Many people have had brilliant ideas for technology businesses but failed to execute them. So how can a budding tech entrepreneur turn their big idea into big bucks?
The UK is ranked as one of the most entrepreneurial countries in the world and new businesses are springing up faster than ever, with official figures showing around 5.4 million registered at the start of last year, an increase of 1.9 million since the turn of the millennium.
Technology is one of the fastest-growing sectors for UK startups and some of them are doing very well indeed. Silicon Valley Comes to the UK recently launched the Scale Up Club, a group of 58 UK-based technology firms that could hit revenues of £100m in the next three to five years. These fast-growth companies generate a combined turnover of £300m and have an average growth rate of 110% per annum.
The rapid pace of new technological development creates opportunities and the familiarity of young people with new technology means that tech entrepreneurs are getting younger all the time.
But having a great technology business idea doesn’t automatically mean you have a great technology business. Would-be entrepreneurs with fantastic ideas and specialist skills can often find it hard to translate these into business success, often because of a lack of general business know-how.
With that in mind, here are some simple tips to help entrepreneurs turn their ideas into viable businesses:
Protect your idea
So you’ve had a great idea and taken the first steps to development you may even have a prototype ready. The most important thing to do is to make sure nobody copies your idea without your permission; this is called protecting your intellectual property (IP). You can only do this when you have physically created something – an idea alone does not count as IP.
In order to do this, you will need to seek legal advice from an IP lawyer. They can advise what type of protection you need for your product; copyright, patent or trademark. Having the correct protection means that you own the rights to your product and no one else is legally allowed to use it without your permission. This may be the most important step in ensuring the success of your product.
Set up as a business
There are legal and tax implications to being registered as a sole trader compared to forming a partnership or incorporating a limited liability company or partnership at Companies House. It’s important to work out which legal structure is right for you and register for tax.
Do market research
Identify potential customers and take the time to talk to them. Find out if they would use your product and whether it is meeting a real need.
Test, test, test
Use potential customers as testers for your product and make changes based on their feedback. Keep doing this until you’re confident it’s sellable.
Every great idea needs investment to cover the costs of developing it until it gets to the point of generating revenue. There are lots of funding options out there, from bank loans to government-backed schemes and crowdfunding. Do your research and find what is best for you.
Move to a tech hub
Being surrounded by other budding entrepreneurs in similar fields can bring huge advantages, so it’s worth looking into the numerous tech hubs around the UK, from London’s Tech City to Bristol and Bath’s high-tech cluster or TechHub in Manchester.
Tech entrepreneurs are usually very creative and skilled at what they do. But they may not have a great deal of experience dealing with the basics of business, from those listed above to the daily challenges of tax, health & safety, pension schemes or employment law.
Entrepreneurs who have a great idea but are unsure how to progress further or how to negotiate these challenges should think about getting external advice. One good low-cost way of doing this is to join a business membership organisation. The less time a tech startup owner has to spend getting to grips with the business administration, the more time they have to turn their idea into a fast-growth business.
This article comes courtesy of David Miles, non-operational director at the Federation of Small Businesses (FSB), the membership organisation for small businesses.