21 things to research before starting a business
The facts are three quarters of start-ups fail within the first
three years and a third of those fall by the wayside in the first
six months. To give you the best chance of surviving the teething
period we've compiled the top 21 things to research before you take
1. Sole trader or limited
Which you choose will impact on the tax you pay and how much
legal and financial responsibility is laid at your door. As a sole
trader you take all the post-tax profits but you are also liable
for all of your business' financial dealings. For a guide on the
pros and cons of each, click here.
2. Size up the competition
Who else is doing what you're planning to do? How well do they
do it? By studying the competition you can learn from
others' mistakes - or even what their customers appreciate. Learn
how much people are willing to pay for your product or service and
how you could enhance the current offerings.
If one big player dominates the market space, focus on what they
don't do well or who they don't cater for; provide a superior
service and you could grab a share of their space. Alternatively,
if the market is fragmented, there could be an opportunity to
launch a brand that becomes the de facto choice for consumers.
3. Define your target audience
Appealing to everyone appeals to no one. You need to focus on
your target audience and style everything from your website to your
marketing campaigns around them. Make sure you are targeting the
right people by sending out questionnaires, speaking to your
customers through social media and holding focus groups. The only
way to provide a product or service people really want is to get
inside their heads. Involve your target customer in the development
of your business and continue to test, test, test. Consulting your
customers will also make them feel like they have a voice, will
breed loyalty and, if you're lucky, will increase the likelihood of
them recommending you to others.
4. Paying yourself
How will you pay yourself? You need to think about this up
front. With the best intentions of ploughing profits straight back
into the business, you're going to have to eat, drink and put a
roof over your head. Cut back on the luxuries but figure out what
you do need to live on and include it in your outgoings. The bank
or any investors would much rather see this than you going back
cap-in-hand six months after you told them your business plan made
5. Your business name
Think long and hard about your name: you're going to be stuck
with it as rebrands are expensive and painful. It'll need to work
with an available web domain and will also often be the first
thing prospective customers see. Consider what your name needs to
say about your business. Should it simply be a case of 'says what
it does on the tin' or communicate aspects of your brand identity,
such as Innocent Drinks, or perhaps geography is important if
you're focused on serving or representing a local area - Manchester
Landscaping Ltd or Premium Lincolnshire Sausages Ltd, for
6. How you'll get your name out
No point having an amazing business idea if nobody knows about
it - so how will you get your name out there? Without a big
marketing budget, start small and focus on building relationships.
Use social media and network hard to start building a reputation
with not just potential customers, but also local journalists,
suppliers, fellow retailers, local business organisations. Start a
blog, be active on Facebook and Twitter, offer to write articles or
talk for free on your expert subject, get people trying and
reviewing your product or service, think about having a launch
party. For tons more low cost marketing tips click here.
7. Your web presence
Did you know that 50% of small business don't have a website?
Most want one, but they either think they can't afford one or don't
have the skills to put it together themselves. The latter may have
been true a few years ago, but web building tools such as Moonfruit -
available as part of Smarta Business Builder - mean absolute
beginners can now get a fully e-commerce website up and running in
no time. You might not need to sell online though, perhaps a simple
brochure site showcasing what you do would be enough - but, then
again, wouldn't it be nice to take bookings? Start thinking about
how much more business you could be doing by embracing an online
market - then explore the available options to make it happen.
8. Your USP
Customers will only stop buying from other businesses in favour
of yours if you offer something better or different. Your USP (unique sales proposition) defines
what is special about your offering; what customers can't get
Carefully sculpt your USP: perhaps it's your product if it is
genuinely unique, or maybe it's about customer experience;
after-sales support; the way you price or offer payment; or that
everything you do is organic. Maybe, like Tom's Shoes, which
donates footwear to Africa for every sale made, you appeal to
consumers' growing demand for ethical trading. Find your angle then
make sure everything you do is true to it.
In an ideal world you would have enough money to self-fund the
launch of your new business. But, for the majority, that's not an
option. Instead you can ask friends or family if they may be
willing to help or you can look into getting a bank loan or seek out an investor. You should
also look into what business grants are available: they're hard to
come by but brilliant if you manage to get one. If you can't secure
the funding you need to launch your master plan, start small and
prove the business works - then go back to the bank or investors
with more evidence.
10. Find an
An accountant is much more than just a
bean-counter. They should be a valuable and trusted source of
financial and business advice. Usually armed with many years'
experience they can help you steer the company away from danger and
advise you when and where to save your money. Seek a local
accountant with experience in your sector who'll see you as a big
enough client not to just pass you onto a junior. Ensure you can
afford to pay for help like this by not frittering away money
getting them to sort out your shoebox of bills and invoices. You
can easily do this for yourself by using a simple accounting
package such as Intuit QuickBooks Online, available as part of
11. Write a business plan
Business plans rock - really! Don't view them as a chore you
must do for the bank or an investor - use this as a chance to prove
to yourself that every aspect of your business plan and model works and makes sense.
If it doesn't, do you really want to go ahead? The Palo Alto
LivePlan software in Smarta Business Builder takes you step-by-step
through every process of putting together a business plan, from the
executive summary to the cash forecasting.
12. Route to market
This one's really simple - how will you sell to your customers?
What's your route to market? Consider all your options,
from market stall to eBay shop to mail order, to retail unit or
concession, to picking up business at networking events and on
social media to telesales or integrated partnerships or simply via
Google Adwords. Where will your business come from? Where's the
obvious place to start? You can't possibly write a business plan
until you've worked out your platforms and route to market and how
much each will cost you.
13. Potential partners
Who could you benefit from working with? Forming a relationship with a business in
another sector could help you tap into a whole new customer base.
For example, if you're a florists you could find a wedding planner
and supply flowers for them at a discount. You'll get access to
their customers and you can recommend people to them too. It's
beneficial for both parties. Find someone to share half the
workload and you'll move twice as fast.
14. Licensing and legal issues
When launching a business you should speak to the local
authority to find out whether you need any special licenses to sell
in your area. For example, if you are selling alcohol or food you
need a license. If you fail to produce one, you'll be fined and
could ultimately be closed down. There are a host of other legal
obligations to consider and it's best to get at least one session
of legal advice. You should also ensure processes - from sales to
supplier agreements and terms and conditions - are legal binding
and contracted up. Smarta Business Builder provides access to a
library of legal contracts written by award winning solicitors that
can personalised to your business.
15. Find the best business bank
You'll need a business bank account - but don't just go straight
to the bank you've used as a consumer. Find one that understands
your business and who you feel comfortable with. Most banks also
offer incentives for new sign-up. For example, NatWest offer two years' free banking and
access to an experienced business manager. For more information,
16. Staffing requirements
Will you need employees from day one? If not, how about day 100?
You need a plan for this so you're organised, prepared and
resourced for whenever - if ever - that day is. Employing someone
is a big commitment to the individual but also to your bottom line.
Don't jump into it and be clear before making any appointment
exactly what that person will do and what added revenue they will
bring to the business: it's usually an equation that results in a
quick rethink! If you can, utilise freelancers and look what you
You are required by law to have employers' liability insurance if you have any
staff and public liability insurance if you expect to welcome
customers or suppliers onto your premises. You must also insure any
vehicle you use. If you sell products explore if you need product
It can be expensive, but think if your business could survive
should the unthinkable happen and your premises, equipment or stock
was stolen or damaged.
Shop around for the best deal and ask your bank for any deals that may come as
part of your account. Premiums are increasingly annually, so
research ways you can keep quotes low.
18. Skills gaps, experience and
Just because you've eaten in a lot of restaurants it doesn't
mean you'd know how to run one - a fairly obvious statement
numerous wannabe restaurateurs have ignored to their peril. So even
though you may have a killer business idea you need to work out if
you have the experience and skills to execute it. If you haven't,
look into training, evening classes and even think about getting a
job in the industry first to pick up that valuable insider
Audit your business plan to figure out what technology will
enable you do five things: save time, save money, stay in control,
make more sales and deliver a better service to your customers.
There are a host of apps and some brilliant mobile technology
out there to consider - and Smarta Business Builder is designed at helping
you with the first three in order to let you focus on the other
Create a business plan, build a website, manage your accounts,
access legal documents and your email all in one place - keeping
you super organised and in control.
Use the spare time to get closer to your customers on social
There's nothing better than having an experienced business
mentor to turn to for guidance - or simply to bounce ideas off.
Someone who has been there and done it and knows what you're going
through will be invaluable. Is there a business guru in your circle
of friends? If not target people you admire, seek recommendations
from people within your industry or consider government-backed
mentoring schemes. The Prince's Trust can put you in touch with a
business mentor if you are aged 14-30.
21. When to start (and give up your day
You're ready to launch your business but don't rush to quit the
day job - the salary could be useful in the short-term. It could
pay to start piecing together your business out-of-office hours and
then make the leap once your business can sustain you and is truly
ready for your full-time attention.