Quick guide to setting up your own business
Startups can happen quickly
Or at least, they appear to from the outside.
The first business I was involved with was a startup in the UK. When I started writing my university dissertation the business just didn’t exist. By the time I handed in my 60 pages of literary analysis the company had been running for a month and I was lucky enough that they were looking for new content writers to join their team.
But is setting up a business something that can be done quickly? As I was to learn, there is a lot of planning that goes into building a successful startup…
Generate Ideas and identify your space
Identify a gap in the market. What is it that makes your product or service special, that you can use to differentiate it from the competition? It may be something as (seemingly!) simple as incredible customer service or a unique approach to advertising, or it could be something that your competitors don’t seem to understand or exploit properly. A business idea does not always have to be super unique to be successful.
If you already have an idea, great! If not there is a wealth of resources online for help generating business ideas.
Here are 7 ideas for under 10k:
- Ebay business
- Cleaning Business
- Personal training
- Market trader
- Event planner
- Wedding photographer
Can you do it?
The answer, of course, should be yes! If you have a good idea then can start your own business. You’ll need to identify the resources you need and the type of people who can help you. But the follow-up question is important…
Should you do it?
There are a hundred ways to run any business. A hundred ways to expand, to communicate with customers, deal with suppliers and fund your business. Some of these will be successful, others less so… Planning the most successful way to run your business requires estimating the financial reality of both starting and running the business.
Ask yourself the following questions:
- How long will it take to get the business running?
- Will I run out of money before my product can start making money?
- How long will it take before I start making money?
- What will be my operating costs?
- When will I make back the money I put into the business?
You need to have best case and worst case scenarios for these questions and a clear understanding of these financial questions. Passion and hope can only take you so far. Only open your business if you can back up your idea with the hard facts.
Most new businesses fail for what seems like an obvious reason – because they simply don’t sell enough to cover their costs. But how does this happen? It’s often a combination of under-estimated costs, over-estimated sales and the growing gap between these which leave the business unable to sustain itself.
At minimum, there are three things you need to get a grip on:
- How different levels of sales affect your business.
- The cost of getting more sales.
- How much you are paying to keep the lights on.
All of these things need to be part of a financial picture of the business. Beyond these, you also need to consider salaries, loan repayments, spoilt inventory, assets needing replacement or maintenance, dividends paid to investors and the choice of when and how to put more external money into the business.
Once you have assembled this picture of your business you will be able to see the gaps in your future cash flow and take steps to ensure that the business has ways to cope with even the worst case scenarios. The best way to do this is with a flexible financial model (which is why we made one).
This is the part where you actually start to seriously commit to the business. Money changes hands, deals are struck. You ensure you have the infrastructure to run the business. You learn the strengths and weakness of the business in practice. As part of this organisation, you need to find the three things that you will definitely need to run your business – money, customers and staff.
All of this should go into your financial plan too. A financial model is an indispensable tool at this stage, gauging whether the future you are building is still the most secure and likely to succeed. In no other way can you foresee the impact of your short-term decisions across the crucial months and years ahead.
Gut instinct is not a replacement for planning. This is the time when your business grows from nothing into something.
It’s the most crucial stage.
So please, keep planning ☺