How to ensure that your start-up is a success

The pandemic has spurred an unprecedented number of UK citizens to take the plunge into entrepreneurship. Research by the Centre for Entrepreneurs highlighted that the number of new businesses during the first nine months of 2020 was 9.5% higher than same period in 2019. And it’s no wonder why the figures for start-ups are so high – the coronavirus crisis has caused many of us to rethink the ways in which we work, innovate and source new opportunities as the usual routes became harder to access.

If you’ve decided to pursue your own start-up, here’s some of the best advice that I’ve picked up throughout my many years as a successful business owner. Equally, if you’re already on your way of business ownership, this can serve as a good checklist for best practice.

Tip 1: Understand the commitment

One of the best parts of my job as owner and Managing Director of Capital Space is that I get to talk with countless small business owners on a daily basis. Capital Space is home to 700 SMEs all over the South East and I have the privilege of seeing companies develop throughout their business journey. However, one thing that always surprises me is the number of new business owners who’re blissfully unaware of the commitment they’re undertaking.

Yes, running a business can be fun at times – and hopefully you’ll be able to get it to the stage where it’s also rewarding you, financially or otherwise. With this said, it can also be incredibly challenging (especially in infancy) to make yours a success. In short, it’s going to take a lot of self-sacrifice, dedication and time. I’m not trying to scare you away from starting a business, but I do think it’s incredibly important that you’re aware of what you’re signing up to before you head into it blind!

One of the key challenges of a modern business is that – unless you have a substantial upfront investment– it’s going to require you to be able to put on many different hats and undertake a lot of different roles. If you’re starting a dress making business, you’re not just going to be a seamstress for a while, you’re going to be the accountant, the marketer and the business coach as well (at least until your revenue permits you to be able to outsource some of those activities). Acknowledging the many roles that you’re going to need to play is one of the best ways to prepare yourself for that all important first year.

Tip 2: Get any necessary accreditation

Some might say that this goes without saying, but it’s always important to remember to do your research to understand which industry standards you need. Obviously, this will largely depend on the sector your new business is in. For example, if you’re looking at setting up a label making company, you might not need any accreditation – whereas a food-based business is going to require more certifications, such as food hygiene documents. A financial planner will certainly need to jump through a lot of extra hoops to be fully qualified before they can start talking to new clients.

Tip 3: Investigate potential insurance

Again, the type of insurance you need will largely depend on the nature of your business, so it’s best to do your own research before getting started. Nonetheless, there are insurances that are legal requirements regardless of the sector you operate in, such as employers’ liability insurance if you employ staff. 

Tip 4: Identify your customers

I always tell my customers at Capital Space to sit down and ask themselves why their ideal customers would switch to them. This helps you to consider how to attract people to your business, visualising customer motives and identifying your points of difference from your competitors.

Tip 5: Create a business plan

A good business plan is at the heart of every successful business – and yet so many new business owners neglect to make one! I think that largely this is due to many new entrepreneurs not really knowing where to start, so they just avoid – or skip – making a business plan altogether. This is often the case as small businesses are born out of the owner’s passion for a particular hobby or vocation, rather than a desire to become a managing director, or any other senior title.

Like it or loath it, in starting a business – however big or small – you have entered into the world of entrepreneurship. This makes creating a solid business plan your responsibility. A great place to start is by writing down where you want to be in three months, six months, nine months, one year and two years’ time. From there, you can start to map your road to achieving those goals.

I also recommend asking someone in the same line of business to discuss the nature and likely size of incidental costs. These could include:

• Premises
• Services charges
• Legal fees
• Business rates
• Book-keeping
•  Accountancy
•  Health and safety
•  Understanding VAT and GDPR
•  Marketing
•  Telecoms 

This will help shape your business plan from fantastic possibilities into a realistic estimate of what the future costs of your business might look like.

Tip 6: Work out your pricing

A great place to begin with working out your pricing is by using your competitor’s rates as a starting point. From there, you’ll be able to calculate how many days a week you will need to work, or how many products you will need to sell, to give yourself the income you need after deducting operational costs.

It’s also important to remember that you can’t be fee earning five days a week. As discussed in Tip 1, you’ll probably want to earn what you need inside three days of billable work, to enable you to focus on the other areas of the business that will need your attention if the business is to prosper.

Tip 7: Identify your suppliers

Can you source sufficient reliable suppliers to know that you won’t let your customers down? Unfortunately, one bad experience can end a business – especially with social media reviews being so crucial!

Tip 8: Understand your cashflow

Use your business plan as a guide to creating a cash flow for the first six months, or until you expect to break even. It should cover all your costs, including your living expenses. After this, revise the cash flow every month, learning from your experience and making adjustments as you go.

Tip 8: Open a business bank account

It’s very important not to treat your business bank account as your personal bank account and keep the two completely separate. Don’t just dip into your business bank account as and when – pay yourself a budgeted-for salary each month, leaving the business account to have enough money in it to reinvest back into the business and to keep track of company finances.

Tip 9: Decide on your trading name

Check out the competition and (if you can initially afford to) work with a branding expert to establish a clear idea of your company’s messaging. If you’re not working with a brander, it’s important to do the basic checks, such as going on Companies House to make sure that your chosen name isn’t taken and acquiring an appropriate URL.

Remember, finding a URL that hasn’t already been taken can be difficult – so it doesn’t have to be your exact company name. If someone has ownership of the address that you want, why not try a different variation, such as separating the words with hyphens – which is actually very good for search engine optimisation (SEO).

Tip 10: Register your chosen name as a limited company with Companies House

A lot of the business owners I talk to don’t do this as they firmly believe that they’re always going to want to be a sole trader and, in some cases, this turns out to be true. However, as your business grows and expands, it may make sense to take on employees or another partner. If this happens and you haven’t already registered your trading name, it can be frustrating to find out a few years later that it has already been taken. So, my advice is to register – even if you make the limited company dormant. Besides, it only costs ￡12!

Tip 11: Buy your URL domain

The pandemic has shown that most businesses need to be online, so make sure you own the URL you want to use for your website. You might also like to consider buying linked domains (such as .biz or .uk endings), as well as alternative versions (such as with hyphens in the name).You don’t want to invest time and money into creating your product, only to have customers buying from your competitors due to being at the wrong website!

Tip 12: Create your website

Websites are vital to many businesses, being the modern-day equivalent to a shop window. Think about your customer’s journey and how you can gently guide them to buying your product or service. Importantly, a good website doesn’t need to cost a fortune. Many website designers actually advise that, if you’re working to a tight budget, a DIY website through Wix or SquareSpace will be good enough until you’re able to invest in something more professional. If you do decide to design your own website, make sure you read up on SEO and cover the basics to ensure your customers can find you.

When the time is right, I do encourage commissioning a professional website, as it can ensure that your online ‘shop window’ keeps up with the size and stage that your business is in.

If you’ve recently decided to take the plunge into business ownership, I wish you all the best on this exciting journey. By implementing my 12 top tips, you should have a good foundation for those important first few months on your new entrepreneurial path.