The Ultimate Guide to Starting a Business
Starting A New Business: The Ultimate Guide
Chapter 1: Understanding that running a business is hard
Table of Contents
Understand that running a successful business is hard
So you’ve decided to start a new business. Congratulations! You’re going to become the next Indra Nooyi or Bill Gates. There’s just a couple of small things standing in your way. You don’t know what to do and you haven’t got enough money to do it even if you did know.
But don’t let that stand in your way. You’re motivated, you may well have the early outline of a business plan, or idea, and you are willing to do whatever it takes to make it a success.
This is the ultimate guide to starting your own successful business. We’re going to cover a complete checklist when starting a new business. Everything you need to know from business planning, running a successful business, creating your business model, identifying your target market to getting your finances straight and planning for the future.
Let’s dive in.
How to start a business.
Here’s the short version. This is what you’ll need to do:
- Understand that running a successful business is hard
- Have a ‘knock it out of the park’ business idea.
- Decide on your business name
- Create a business model that scales
- Identify your target market
- Settle on your pricing strategy
- Create a budget and use forecasting
- Choose the appropriate business structure
- Get Insurance
- Look into startup capital (if you need it)
- Understand what it means to become an employer
- Choose your business bank
- Create a marketing plan
- Write a business plan that you stick to
- Choose A New Accountant
There is good news
The good news is that you can do it. Even the most successful business people had to start somewhere. Yes, there are examples of people being born into family wealth and being given a leg up, or taking over the reins to an already successful business. Yet for every example of someone who was born on a square with a ladder on in the great of life that is snakes and ladders, there are plenty of other example of budding entrepreneurs who started with very little, lacked finance, lacked formal education or business experience and who still made it to the top of their game.
You too can become very successful and wealthy in the process.
Although, the reality is achieving success in business will be hard. There will be setbacks, disappointments and failures. It’s better that you accept this right at the beginning and come to terms with the idea that the most successful people in business are the ones who pick themselves up, dust themselves off and give it another go. Your desire and self-belief are going to be what separates you out from all the people who claim to want to run their own business but never get round to it.
You’ll get to know yourself really well when you start your own company. Why? Because if you’ve come from a larger organisation, then chances are the roles and responsibilities will be more evenly distributed between people. There are people for accounts, people for sales, people for admin, people for credit control and so on. When you start a business yourself, unless you have secured huge venture capital funding for your billion pound business, you’re going to find yourself doing a lot of roles that don’t come naturally to you. You might be great at sales and terrible at admin, or superb at organisation, but terrible at dealing with people. Your short-comings are going to be magnified.
Embrace your weaknesses. As your business grows, you’ll learn the areas that need support. Your challenge, as your business grows, is to position yourself to do the work that only you can do. If you can grow your company and delegate tasks to staff, that is where scale comes from. If you remain as a single point of failure in the delivery of your services, you’ll never be able to step away or ultimately exit the business for a stack of cash.
Enjoy your unjaded vision at this point. It will become bruised and battered along the way, but if you can push through the setbacks, you will never know a life with as much freedom and earnings potential as you can, by running your own business.
Why do you want to start your own business?
This is a really good question to ask yourself. You need to weigh up starting a business versus working for someone else. If you only want to start a business to make serious money, then this may be the wrong intrinsic motivation. You may well find it takes a long time (seriously long) before you see a significant return on your time and investment. Many businesses fail within the first few years of operating, so you need to consider there is a chance you could lose money from starting your own firm.
Better to be motivated by something larger than just cash. Certainly a big pot of money is nice and of course it’s a factor, but are you looking for freedom? Do you want to be one driving the vision forward? Do you have a passion for the work your company will be involved in? Look for what motivates you beyond the money and make sure you’re not simply reacting to a situation in a way that could be solved in another way. For example, if you think starting a business is a good way of not having to deal with your boss, or is a way of furthering your career, then stop and ask yourself if changing paid employment or doing an evening course would meet your need in a far less risky way.
Planning for success when starting a new business
There is an element of luck, fate, fortune and misfortune in becoming a successful company. However, the reality is that for every part of luck or misfortune there are 5 parts of determination and planning.
What may seem like misfortune in your early days, may, with the clarity of hindsight and experience, be revised as insufficient knowledge and know-how. Everything is easy when you know how to do it.
There are common characteristics of successful business people. Not everyone has every one of these! However, you can be assured that if you factor these into your thinking, you’ll be starting off in the right way.
Understand there are big risks and big rewards when starting a new business
It might sound pessimistic, but it can be helpful to spend some time thinking about the things that could go wrong. The chances are pretty high that if you’re thinking of setting up your own company, you’ve spent quite a bit of time dwelling on the things that could go right. You might end up with a big house, lots of money, freedom, status, satisfaction and so on.
So here are 2 simple tips.
Ask yourself what the worst-case scenario is for each step of your planning. If things don’t work out, what is the impact on you, your family and your finances? Can you live with those scenarios if they pan out to be true?
How to spot when there are potential downsides to your planning? Use this simple strategy – every time you are discussing or writing down your business ideas, pay attention to whenever the word ‘if’ appears.
IF we sell X units we’ll have…
IF demand continues at this pace…
When the marketing starts, IF we get a response rate of X…
Whenever you see the word ‘if’ stop and ask yourself what the likelihood is of this not happening and therefore, what the impact would be on you and your business if it didn’t happen.
For extra points, give it a score between 1-10 for the likelihood of the event not happening and another score between 1-10 for the impact should it fail. Multiply these scores together to get a risk score between 1-100. The higher the score, the more you need to pay attention to this risk.
Start organised and stay organised
It’s easier to start right (take a little longer) and carry on right, than it is to start wrong (can be a little faster) and correct it later.
Split your organisation into 2 camps: Personal and Company.
Personal – your time is your single greatest asset. You can be a busy fool, chasing your tail and not getting much done if you don’t plan your tasks. Use a tool for staying on top of your time. Make sure you allocate blocks of time for those tasks you don’t want to do, this will stop them from building up and becoming an even less desirable job. If paperwork is something you seek to avoid, schedule it in for an hour a week. It will be a lot more palatable than having 3 days worth of work later.
There are lots of helpful books & articles on time management, so I won’t repeat it all here. But just to say, that you should split your time between short term and long term tasks and use a tool for planning your time.
Company organisation – you are going to have more paperwork than you ever imagined. Invoices, receipts, tax returns, correspondence, bookkeeping and so on. The processes you use for the smooth running of your company will evolve and change over time. But it’s best to start off with something in place. The modern world of accounting software can be a real time saver, helping you snap pictures of receipts, reconcile your bank statements automatically and send and track invoices. We definitely recommend starting with a widely used accounting software package. We like Xero, but there are also Freeagent, Quickbooks and Sage.
Be focussed and creative
Whether you are starting a new business from home or starting a new e-commerce business, the first step should be to start with your end goal in mind. This single piece of advice is helpful for nurturing your focus and creativity. Why? Because regardless of what you are seeking to achieve you need to know two things:
- Where you want to end up
- Your plan for how to get there
Keeping your focus will ensure that you have a mental image for what success looks like. Imagine you are a pilot flying a plane, you might deviate from the flight path a little from time to time, but you’d never forget what the final intended destination is. You are the pilot of your new business and it’s your job to keep in your mind’s eye where you want to land the plane.
Creativity on the other hand is being able to course correct and come up with innovative solutions to keep you headed for where you want to go. Keeping with the pilot analogy, you might hit some bad weather and turbulence and have to take a different route. You’ll certainly be required to try different things when you run your own business all in the pursuit of arriving at the destination of a successful business.
Allocate time for creativity. It’s tricky to be creative whilst you are under pressure and focused on the immediate deliverables. Go for a walk, meditate, run, read a book, play a guitar. You might feel this takes you away from working on your business, but you might just find these are moments when thoughts pop into your mind such as ‘can you get a grant for starting up a new business’ or ‘I wonder what I can claim when starting a new business’? These bursts of ideas and questions can come at the strangest of moments and can pay dividends (no pun intended) to help you be more productive and explore fresh avenues for business success.
Get support and be comfortable asking for help
You might wonder who to contact when starting a new business. The answer is – other people in business. No one, no matter how long they have been in business, has all the answers and you’ll be amazed at the common concerns that business owners have. And just how normal your experiences are. This can be an enormous comfort as you get going.
It’s normal to wonder where to start when embarking upon a new business and to be unsure of the challenges. Speak to people that are a little further ahead than you. Ask for tips when starting a new business. The beauty of other peoples’ experiences is that you can quickly include them in your own responses and capabilities without having to go through the first hand problems of the person supplying the knowledge.
You’ll likely find that other business owners are very happy to offer advice and share their knowledge of how to get help starting a new business.
Business owners are a funny breed of people, they have made a decision to take on extra risk in their life for the possibility of additional reward. You will probably find some camaraderie with like minded people.
Recognise that reputation is everything
When you first start trading you won’t have a reputation to trade from. Starting a new business requires a great deal of effort to establish a reputation that you can rely on to help secure more business.
Once a reputation is established, making sales becomes easier due to something known as ‘social proof.’ The idea is simple enough. If many other similar businesses have already used your services and are happy with the product/service they received and are willing to endorse you to others, then this makes the buying decision a lot easier for new customers. This is because someone else has already risked their money with you and has lived to tell the tale. Not just lived through it, but thrived and is willing to share their experience with others.
Having businesses that are willing to endorse you and your company is worth its weight in gold.
Therefore in the early days, start with the right behaviours, such as delivering outstanding customer service. This doesn’t mean you need to employ thousands of people, but as a general rule you should deliver on what you say you are going to deliver on. Communicate clearly and promptly with your customers and if there are mistakes, of which there will be, own it. Mistakes can be a great opportunity to cement customer relationships. When advising a customer of a problem, tell them openly what has caused the issue and crucially, how you intend to solve the problem without any effort on their part.
It’s okay to ask your customer not to judge you on the basis of a problem, but to judge you on the quality of your response.
Key Takeaways
- Start your business for the right reasons, not to escape a situation you don’t want to be in.
- Understand we all have strengths and weaknesses and when you run a business you won’t be able to hide from these.
- Recognise there are potentially big rewards and there are certainly big risks along the way.
- Learn to consider risk as part of your planning and decision making.
- Plan your organisation from the start. Split your organisation into personal and business organisations.
- Stay focussed on what you want to achieve.
- Allocate time to let creative juices flow naturally. Trust that creativity is as good a use of your time as doing paperwork.
- Ask for help when you need it and build a support network of people with similar experiences.
- Recognise that reputation is everything.
- Deliver outstanding service and communication to your customers from day 1.
If you’re still keen to seek out your business fortunes, then what you need is a business idea that knocks it out of the park with its sheer awesomeness. And that’s what we’ll look at in Chapter 2.
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