According to QuickBooks research, 26 per cent of UK adults have dreamed about starting their own business during lockdown. Having run my own business for almost three years, I know how starting out can be both exciting and daunting. Here are my top tips on how to start a business.
Know your customer and have a clear business strategy
Starting a business should always begin with the customer in mind – knowing who they are and what problems you can solve for them. Ahead of anything else, you should talk to your target audience as well as making sure you understand the market and your competition.
Next, you need to work out your game plan. Before you can start attracting investors and operating, you need to summarise what your business will do and how it will do it, by putting together a business plan.
Think through your long-term vision and business strategy, the key milestones and what you will need to achieve them. A good plan should cover: market overview, including the size of the market and competition, your objectives, such as how big you want the business to become; an overview of your product and how it solves your customer problems; financial forecasts for the next three years with the zoom-in into the first to ensure you have enough cash to start your business; and go to market strategy to understand how will you acquire your customers including target customers overview, acquisition channels, and competitive positioning. As well as being important documents to share with any potential investor or bank lender, business plans are also a good way of keeping you on track and ensuring you’re moving forward with your idea.
Prioritise financial planning
I found financial planning an important milestone when starting out: I needed to quickly bring myself up to speed on what was required to raise capital and how to manage cash flow. Your financial plan should consist of details on revenues and expenses, and financial budgets, which show how you expect cash to flow into and out of the company. The result is a budgeted balance sheet, breaking down how much income and assets your company should have to cover its debts and expenses in the coming fiscal year. Using financial tools such as QuickBooks can help you track income and expenses throughout the year, ensuring you keep on top of your financial plan.
Seek small business finance
Depending on the type of business you are setting up, you may not need a lot of capital to get your business up and running. In fact, sometimes you can get started with little to no funding. However, if you want to scale fast once your product finds product-market fit, you’ll likely need business funds to grow. How you decide to raise funds will depend on a variety of factors, including the nature of your business or the state of the market. Raising money for a company is critical for the business to grow, but it is also time-consuming. That’s why it is helpful to know all your options.
One option is to consider different alternatives: from government backed loans, grants, to raising money with angel or private investors. Government-backed loans are a good place to start as they are unsecured, meaning you can get access to the cash without needing to put up assets to secure the loan. Alternatively, you can look into private equity or angel investors. Both options are viable and depend on the type of the business you are running and how quickly you want to grow your business.
No matter what investment option you go for, you’ll need to prove you can be trusted, can execute well, and show your business can succeed.
Build a great team around you
You can’t grow a business on your own. It’s important to find the right kind of people to help you reach your goals. Building a successful team is about more than finding a group of people with the right mix of professional skills, it’s important to find someone who is as passionate and committed as you are. Having a fantastic team helped me navigate my most challenging moments. Equally, don’t be afraid to reach out to people and ask for advice from those you trust. In my first three months, I spoke with hundreds of industry experts, existing and potential customers, and their advice and feedback was critical in getting my assumption right.
Stay focused, but give yourself time to recharge
Building your business is all-consuming and it can be hard to switch off. I know from experience how easy it is to start sacrificing holidays, hobbies, and time with family and friends. However, I have also learnt that to be your most productive you have to give yourself time off. Burning yourself out will not help you nor your business, so make sure you ring-fence time off.
Mistakes will happen, so don’t be discouraged; the important thing is to learn from them. When times get tough, remain focused on your long-term vision. Reminding myself of my goals, and why I started the business helped me enormously whenever I hit a bump in the road. Starting your own business is never a quick ride, so buckle up and enjoy the journey!