How to give yourself the best possible chance of success.
Deciding what business to set up needs careful thought but you can dramatically increase your chances of success by planning carefully.
Planning your business
Is there really a need?
It is almost impossible to set up a business without sufficient demand for your product or service. An ‘enterprise’ without paying customers is called a hobby. The fact that you are good at something and that you enjoy doing it, sadly, is not enough by itself. However, thorough market research will help you assess whether there is really a need.
Are you going to start from scratch?
Setting up something completely new can be exhilarating – but challenging. In addition to your core skill, you will have to quickly get to grips with many more tasks which in corporate life are handled by somebody else. With so many different things to think about, it can be easy to overlook something.
Buy a business?
Buying an existing business is a good way to leapfrog much of the set up process. Although the cost of purchase may be higher than if you started from scratch, you do gain a trading concern from day one.
Buy a franchise?
Franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trademark/trade name of the franchisor in exchange for a fee.
Create a Cash Flow Forecast
Sadly, money rarely comes in or goes out at the most convenient time (for example you may have to pay for your stock before you can sell it). A cash flow forecast will help you work out roughly what you can expect financially in the future – even if some of it will have to be based upon guesswork. This is vital information, particularly if you are planning to borrow money – it is best to plan for the maximum amount that you will need rather than having to keep going back to ask your lender for more.
How will you reach them? (Marketing)
Your market research should have helped you to identify your target market, where they are located, what their needs are, how they spend their money, and how they find their suppliers. The next step is to make them aware of your business and to encourage them to buy from you.
There are so many ‘opportunities’ to promote your business, you could easily spend every penny you earn on marketing. So, how can you create the maximum impact without breaking the bank?
Customers – who will buy from you?
Who are your customers?
What do they need?
Where do they live/work?
Do they fall within a certain social group?
What are the benefits of your product/service that satisfy that need? Why will they buy from you? What is your USP?
How much are customers prepared to pay?
Competition – who are you up against?
What do you know about the competition?
Who do your customers buy from now?
Who are your main competitors?
How do they do business?
What do you see as their strengths and weaknesses?
How will you take business from them?
When deciding where to spend your budget, be very wary of ‘special offers’ and impressive circulation figures – it is better to reach one customer who will buy than 100,000 who don’t!
PS: Word of mouth advertising is probably the best marketing tool in your armoury. A recommendation from a satisfied customer is far more persuasive than any paid advertisement. Harness this secret weapon by asking for referrals and positively encourage your happy clients to tell their friends.
