chain / Purchasing software
- Customer relationship management software
- A communications system (email, telecoms, instant messaging etc.)
Many large businesses use several of these components as part of an Enterprise Resource Planning (ERP) system that integrates all reporting and business management aspects. Integration of these systems is efficient as it facilitates seamless communication between systems and improves employee collaboration.
Unfortunately, most marketing-leading ERP systems do not come cheap and may financially be out of the reach of many startups. You should take advantage of SaaS ERP vendors that provide a scalable integrated system.
Technological advances have allowed startups to compete on a level playing field because they have the tools and solutions only larger businesses can access. However, the same technology is also accessible by your direct competition. Your business’s competitive advantage could depend on how effective its IT infrastructure and strategy are.
Talent Management
Employees are the most important component of any business, you can have the best idea in the world, but if you don’t have the right people, you can never execute it. Understanding how to recruit and retain the best staff is a skill every entrepreneur should possess. Having the right team in place will enable growth and reduce dependency on the owner.
Startups and startups struggle to attract top talent, often losing out to larger and more established businesses.
The main challenges that startups startup face are:
1. Knowing what you want.
It’s key to understand the role you have on offer. Look at what the job entails now and how you expect it to grow. There is little point in recruiting a bookkeeper on a long-term contract if you expect your business to expand dramatically in the next three months and will require an accountant. You will be stuck with an employee who no longer fits your requirements. It would be much wiser to recruit a bookkeeper on a three-month contract and then recruit an accountant if the business grows as expected.
Overall, startups should use an agile recruitment model and fully utilise short-term contracts
2. Lacking HR knowledge
Most startups do not have a recruitment specialist; this risk can be outsourced by using a specialist recruitment consultancy to handle your recruitment process. Most consultancies work on a fee only if they place a candidate in your business. However, their fee can be up to 35% of the first year’s annual salary. This cost should be budgeted for in your business plan.
3. Cost to Hire
You need to plan how much you have to spend on recruitment, newspapers and recruitment consultancies can be expensive. Cheaper alternatives are internet job sites and social networking sites that allow you to find the right people without the cost.
4. Salary and Benefits
You will compete with larger, more established businesses if you are trying to recruit top talent. Many startups fail to recruit high-quality staff because they cannot afford to offer the salary and benefits of larger businesses. Do not be put off by this, focus on what you can provide the top talent.
Working for a startup offers responsibility and the chance to make a bigger impact; this will be enough to attract many people as long as they support your business vision. Share your business plan with them, show them where you want to take the business and the importance of their role, and show them how you see their role developing.
Staffing Alternatives
Virtual Teams
In the past, businesses operated from small offices or homes were not taken seriously. This is no longer the case in today’s new economy, as technology makes it possible for a startup owner to conduct business with multinational companies from home.
A virtual office is a good option if you are starting up and customers do not visit your premises often. You can hire an office space or a meeting room on a pay-as-you-go basis.
There are many benefits of setting up a virtual office, it:
- Reduces overhead costs
- It promotes environmental sustainability
- Provides you with the freedom to choose your employees from a larger talent pool.
- Increase employee satisfaction as they enjoy the flexibility of working from home.
The technology allows you to run your business and manage a virtual team successfully. Managing a virtual team differs from managing a co-located team.
When managing a virtual team, you should:
Get the right technology – There are many vendors available for audio & web conferencing, collaborative software and shared directories
Establish team objectives – It is important for the team to know and understand what they are doing together. They will always be individual contributors if they know only their roles and work. Manage tasks and objectives to promote collaboration between team members.
Look for opportunities to socialise – Team members have opportunities to socialise throughout the day. Virtual teams rarely have the same chance to interact with each other. Arrange a regular web conference where all team members can interact with each other.
Communication – It is essential to be proactive to ensure everyone understands what is expected; feelings of isolation are more common in virtual teams.
Outsourcing
Outsourcing is contracting out a business function to an external business or person. The outsourcing industry is growing rapidly; you can now outsource almost any business function.
Outsourcing is particularly beneficial for startups as you can keep your workforce as lean as possible, focusing on revenue-generating activities rather than managing routine tasks.
Outsourcing some of your back-office functions is a great way to reduce costs and streamline your business. This is particularly beneficial for startups as you can leverage the same resources and technologies as larger companies, thus while still minimising costs.
Main benefits of outsourcing
Improve quality — You can improve quality by contracting out the business function with a service-level agreement.
Knowledge — Your business will benefit from a specialist company’s intellectual property and wider experience and knowledge
Expertise — Good outsourcing companies use industry best practices that would be too difficult or time-consuming to develop in-house.
Weaknesses/Risks of Outsourcing
Poor customer communication – Outsourcing business functions that interact with your customers can be difficult; this is usually due to communication issues as service centres are often internationally based. Ensure customer satisfaction is carefully monitored.
Poor internal communication – Outsourcing internal functions can be difficult for employees; they may not get the more personal service they used to get from their colleagues. Set expectations among your employees about what level of service they will get from the new service.
Capacity & Service Level Agreements (SLA’s) – Before outsourcing a business function, you should understand the volume of the function. You will need to know how many calls, transactions, sales or users the outsourcing will have to perform or support. This should be written into a Service Level Agreement (SLA) between the outsourcing company and your business.
Be very careful when agreeing to the SLA because if you exceed the capacity of the agreement, your business may be billed for the excess. Always try to agree on SLAs where the outsourcing company takes the risk of any over-capacity.
Business Functions that can be Outsourced
- Cleaning
- Security
- Sales Receipts / Donations
- General Ledger Accounting
- IT Support
- Legal
- Inside Sales
- Administration / Data Entry
- Reception
Marketing & Sales
For this section, go to the post:
Marketing For Startups: Our Definitive Guide
Finances
For this section, go to post:
Financial Management For Startups: A Definitive Guide
8. Becoming A Leader
Becoming a business owner can be very daunting, and you will have to become
- A strategist
- A marketer
- An Accountant
- A Manager
- A Leader
It’s a completely different skillset from being employed. You need to stay focused enough on operations but stand away enough to look at the bigger picture.
Let’s go through the key skills you need to run a successful business.
Strategist
You need to look at the bigger picture, search for new opportunities for your business and work on strategies to implement to get the business ahead. You must also review competition and form strategic partnerships with other businesses.
Marketer
At least 50% of your time when starting your own business will be spent marketing your business. Become an expert in your chosen field and exude confidence when you talk to others about your business.
Manager
As your business grows, you will manage staff. You will have to balance between ensuring all the daily tasks are completed by other people (who are not you) and ensuring their well-being is managed in the workplace.
Leader
To run a business you will have to move beyond being a manager, you will have to become a leader and inspire your staff.
Perhaps the most intimidating aspect of leadership is knowing that besides playing an important role in a team’s success, leaders are held responsible for their team’s failures.
Leadership Tips
Communication
Express your ideas clearly, ensuring employees understand what you’re asking of them. Create a conversation-friendly environment and allow employees to express their thoughts and concerns. Team members are more willing to trust a leader they can openly communicate with.
Encourage Mistakes
Encourage creativity by allowing team members to be wrong. Making mistakes is an inherent part of the creative process. If employees know they won’t be punished for coming up with an atypical idea or solution, they will be inspired to think outside the box and take more chances, leading to the creation of better, more innovative ideas.
Think Ahead
A leader with a plan is the easiest leader to follow. When staff know the big picture, they will understand the role they have to play in the company’s development.
Show Your Passion
Share your passion for your work with your team members. If a leader is enthusiastic and believes in the work, while recognising the team’s hurdles, employees will continue to do the same.
Top Tips For Business Owner Success
- Many first-time entrepreneurs feel the need to jump at every “opportunity” they come across. Avoid getting side-tracked. Juggling multiple ventures will spread you thin and limit your effectiveness and productivity. It’s better to do one thing well than ten things poorly.
- Don’t start a business because it seems sexy or boasts large hypothetical profit margins and returns. Do what you love. Businesses built around your strengths and talents will have a greater chance of success. From a chance encounter with an investor to a curious customer, always be ready to pitch your business. State your mission, service and goals clearly and concisely.
- No one knows everything, so don’t come off as a know-it-all. Surround yourself with advisors and mentors who will nurture you to become a better leader and business person.
- Forget about fancy offices, fast cars and expense accounts. Your wallet is your company’s lifeblood. Practice and perfect the art of being frugal. Watch every pound spent and triple-check every expense.
- No business book or business plan can predict the future or fully prepare you to become a successful entrepreneur.
- There is no such thing as a perfect plan. But never jump into a new business without any thought or planning, but don’t spend months or years waiting to execute.
- Learn from your mistakes and never make the same mistake twice.
- If you need large sums of capital to launch your venture, go back to the drawing board. Find a starting point instead of an endpoint. Scale down pricey plans and grandiose expenditures. Simplify the idea until it’s manageable as an early-stage venture. Find ways to prove your business model on a shoestring budget. Demonstrate your worth before seeking investment. If your concept is successful, your chances of raising capital from investors will dramatically improve.
- Entrepreneurship is a lifestyle, not a 9-to-5 profession. Working to the point of exhaustion will burn you out and make you less productive. Don’t make excuses. Eat right, exercise and find time for yourself.
- The “Power” of free is dominating the digital industry. It has revolutionised the music industry. You must be prepared to give something away to get new customers. This applies to any industry.
- You need to be prepared for the power of free you need to be able to create products and services that take the customer throughout its journey and be ready to serve the hyper-responsive customer who will buy whatever you produce.
9. Making That First Sale
“If you build it he will come” –
A quote from the movie Field of Dreams. Many entrepreneurs go into business believing that as soon as they launch, their customers will roll in and buy.
However, the reality is far different from the movies. One of the most common challenges that startups may encounter is the struggle to make that first sale.
Below are the steps you need to take to make that first sale and ensure more follow.
1. Analyse Your Business Plan
The first thing to do when sales are slow is to analyse your original plan and find out whether you are carrying out what you originally planned. You may have spent months working on your marketing and sales plans only to abandon the plan upon launch.
To understand why sales are slow, you will need to challenge all the assumptions with which you launched the business. You must revisit your original Unique Selling Point (USP) and challenge the need for your business. Change your product or service based on your findings.
2. Analyse Your Marketing
Making sure people interested in products like yours know about your business is the main aim of your marketing.
Marketing is a common area of waste for startups; marketing budgets are spent without focussing on the right channels and targeting the correct people.
To increase the return on investment in your marketing, you must understand your customer.
3. Sales Process
Your marketing may attract potential new clients/customers. However, if your sales processes are not set up correctly, you may miss out on sales. Based on what you have learned about your target market from the customer profile from your business plan.
Can you answer it?
- Is your product/service being sold in the right places to maximise chances of success?
- Are you selling your product in a place where your target market can access it?
- Are the right people selling your product?
- Are you offering any incentives to the customer?
You should consider increasing the number of sales channels your product is available. Try finding new partners or resellers to increase the possibility of sales.
You should also consider providing potential customers with an incentive to purchase. Common incentives are discounts or bundled products like 2-4-1 offers.
4. Market & Competitive Analysis
Studying what the competition is doing and how successful they are essential if you want to close more sales. Think of ways you can draw your competition’s customers away and attract them to your business
Find out:
If they reduced their prices, are they doing something different?
Is there a new entrant into the market that is redefining it?
Is there now an alternative in the market that renders your business irrelevant?
10. Staying On Track
As soon as a business secures its first few customers, they immediately turn its attention to growing. All companies should strive to grow, but many are not successful in their growth plans, ultimately leading to the business failing.
There are five common reasons why businesses fail in their attempts to grow.
1. They haven’t planned properly for growth.
Your business plan should be the key driver in your growth planning. It contains your revenue expectations, marketing plan and sales plan.
Your business plan should help you understand exactly what you need to do operationally to grow. Targets will be set for your marketing campaigns, sales conversions and spending. It is also essential to set goals for specific metrics that will help you understand your business and measure the success of your growth plans.
Below are some of the key performance indicators KPIs you should set targets for in your business plan and then review performance against.
- Customer Acquisition Cost (CAC)
- Average Customer Spend
- Customer Retention %
- Attrition Rate %
- Referral Rate
- Sales Revenue
- Gross Margin%
- Net Margin %
- Overhead to Revenue %
- Variable Cost %
2. They do not understand their business enough to grow
Some business owners do not understand how their business is performing to grow successfully. You cannot grow a business sustainably unless your business model is sound and your operations efficient. For example, if your customer growth rate is 10%, but you have a customer attrition rate of 20%.
To grow, you need to find out why you are losing so many customers and solve this problem first. Once this issue has been rectified; you can try to grow your customer base.
Essential tools to help you understand and grow your business are SWOT, PESTLE and Porter’s Five Forces analysis. These tools provide you with an analysis of not only your business but external forces that affect it, which may positively or negatively impact your growth plans.
3. They lack funding
Sometimes all a business requires to grow is a cash injection to purchase extra stock or pay for a specific marketing campaign.
In this case, you need to find the best funding mechanism for your business. A bank loan or overdraft facility is a good option if you have an excellent trading history. Banks are more likely to lend to you if you are established and know precisely what you want to do with the money.
4. They lack the right resources to grow
This is very important; firstly, you need the correct staff to enable you to identify growth opportunities. This could mean you need to employ someone with a specific skill set. Alternatively, you can hire someone you can delegate your day-to-day activities while you handle the strategic planning of the business.
Secondly, you may need to employ more staff to handle the new business if your business does grow. You need to factor into your plan potential ramp-up time and training costs.
5. Chosen the wrong growth strategy
Selecting the correct growth strategy is crucial to your business. There are many options available; choosing one that fits your business and is sustainable is essential. For instance, if you have cash flow problems and want to grow sales by reaching new markets. A far more sensible and cost-effective plan would be to invest in an online sales platform rather than opening a new office or location.
Conclusion
Starting your own business is one of the hardest things you will do in your life; it requires persistence and commitment and will significantly affect your and your family’s lives. Before starting your own business, do your research and plan. The road ahead may be tough, but it could be very rewarding.
To recap everything in this blog, to start your own business, you need to follow these key principles:
Idea – Ensure you have a viable business idea in a profitable and sustainable market.
Product / Market Fit – Your product or service doesn’t have to be perfect, but it needs to be good enough to meet your customer’s expectations.
Funding – Funding to start and maintain operations is critical to your success. Finance is a big challenge for most entrepreneurs, and it’s best not to see it as a one-time event. Realistically, business funding comes from various sources throughout your business lifecycle. It is best to bet on what you need at each stage of your development.
Distribution – Finding the right platforms to launch your business, which can be online or at a specific physical location. You need to ensure your business is accessible to your target market.
Infrastructure – You need to ensure you have the right marketing infrastructure, sales and operations to support your business as it grows.
Resources – You also need to have the right people in place to keep operations going. Rarely can entrepreneurs do it all by themselves, you will need staff, partners and advisors to set up and maintain your startup.
Strategy – To need a clear vision of what you want to achieve and the means to review and assess performance.
Education – A business owner’s work is never done; you need to invest time in your personal development and build your skillset.
