Many people dream of owning their own successful business and being their own boss, not answerable to anyone. To many, this remains a dream, but with dedication, determination and careful planning, you can make your business start-up a reality. If you are determined and driven, you can make the dream a reality, but it is essential to remember that many start-up businesses do not last two years, with many failing within the first year.
There are many reasons why a company fails; it can be that the market is not ready for the type of business or services offered by the industry. It can be that the market is already over capacitated or simply that there is no market for your offering. Before starting your business, you should do market research. Is there a need? Know your target customer base; who will buy your products and services? How can you best reach your target customers? Before you start your business, ask yourself, is there a market for what I am offering and am I qualified to sell into that market? If the answer to both of these questions is yes, how do you best approach the challenge ahead?
Study the market, do market research to see where your business will fit, identify your potential customers and decide how you can best reach them. This can be done by traditional marketing methods, i.e. advertisements, tele-canvassing, leaflets, or, more recently, through social media. Once you have a clear view of your business objectives, it is crucial to have a strategy. If you have friends and colleagues who run their own businesses, don’t be afraid to seek advice and opinion, they may point out issues and pitfalls that you had not considered or offer sound advice which you can use to your advantage.
At this point, it is essential to consider a business plan. What is a business plan? A business plan is an overview of your company's expectations. It helps a business look forward, estimate development costs, allocate and cost resources, and understand performance related profitability and ongoing investment and expenditure.
The business plan is not just for the start-up of a business but is also essential regarding the day-to-day running and future growth and development.
There should be a mission statement and a market analysis within the business plan. The mission statement will detail your aims and expectations. The market analysis will analyse whether there is a need for what you are offering and how big the market is. Also, consider what you need to make the business viable and what it would cost to achieve your goals. There are business plan templates that you can download from the internet. Once you have completed your start up business plan, you will be able to decide if the business is worth pursuing and would pass the risk-reward test—the risk-reward test analyses whether the return is worth the investment both in time and financial reward. Be realistic in your business plan. Do not over expect in the sales column, which would show an over-optimistic return. Be as realistic as possible based on your market research.
When you are happy with your start-up business plan and are confident that you can be successful, you should move to an operational business plan that may change as the industry develops but keep the fundamentals and always look for changing patterns.
You may wish to seek the advice of a business expert or experienced accountant. These experts will have helped set up many successful businesses and have seen many failures. Their input into your business planning and strategy may prove invaluable.
Moving on with your business, an essential part of any business is cash flow, which must not be confused with profit. Cash flow is crucial because even a profitable company can struggle to meet its commitments without insufficient cash flow. Funding a business at any time may require a loan or a facility from the bank; a properly constructed business plan is essential to help the decision-maker granting such a loan or facility. They may wish to see a description of the business, a description and experience of the management team, products and services, sales and financial forecasts. These should be incorporated within a business plan presented to a lender. If your business plan is purely for your purposes and you are self-funding the business, you would not require the background information needed for a lender. Construct your business plan to suit your purpose.
It is essential to include these elements in your business plan - Profit and Loss, Cash Flow, Break Even Analysis and Balance Sheet.
Now that you have decided you are in a position to proceed and chase the dream, it probably won’t be easy, but the harder you work and the more focused and organised you are, the more successful you will be. Once you have committed to the business, stick to your business plan, check performance against expectations and don’t be afraid to seek advice from an expert.
Love Finance can't currently offer start-up loans, but we have partnered with a company that does. Transmit are a company specialising in helping small businesses attain start-up loans, apply on their website here.
While we can't help with a start-up loan directly, feel free to contact us and we'll be there to assist you with any advice you need.
