Getting Started in Business

At a glance

As a start-up, your company’s first 12 months are critical. There are several key areas you should focus on during this time for your business to grow and thrive.

Articulating your purpose, setting out a proper ownership structure and writing clear business plans are all vital steps.

It’s also important to build your leadership team, regularly forecast cash flow and profit numbers, and focus on selling from day one.

The tech boom has left many budding entrepreneurs thinking they can quickly create a business worth billions. But only a tiny proportion of companies ever get this big. Only 3.9% of businesses with 10 or more employees have been classed as being high growth according to the Office for National Statistics.1

Many start-ups want to be the next Apple or Facebook. But they tend to fall apart easily unless they can answer some basic questions about their strategy and structure. One big problem is that they’re often blind to what’s happening in their market and how crowded it is.

Why is prioritising important in business? In your first year, you’ll have a long and urgent list of tasks competing for attention. So, it’s important to maintain your focus on the key areas that will help you survive the critical stage and move on to success.

These seven tips can help you set your key priorities.

1.Set the proper legal and ownership structure*

When starting out, entrepreneurs sometimes postpone setting up shareholder agreements and other important legal documents as they focus on other priorities. But incorrect structures and documentation can cause bigger problems later, when the business is worth more.

You may find yourself in a situation where the founders of a business, who started as friends, now want different things. For example, one wants to push on; the other wants out. But they never concluded their shareholder agreement when they set up because it was expensive and time consuming. Now they’re in a legal process with two sets of lawyers’ fees and disruption that could be harmful or even terminal to the business. If this was addressed in the shareholders agreement, it could have been avoided. Don’t think, ‘This will never happen to us.’

2.Communicate your purpose and strategy

Taking the time early on to outline your vision for the business and your overall strategy can help you further down the line, keeping you focused on your goals.

Write a purpose statement to guide you through the critical first 12 months and beyond. Meanwhile, creating an overarching strategy can help you clarify your business model in more detail. Using tools such as the business model canvas, for example, helps you hone essential areas such as your value proposition and market niches. This then gets you thinking about what drives your revenue and costs, and what skills and resources you need to grow.

3.Write one-and three-year business plans

Set more detailed short- and medium-term targets and write plans for how to meet them. Try to anticipate the growth constraints you might face, such as skills shortages or operational choke points, and develop strategies to overcome them.

These plans will change regularly, so review them constantly. But having that planning discipline gives you a framework to work from and enables you to adapt. Without it, you could lurch from one disaster to another.

Then plan your funding journey from day one. Some businesses get enough early sales to self-fund. Others need several funding rounds. Alongside sales, robust strategy and planning will attract early investors, which then makes it easier to find others.

Have one eye on your exit* options from the start and work back from there. If you're always clear what you want from the business, you can stay true to that throughout the journey.

4.Build your skills and capacity

As a start-up owner, you’ll likely be juggling several roles initially. But you quickly need to understand and define your core competence so you can focus on that, and delegate or outsource other tasks. Then as you grow, you’ll need talented people around you to fill skills or capacity gaps.

Don’t be afraid of working with people who are better than you in certain areas. You may need to be creative in how you incentivise them to join. But unless you build your team quickly, the constraint on your business will be you.

5.Understand your numbers

Why do companies fail in the first year? Lack of cash is the most likely cause – if you burn it too fast, you’ll crash. It’s crucial to forecast cash flow and profit numbers regularly – and then understand what levers you can pull to move them in the right direction.

Review your personal finances too. Starting a business can be financially stressful, but you need to keep supporting yourself and your family through the early months and years. We can help you have enough with careful financial planning and cash-flow forecasting. We can also often make recommendations about other areas, such as the best way to extract profit from the business.

6.Sell, sell, sell

Many new business owners rightly conduct thorough research and preparation. But too much can lead to ‘paralysis by analysis’ and detract from sales activity.

Many early-stage business owners attend lots of courses and seminars and hire armies of advisers which can grind them to a halt because they never get anything done.

Early sales are vital as they prove your business idea and model, get cash flow moving, attract early investors and build a foundation for growth. Start selling your product or service from day one – even if your business still looks scruffy behind the scenes.

7.Decide what leadership team and outside help you need

Avoid the trap of working too much in the business and not enough on it – it’s the latter that drives longer-term growth. That often means making difficult decisions such as when and how to restructure your team, delegate or outsource functions such as HR, legal, bookkeeping and accounting.*

Some founders get lost in thinking they need to act a certain way – being founder doesn’t mean you have to be the best CEO in your sector. Don’t promote yourself to a level of incompetence where you’re no longer driving business value. Instead, think about what will keep you motivated. If your passion is designing or manufacturing, focus on that and bring in others with management or leadership skills

Plenty of external help is available from coaches, mentors, consultants and advisers – but don’t end up listening to too many voices. Consider carefully which help will give you the best chance of achieving your business goals, and contact us for guidance and support.

If you want help with your business which ever life stage you are at, speak to an adviser. We offer expert advice and access to a suite of business consultancy tools, and specialist services to support you.

*The services provided by specialists and are separate and distinct to the services carried out by St. James’s Place.??

Source:

1Office for National Statistics, Business demography, UK: 2022 published November 2023 (latest release)