Have you ever wondered how to start a business? If so, we’ve got just the thing. In this first article in our series, we cover some of the fundamentals you need to think about as you’re getting started.
Although it might seem like a daunting task, just about anyone can start a business from scratch. The actual process of creating a company or registering as a sole trader is reasonably straightforward. However, to be successful, there is often a lot of planning and preparation needed. In our series on how to start a business, we take a look at each stage of the process.
To start with, we’re going to explore some of the fundamentals you need to consider. As well as thinking like an entrepreneur and evaluating opportunities, you’ll also need to come up with a solid idea and a business plan. We take a look at each area to help you get started.
Why start a business?
Before we look at how to start a business, let’s first look at why you might want to do so in the first place. It’s quite an undertaking, after all. Whether it’s an addition to or replacement for your full-time job, working for yourself takes a lot of time and effort. Of course, there are also many reasons why you might choose to do so, including:
- To do something you love. Doing something you enjoy can make your work more enjoyable and fulfilling. If you have a particular talent or hobby, turning that passion into a business can drive you to succeed.
- To make money. When you start your own business, your earning potential is often tied to your own efforts and success. Rather than a fixed salary, you can continue growing your income as your business takes off.
- To have a flexible schedule. When you’re your own boss, you can set the hours that you work and when you work them. If you have other commitments in your life, you can often build your business hours around them to some degree.
- To fix something. If you can see a problem that nobody’s fixing, or a gap in the market that nobody has plugged, responding with your own business can be a great way to help people or provide new solutions while also providing for yourself and your family.
- To explore a new idea. Starting a business gives you the chance to turn your ideas into reality. So, if you’ve spotted a gap in a market, you can carve out a niche for yourself and start building a customer base.
How do I start a business?
As we work through this series of articles, we’ll cover a wide variety of topics related to starting a business. However, if you’re looking for a simple checklist of what you’ll need to do, we’ve got you covered there too. Below, we’ve outlined the steps you need to take to get started. Our series is based around these points:
- The basics. First, you need to come up with a business idea. This includes evaluating opportunities and existing businesses, as well as writing a solid business plan.
- Structure and people. Next, you need to choose the right structure for your business and register your company in the correct way. You also need to think about the people you’ll need to involve and how to network.
- Customers and competitors. You’ll need to figure out who your target demographic is, as well as analysing your target market. Additionally, you’ll have to research competitors and work out how to target customers.
- Brand and business process. Next, you’ll need to consider how to brand and market your company, as well as how you’re going to operate and grow. Technology also needs to play a part, such as the systems you’ll use to track your success.
- Finances. Finally, you’ll have to set up a business bank account and consider some key financial information. Forecasting and analysis also need some thought, and you’ll need to know about funding opportunities.
How to start a business: the basics
Let’s turn our attention to some of the basics of how to start a business. Essentially, these areas are the main bulk of the planning stages. Before you get started with actually registering a company and trading as a business, you need to put some time into working out how you’re going to operate.
As with many areas of the world of work, preparation goes a long way. Once you have a goal in mind, it’s far easier to build towards it. Although it’s possible to skip the planning section, doing so can leave you floundering later on. These basic areas can help to keep you on track:
Know your entrepreneurial self
There are positives and negatives when it comes to starting your own business. Many of the reasons we listed under why you might choose to start a business could also be used as to why you might not. It’s often hard work, risky, and demanding. But as an entrepreneur, you will rise to these challenges. To do so, you need to really know yourself when it comes to some key areas:
Your strengths and weaknesses
You’ll need a whole host of hard and soft skills to start a business. Although that may sound daunting, you probably have many of them already. When you’re figuring out how to start a business, a good place to start is by working out which areas you excel in, and in which ones you’re not quite as confident. Doing so will make it far easier to plan your business strategy.
Some skills to think about include:
- Communication. Whether it’s when you’re working with clients, customers, or collaborators, communication and interpersonal skills are essential. Starting your own business often means working with many other people.
- Project management. Understanding the foundations of project management is vital, as you’ll frequently need to oversee a wide range of projects.
- Time management. Without the structure that comes with an employed position, you’ll need to take charge of your schedule and manage your workload.
- Leadership. Knowing your leadership style is useful as it helps you bring the best of those you’re working with.
- Problem-solving. Sometimes, knowing the right problem to solve is half the battle here. When starting a business, you’ll be presented with plenty.
- Marketing. Your marketing skills will help you to understand your audience and promote your brand.
- Financial management. As a business owner, you’ll need some understanding of finance and accounting if you’re going to succeed.
What you do and don’t enjoy
As well as knowing where your strengths and weaknesses lie, you also need to think about the things you do and don’t enjoy doing. When you run a business, there are certain tasks that may be unavoidable. However, you might be able to delegate some of the work depending on your current skill set.
Understanding what you’re good at and enjoy can make it easier to determine the type of business you want to run. Similarly, if you know the aspects you don’t enjoy and aren’t especially strong at, you can either avoid this particular niche or collaborate with someone to complement your strengths.
Where you need to train
When it comes to unavoidable tasks where your skills are lacking, you might be able to train in these areas. Whether it’s taking a short online course to boost a specific skill or a longer learning commitment, understanding your current entrepreneurial self can help you decide.
Evaluate opportunities and existing businesses
Once you know where your own skills and areas for development are, you’ll want to start doing some research. Figuring out how to start a business is as much about knowing where there are opportunities worth taking. There are several approaches you can take to this stage:
Solve a problem
If you regularly encounter a stumbling block or challenge in your day-to-do, you might be able to solve that problem with your business idea. Ask yourself whether this is a common problem and whether others could benefit from a pre-made solution.
Apply your skills somewhere new
Ask yourself whether there are industries that could benefit from your skillset that aren’t currently utilising them. You might be able to develop a new niche that makes use of your expertise. Talk with people you know in other industries to see how they could benefit.
Improve on an existing business
Perhaps there’s a product or service that you’re familiar with but can identify possibilities for improvement. Consider what you’d need to do to make it better, how practical that is, and why someone hasn’t done so beforehand.
Focus on your interests
You already know what your strengths, weaknesses, and areas of interests are. Can you provide these as a service? Is there scope to make a living doing something you love and are there already lots of businesses offering it? As an enthusiast, you’ll be able to answer these questions with relative ease.
Define your business idea
After the research stage is complete, you should have a whole host of great ideas, solutions, and potential opportunities. It’s unlikely that you’ll be able to focus on all of them at once, and you won’t be able to flesh out a solid idea if you try and do so. Instead, you want to pick one idea and focus on how to start a business in that area. Some areas to think about include:
Problems and solutions
Again, you should consider how your business idea offers a creative solution to a problem. You need to check that your solution is viable, affordable, and marketable. Importantly, you need to check whether there is a demand for your idea, now and in the future. Make sure to do your research here.
Your unique selling point
Of course, you might be considering starting a company in an industry that’s already established. Truly unique ideas are hard to come by, but you should have an idea about what will make you stand out from the crowd. Think about how you’ll do things differently, and why customers or clients might choose you above a competitor.
Your elevator pitch
No matter how simple or complex your business idea is, you need to be able to explain it in straightforward terms. Ideally, you’ll want to be able to describe what your business does (or will do) in 20 to 30 seconds. This elevator pitch will help you visualise what you want to achieve, and help you explain it to those you’ll be working with.
The resources you’ll need
In order to start a business, you’ll potentially need all kinds of resources. While you’re in the planning stages, you’ll need to consider what you’ll need to make your business idea a reality. Some resources to think about include:
- Funding. What will your startup costs be? Do you have cash readily available, or will you need to think about securing finance? These are essential questions to ask yourself.
- Employees. Is this going to be a one-person operation, or will you need the skills of others? Hiring employees comes with all kinds of costs and challenges.
- Know-how. What are your educational resources like? Do you currently have enough knowledge to make your idea a reality, or will you need to train to gain enough expertise?
- Equipment and premises. Can you conduct your business from home? Do you already have enough materials, equipment, and space to carry out your ideas?
Write a business plan
As you define your business idea, you’ll no doubt come up with a range of other questions and challenges. When you’re working on how to start a business, this is where a business plan comes in handy. It’s a document that describes your business and its objectives, and it’s important for several reasons. A business plan helps you:
- Clarify your ideas
- Identify potential problems
- Outline your business goals
- Measure your progress
- Secure funding or investment
- Convince customers, clients, and suppliers to support you
Ultimately, it’s one of the documents that can help turn your business idea into action and secure the help you need to do so.
How to write a business plan
In a separate article, we cover the process of writing a business plan in more detail. For now, we’ve outlined some of the basic information that your business plan might have:
- Executive summary. A brief explanation of what your company is all about.
- Company description. Give specifics of what your business will do, noting the problems it will solve, and who it plans to serve. Outline what it is that will make your company a success.
- Market analysis. An explanation of the outlook of the industry you’re in and who your target market will be. Knowledge of competitors and trends also helps.
- Company structure. Who are the key stakeholders in your organisation, and what are their roles? Think about the legal structure of your business and why you’ve chosen it.
- Service or products. A description of what you’ll offer your customers or clients. Give details on products/services and relevant information.
- Marketing strategy. Explain how you aim to attract and retain customers and what marketing activity you have planned to do so.
- Funding requirements. If you’re seeking funding, you should outline what you’ll need and what you’ll use it for.
- Financial projection. In this section, you can outline how your company is going to make money and what your margins and operating costs are going to be.
Depending on your business and its goals, you won’t necessarily have to include all of these points. Similarly, you might not know what to include for each. However, it’s a worthwhile exercise when you’re first starting out, and we cover everything you need to know in the rest of the series.