How to start a small business

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Starting a small business can be a challenging but greatly rewarding journey, especially when you equip yourself with a clear understanding of the steps involved in building a business.

According to 1st Formations, as many as one in three start-ups fail in their first three years, so it is vital that you are informed of how to navigate the small business market before you begin your venture. By understanding the market, developing a solid business plan, building a strong team, and managing your finances, you can increase your chances of success and build a thriving business.

Discover our guidance below for help and advice surrounding how to start a small business.

Understand the market

Before starting a small business, it is essential to carry out research to uncover whether there is a market for your product or service. By taking the time to understand the market your business would sit in, you can identify any potential gaps for your product and assess if there is a demand. This would initially involve analysing where competitors’ weaknesses and strengths lie, understanding what your customer’s needs and preferences would be, and evaluating market trends

Consider conducting surveys, focus groups, and interviews with your proposed target audience to gather valuable insights and to understand ‘problems’ they may need solving. It is essential that you review existing products that currently sit within your industry and identify how your small business would work to differentiate itself. Further research on your target audience’s behaviour, purchasing habits, and pain points will enable you to tailor your product to meet your customer’s specific needs effectively.

Build a strong team

Building a strong team is fundamental for contributing diverse skills, perspectives, and experiences, which are crucial for tackling the challenges of starting a new venture. To assist with recruiting, identify the key roles within your business which need to be fulfilled, along with the specific skills required for each position. It is important to build a team of individuals who not only possess the necessary expertise but also share your vision and passion for the business.

Online accounting software for small business owners, Xero, shares how you should inform your team of their aims and wider company goals through: talking about the culture you want to build, describing your future plans, explaining the environment of customers, prospects and partners, and using ‘we’ instead of ‘I’ when talking about your business.

Discuss ideas and listen to feedback

Talking to others about the concept of your small business prior to launching is crucial. If you are working alongside a team, foster an open environment where all members feel comfortable to share their thoughts about the business’s strategies. You can achieve this through regular brainstorming sessions and meetings where a structure is in place and every voice is heard.

If you are beginning a business venture by yourself, attending networking events and speaking to mentors and peers is an ideal way to receive honest opinions about your product or service. An article from LinkedIn shares how seeking feedback will help to get your idea validated and serve as a confidence booster, or in some cases, encourage you to re-think your idea and conduct further research – listening to feedback from business associates whose perspectives you trust can prove invaluable.

Develop a solid business plan

All small business start-ups require a carefully thought-out business plan to provide structure in the early stages, and realistic and educated projections for the future. The plan will begin by outlining a description of your business, your chosen structure, and marketing and sales strategies. A robust business plan also includes financial forecasts for the next 3 years, which is where it is wise to speak to an expert, such a business advisor, who can help you to put a plan together and provide rational financial estimations.

For more detail surrounding how to write a business plan, visit our dedicated guide, or explore the Markel Business Hub to discover business planning resources for helping businesses to succeed in competitive markets, including a simple, easy-to-follow business plan template for you to download.

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Manage your finances

When starting a new business, it is crucial to ensure you begin on solid financial footing. If you require funding, consider exploring options such as small business loans, grants, or investors: use the afore mentioned business plan and financial projections to present to potential lenders or investors. Always seek professional advice to help with financial structures, including invoicing, to ensure cash-flow remains strong enough to support both business and personal financial requirements.

Create a detailed budget that outlines all expected income and expenses to help you monitor cash flow and make informed financial decisions. Shopify emphasises the importance of opening a dedicated business bank account to facilitate better tracking of your business transactions, in addition to simplifying your finances when it comes to submitting a self-assessment tax return.

Consider your insurance needs

Business insurance is key when starting a small business. Ensuring you have the appropriate coverage can protect you from potential liabilities and financial losses that could arise from unforeseen events. To make sure you source the correct insurance, you must assess the specific risks associated with your business - consider consulting with an insurance professional to determine the best coverage for your needs. Learn more about insurance for small businesses here, including answers to frequently asked questions and additional services provided by Market Direct’s coverage.

Market your business

Marketing your business effectively is essential to ensure its visibility and success from the outset. It is important that the belief of your product comes across in your marketing communications as it can play a big part in engaging people and convincing potential customers to invest in your product or service.

Prior to starting your small venture, you will need to plan how you are going to win new business and create repeat business, which is where marketing is greatly beneficial. Decide how you will promote your products and services, what platforms you will use, and how much your advertising and promotion will cost.

Make sure you establish a strong online presence via social media platforms, utilise networking and partnerships, and leverage email marketing to grow your brand presence and potential opportunities. To discover new ways to market your business, explore our articles surrounding setting up a podcast and artificial intelligence.

 

Discover more help & guidance for small businesses, here, or read about our small business insurance solutions.

Please note: This article provides guidance for information purposes only. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional.

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