So, you’ve had a lightbulb moment and found a way to convert something you’re passionate about into a viable business, which works…in theory. Although thousands of new businesses get started every month, more businesses shut down than start up, but this isn’t because all of the ideas are terrible, it’s more to do with the fear factor that sets in as soon as we all start wondering how on earth to convert our ideas into reality. There are no hard and fast rules about how to start a business, but if you don’t try you’ll never know and there’s no better time to try than at the start of a brand new year.
Test your idea
“If we knew what it was we were doing, it would not be called research, would it?” The words of Albert Einstein, and a quote that should become your mantra when beginning your brand new business journey – testing your initial idea through research is essential; it’ll help you shape your business plan and fine tune how and who you plan to target, as well as help to clarify points on pricing. The internet and social media are hugely effective tools when it comes to determining trends and garnering opinions, but don’t underestimate the impact and importance of field research: speaking to your potential customers directly and testing your idea personally. Surveying, focus groups and face-to-face interviews are all areas you should look further into.
Pick the perfect name
Remember when ‘Jif’ changed to ‘Cif’? Uproar. It is absolutely essential to think long and hard about the name of your business or product, so that it resonates with as many of your potential customers as possible and not just you. Your business name, which will become your branding, shouldn’t just be memorable therefore, or simply sound good when you say it out loud, it also has to be recognisable, uncomplicated, easily associable with what your business does, and be able to be visually represented for the purposes of your logo. You should definitely like saying it, like hearing it and like looking at it, but it’s important not to make it too personal, or long winded – make it snappy and inject some humour if that’s relevant.
Choose the right structure
Sole trader, limited company, LLP or partnership? Gulp. There’s a fair few ways to structure your new business depending on how the decisions you make down the line will affect its growth. If you’re not planning on employing anyone except you then you’re likely best off as a sole trader, but that does mean that any business debt will be met from your personal wealth if the business fails. A partnership is great if you’re going into business with someone you know well and is common when sole traders wish to expand, but liability will affect all partners and can lead to messy ‘break ups’. Registering a limited company at Companies House gives your business instant credibility and makes it easier to separate your money from the company’s money, but you’ll need to be really on top of your admin. And, limited liability partnership (LLP) models are effectively a hybrid between limited companies and partnerships, which allows for flexibility, but does not give the same tax advantages. Research every option extensively and seek advice about which is best for you.
Make your logo stand out
There are five key points that your logo should clearly communicate to your customers. It needs to tell your customers what you do as well as express the personality of your business – are you friendly and fun, or formal and professional. Make sure your logo refers to your business name and don’t lose your identity in the colour scheme – sounds simple, but is easy to get wrong. Pair your logo’s aesthetic with the expectations of your target audience – survey what colours, fonts and styles your demographic responds positively to and incorporate them. Lastly, think about the level of quality your logo promises – this isn’t to say that it will be less appealing if your product isn’t high end, but is more to do with differentiating how you illustrate a cost-effective, basic product from a premium one.
What to expect when applying for a start-up loan
Raising capital to start a business is no mean feat, but it isn’t impossible either and there’s a lot more guidance and support out there than you probably realise. Start Up Loans is a government-backed scheme in place to help people start or grow a business in the UK, and they’ve identified 10 key questions you need to consider before you apply for funding that include reference to everything from your business plan to cash flow forecasts and exit strategies. Head to www.startuploans.co.uk for the full list of questions and lots of helpful hints and tips; you can also find a host of step-by-step guides to writing your business plan online at sites such as www.entrepreneur.com and www.gov.uk/write-business-plan.