The facts are that three quarters of start-ups fail within the first three years, and a third of those fall by the wayside in the first six months. To give you the best chance of surviving this teething period, we have compiled the top things to research before you take the plunge, according to http://www.smarta.com.
Sole trader or limited company: Which you choose will impact on the tax you pay and how much legal and financial responsibility is laid at your door. As a sole trader, you take all the post-tax profits but you are also liable for all of your business’ financial dealings.
Size up the competition: Who else is doing what you are planning to do? How well do they do it? By studying the competition, you can learn from others’ mistakes – or even what their customers appreciate. Learn how much people are willing to pay for your product or service and how you could enhance the current offerings.
If one big player dominates the market space, focus on what they don’t do well or who they don’t cater for, provide a superior service and you could grab a share of their space. Alternatively, if the market is fragmented, there could be an opportunity to launch a brand that becomes the de facto choice for consumers.
Define your target audience: Appealing to everyone appeals to no one. You need to focus on your target audience and style everything, from your website to your marketing campaigns, around them. Make sure you are targeting the right people by sending out questionnaires, speaking to your customers through social media and holding focus groups. The only way to provide a product or service people really want is to get inside their heads. Involve your target customer in the development of your business and continue to conduct tests. Consulting your customers will also make them feel like they have a voice, will breed loyalty and, if you are lucky, will increase the likelihood of them recommending you to others.
Paying yourself: How will you pay yourself? You need to think about this up front. With the best intentions of ploughing profits straight back into the business, you are going to have to eat, drink and put a roof over your head. Cut back on the luxuries, but figure out what you do need to live on and include it in your outgoings. The bank or any investors would much rather see this than you going back cap-in-hand six months after you told them your business plan made sense.
Your business name: Think long and hard about your name: you are going to be stuck with it as rebrands are expensive and painful. It will need to work with an available web domain and will also often be the first thing prospective customers see. Consider what your name needs to say about your business. Should it simply be a case of ‘says what it does on the tin’ or communicate aspects of your brand identity, such as Innocent Drinks, or perhaps geography is important if you are focused on serving or representing a local area – Manchester Landscaping Ltd or Premium Lincolnshire Sausages Ltd, for instance.
How you will get your name out there: No point having an amazing business idea if nobody knows about it – so how will you get your name out there? Without a big marketing budget, start small and focus on building relationships. Use social media and network hard to start building a reputation with not just potential customers, but also local journalists, suppliers, fellow retailers, local business organisations. Start a blog, be active on Facebook and Twitter, offer to write articles or talk for free on your expert subject, get people trying and reviewing your product or service, think about having a launch party.
Your web presence: Did you know that 50 per cent of small business don’t have a website? Most want one, but they either think they can’t afford one or don’t have the skills to put it together themselves. The latter may have been true a few years ago, but web building tools such as Moonfruit – available as part of Smarta Business Builder – mean absolute beginners can now get a fully e-commerce website up and running in no time. You might not need to sell online though, perhaps a simple brochure site showcasing what you do would be enough – but, then again, would it be nice to take bookings? Start thinking about how much more business you could be doing by embracing an online market – then explore the available options to make it happen.
Funding: In an ideal world, you would have enough money to self-fund the launch of your new business. But, for the majority, that is not an option. Instead you can ask friends or family if they may be willing to help or you can look into getting a bank loan or seek out an investor. You should also look into what business grants are available: they are hard to come by but brilliant if you manage to get one. If you can’t secure the funding you need to launch your master plan, start small and prove the business works – then go back to the bank or investors with more evidence.
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