You have the idea. You have the enthusiasm. You have all the tools you need to succeed, right?
Well, before you get ahead of yourself, here are five simple things you need to think about before you start up your own company. Once you have these nailed, there’s no stopping you!
1 - What Do You Really Want?
Before you even start to think about your business, you need to think about yourself.
Yes, you!
You need to ask yourself:
- Why am I doing this?
- What do I want to achieve?
- What is my end goal?
In order to be successful, you need to understand what success means to you, because, as it has been said a million times, success means something different to everybody.
For me, success ultimately means that I will be happy in whatever I do.Like many of my friends, I want the life-long marriage to the love of my life; I want two or three happy, healthy children and I want to have a career involved in protecting our beautiful array of wildlife. However, what I want and what may happen (no matter how hard I work or plan for my future), are two very different things. Therefore, by defining success as being happy, it doesn’t matter what I end up doing, or how I get there, as long as I go to sleep with a smile on my face.
Therefore, you need to understand what success means to you.
Are you a success if you have a family? Are you a success if your business or job makes enough money for you to pay off your mortgage every month and pays for a few family holidays each year? Or do you define success as dominating the world, where everyone knows your name?
If you are doing this for the money, I warn you now, think again! Most entrepreneurs don’t take a wage from their company for the first few years, and even after that, the business must always come first. If the company needs money, you go without! Only a handful of businesses make it big, and even then it can take years before you see a return!
Whatever it is, it is important that you understand what will make you successful so that you can plan for your “end goal”. Before you start your business, you need to know what you want in the ‘end’ as this will provide you with the focus you need to achieve your goals.
2 - Know Your Strengths and Weaknesses
Before starting your company, you need to evaluate yourself and recognise not only your strengths but also your weaknesses:
- Are you good with people?
- Are you confident with public speaking, meeting new people, or pitching your ideas?
- Are you just the ideas person, creative? Do you need someone to do the numbers for you?
- Are you easily distracted?
- Are you impatient, lazy or short-tempered?
You need to understand what you are good at, but more importantly, what you struggle with. You may be really good at meeting people or picking up new skills quickly, but if you aren’t good at organising your time or you’re terrible at controlling your finances, how is your business going to run effectively?
Once you understand your strengths and weaknesses, you can begin to think about what you need to elevate your business to the next level. Maybe you need a business partner to balance your qualities, or maybe you need more training and refining in certain areas?
Whatever you need, it is really important that you understand how to improve yourself, if you want your business to thrive.
3 - Do Your Research!
Before you can start any new project, whether it is as simple as writing an essay for university or as big as starting your own company, you need to do your research! With Business, there are many different areas that you need to focus on if you want your Company to be a success.
Numbers
Turnover - the amount of money taken by a business in a particular period. Whether it is projected turnover, or actual turnover for the past few months, you need to have a clear idea of how much your business is making or will make, so that you can make projections for the longer term in the future, as well as seeing where you can grow and improve.
Gross Profit - the profit or loss, which can be calculated as sales minus all of the costs that are directly related to those sales. These costs include manufacturing, labour, marketing, raw materials and other such expenses.
Net Profit / Loss - the actual profit or loss, which is calculated by subtracting a company’s total expenses from the total revenue taken in a given period.
Customer Acquisition Costs - the cost associated in convincing a potential customer to buy your product or use your service. This cost not only includes the cost of the product but also incorporates the cost involved in doing the research, marketing, and the costs in making the product or service easily accessible. On top of this, you need to consider what the cost is to keep the customer - known as the customer retention costs.
Competition
- Who is your competition?
- Does anybody occupy the same market?
- What sets you out from the rest? What makes you that much better or different that the customers will use your business instead of the ones that are already established
- Can you compete on the price? If not, why will the customers be willing to pay more for your product or service?
Be realistic on who your competition is!
Market
It is very important that you understand the market you are trying to occupy. You need to ask yourself:
- How is the economy doing?
- Is there a gap in the market for your product or service?
- Does the market actually need your product? Or is it not out there for a reason?
Target Audience
- Who is your target audience?
- Are you trying to provide for everyone, or is your company aimed at a select niche?
If you are aiming your product or service at students, for example, it is extremely important that you factor in costs. Or if you are aiming your company at parents with young children, it is vital that you think about the accessibility of the product!
Product
- How much can you make your product for?
- How much can you sell the product for?
- What will your margins be? You should be aiming for around 40–60%gross margin!
- Where do you want to make your product?
- Do you want to stay local or would you prefer to reduce your costs and make the product offshore?
Once you’ve done your research… Learn It!
4- Pick The Perfect Company Name
Once you have done your research and you have a clear idea of the products or services you will be providing, you need to think of a name for your business. This is very important, as you want your name to stand out and be memorable, but also be simple and almost self-explanatory.
There is a danger of trying to be overly clever. Think about it. Does it make sense for your company name to be in Latin? Is there any relevance for it to be in Italian, or French, or Spanish?
It may sound sophisticated, but if it confuses the customer, or it is hard to pronounce, you’re putting off your customers before they even look at your business. You only have 7 seconds to make the first impression!
So, keep it simple. If you’re working with Lamps, call it ‘The Lamp Company’. The best companies names are the ones that are simple. For example, Bed, Bath and Beyond, British Airways, PC World… you don’t have to ask yourself what they do!
Naming the Company - helpful links
UK — www.gov.uk/choose-company-name
USA — www.sba.gov/content/how-name-business
Searching for a Trademark - helpful links
UK — www.gov.uk/search-for-trademark
USA — www.uspto.gov/trademark
Once you have decided on a name, you should register the domain names for your website at: www.123-reg.co.uk
5 - Write Your Business Plan
After evaluating your strengths and weaknesses, doing your research and coming up with your company name, you are now ready to write your business plan!
If like many of us, you are unsure of where to start, there are some very good links and PDF examples on the internet that are perfect at providing you with a clear guideline on writing a business plan. For example:
http://www.va.gov/osdbu/docs/vepBusinessPlanOutline.pdf
Start up festivals are always another option for more information:
So, what do you think? If you are dedicated, driven and not adverse to taking some pretty big risks, starting a business may be the perfect life choice for you. But be warned, it won’t be easy and it certainly won’t always be fun - but if you do it right, it could be the high of your life.
Good Luck!
For more information go to: www.youngstartuptalent.co.uk and apply now for your chance to win a prize fund worth £50,000!