Points to consider prior to starting your own business

Points to consider prior to starting your own business

Firstly, ask yourself why you want to start your own business.

Whether you are looking to go freelance as a limited company owner or would like to start a business with plans to grow and employ staff, it’s important to ask yourself why starting your own businesses is important to you, what’s the reasoning behind your decision? The answer will help provide you with your ‘business mission’ and ethos.

Examples of reasons to start out as your own boss include:

  • You have an idea for a product or service that will help to improve people lives.
  • You have an idea for a product or service that will help to improve business processes in some way.
  • You have a passion that you have identified a gap in the market for.
  • You want the responsibility and freedom that comes with being your own boss.
  • You want to earn more money.

It is important to have a product or service that you fully believe in. That belief will come across in your marketing communications and play a big part in engaging people and convincing potential customers to buy your product or service.

Realising your vision

Research your business idea carefully and in-depth. What will you offer and who will you offer it to?

Typically, there are three types of business: service, merchandising, and manufacturing.

  • Service: Selling time and expertise to businesses, such as marketers; IT consultants; events planners; restaurants; salons; health spas.
  • Merchandising: Buying and selling goods, including retail, wholesale, trading and distribution. Examples include grocers and department stores, retail outlets, and online retailers.
  • Manufacturing: The combination of labour, business equipment and raw materials to create a saleable product, such as cars; mobile phones; apparel.

Why your mission statement is so important

Earlier, we mentioned your ‘business mission’. Mission statements help business owners and employees see the meaning and purpose of their work. It provides clear reasons why their job benefits a larger goal and helps to keep the business on track to achieve its goals.

Get to know your target customer

You’ve got your great business idea and you know what you’re going to sell, but do you know who actually wants and needs your products and services?

If you don’t know which potential customers will buy your wares then your business will struggle for success and profitability, which is why it’s important to study the business landscape to determine what market there is for your business.

A point to remember is, ‘a product or service for everybody is usually a product or service for nobody’. That’s why many new businesses focus on a particular niche. Finding your niche is based on getting to know your potential customer.

Business planning breeds success

Write a robust business plan including financial forecasts for 3 years. Once you’ve done your first draft, have a look at what you’ve written and be honest with yourself and ask if your figures are realistic?

Many people over-estimate how many sales they will make and underestimate their costs, leading to an unrealistic profit figure. For help completing your business plan, it is wise to speak to an expert. An account can usually help you put your business plan together.

Set your pricing based on your time, resources, cost of materials and competitor pricing. Will you be competitive, too cheap or too expensive? Where will your products/services sit in the market?

Will your prices be low and target high volume of sales, or will you be targeting the high end of the market, with higher prices and lower sales volumes? Remember, how you position your business could make all the difference between success and failure.

The Markel Law Hub provides many business planning resources to help businesses succeed in competitive markets, including a simple, easy-to-follow business plan template for you to download.

To find out how you can access the Markel Law Hub, click here.

Get the financials correct from the outset

Engage with an accountant and/or business advisor. When you start a new business it’s important to ensure you begin on a solid financial footing.

An accountant or business adviser can help you hone your business plan and your financial structure, including your invoicing, to ensure you remain solvent (especially in your first three years) and to ensure your cash-flow remains strong enough to support your business and your personal financial needs.

Why business insurance should play a key role in your business planning

Once you have registered your new business it’s crucially important that you insure it. You’ll need to know what types of insurance will you need and how much will it cost?

Browse our website to see what business insurance protection we offer and for a quick online quote.

Remember, the cost of insurance is far less than the consequences of not being insured should something go wrong. That’s why purchasing business insurance should be at the top of your priorities when starting your new venture.

Promoting your new business

Planning, registering and insuring a business is only the start, and to coin a cliché “that’s when the hard work begins”.

You will need to create a plan for how you are going to win new business and create repeat business, that’s where marketing helps.

  • How will you promote your products and services?
  • What platforms will you use?
  • How much will your advertising and promotion cost?
  • How will you fulfil the delivery your products and services?

Online business services can be a lot cheaper than the delivery of a physical product, but they come with their own costs such as:

  • The creation of, and ongoing maintenance of a website.
  • Monthly fees for apps for secure online payments.

 

This list is not exhaustive and shouldn’t be taken as business advice, but it should at least provide you with a start point. For in-depth advice setting up a business, seek an accountant or business adviser.

If you have already set up your business and are looking for business insurance, you can get a quick online business insurance quote by clicking here.

 

Business insurance from just £5 a month