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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2023
Get well on your way to business success Starting & Running a Business All-in-One For Dummies is a treasure trove of useful information for new or would-be business owners in the UK. This comprehensive guide will help with every part of starting your own business and keeping it running. Generate great business ideas, navigate legal considerations, finance your new business, create a solid business plan, and spread the word through marketing. With this guide, everything you need is in one place, so you don't have to bounce from book to book as you learn. And it's all written in simple terms anyone can understand. You'll be flipping that sign around to open up shop any day now! * Get UK-specific advice on structuring and launching your own business * Learn the most effective methods of marketing, virtually and otherwise * Keep your books in order and find success in your first year of business * Write a stellar business plan and hire good people to keep your business going This book is for any new entrepreneur looking to start a UK business from the ground up and keep it running successfully, as well as veteran entrepreneurs who want to get up-to-date on the latest business trends.
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Starting & Running a Business All-in-One For Dummies®, 4th UK Edition
Published by: John Wiley & Sons, Ltd., The Atrium, Southern Gate, Chichester, www.wiley.com
This edition first published 2023
© 2023 by John Wiley & Sons, Ltd., Chichester, West Sussex
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Starting & Running a Business All-in-One For Dummies®
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Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Book 1: Laying the Groundwork
Chapter 1: Preparing for Business
Getting in Shape to Start Up
Confirming Viability
Getting Help
Entering an Incubator
Assisting Inventors
Chapter 2: Arranging the Foundations
Structuring Your Business
Safeguarding Your Business Assets
Working from Home
Chapter 3: Can You Do the Business?
Deciding What You Want from a Business
Exploring Different Types of Business
Assessing Yourself
Taking the Make-or-Buy Decision
Chapter 4: Preparing the Business Plan
Finding a Reason to Write a Business Plan
Writing Up Your Business Plan
Using Business Planning Software
Presenting Your Plan
Chapter 5: Establishing Your Starting Position
Introducing SWOT Analysis
Identifying Strengths and Weaknesses
Analysing Your Situation in 3-D
Chapter 6: Researching Your Customers and Competitors
Anatomy of a Customer
Determining Which Customers Buy What
Seeing Your Product through Your Customers’ Eyes
Sizing Up Competitors
Calculating Your Market Share
Introducing Market Research
Book 2: Sorting Out Your Finances
Chapter 1: Finding the Money
Assessing How Much Money You Need
Reviewing Your Financing Options
Determining the Best Source of Finance for You
Going for Debt
Sharing Out the Spoils
Chapter 2: Seeking Alternative Funding
Researching and Obtaining Grants
Applying for Awards
Paying for Help
Playing to the Crowd
Comparing Accelerators and Incubators
Chapter 3: Figuring Out the Figures
Understanding Your Accounts
Balancing the Books
Analysing Performance
Accounting for Pricing
Chapter 4: Budgeting for Beginners
Constructing a Budget
Exploring Budgeting Alternatives
Capital Budgeting
Book 3: Finding and Managing Staff
Chapter 1: Staying on the Right Side of the Law
Cutting Through the Red Tape
Knowing What the Law Expects from You
Going the Extra Distance
Deciding Who Has Rights
Figuring Out the Contract and Other Employment Policies
Managing Without an HR Department
Getting Help and Advice
Chapter 2: Finding and Interviewing Job Candidates
Identifying the Gap
Getting It Right from the Start
Considering Diversity
Sorting the Wheat from the Chaff – CVs and Application Forms
Handling the Practicalities of Interviews
Planning the Interviews
Checking Up on Your Chosen Candidate
Offering a Job to Your Dream Candidate
Chapter 3: Employing People Successfully
Motivating and Rewarding Employees
Managing the Admin
Chapter 4: Disciplining and Dismissing Staff
Resolving Disputes
Dismissing Staff – the Right Way
Dismissing Staff – the Wrong Way
Tying Up the Loose Ends
Facing Tribunals – Something to Be Avoided
Chapter 5: Inspiring Employees to Better Performance
Introducing the Greatest Management Principle in the World
Discovering What Employees Want
Deciding What to Reward
Starting with the Positive
Making a Big Deal about the Little Things
Considering Money and Motivation
Chapter 6: Coaching and Development
Playing a Coach’s Role
Coaching: A Rough Guide
Tapping into the Coach’s Expertise
Developing and Mentoring Employees
Chapter 7: Becoming an Expert at Performance Appraisal and Management
Taking the First Steps
Developing a System for Providing Immediate Performance Feedback
Reducing Shrinkage
Reading the Results
Appraising Performance: Why It Matters
Spelling Out the Performance Appraisal Process
Preparing for the No-Surprises Appraisal
Book 4: Keeping on Top of the Books
Chapter 1: Recording the Financial Facts
Keeping the Books
Maintaining the Right Paperwork
Filing Your Accounts
Managing Your Accountant
Protecting Your Business Against Internal Fraud
Insuring Your Cash through Fidelity Bonds
Chapter 2: Managing Your Tax Position
Tackling Taxes for Different Types of Businesses
Paying Taxes
Handling Employment Taxes
Surviving a Tax Investigation
Chapter 3: How Investors Read a Financial Report
Analysing Financial Reports with Ratios
Finding Financial Facts
Introducing the Audit Report
Perusing the Footnotes
Book 5: Marketing and Advertising Your Wares
Chapter 1: Taking a Closer Look at Customers
Who Are Your Customers?
Discovering Why Your Customers Buy
Finding Out How Your Customers Make Choices
Remembering the Big Picture
Dealing with Business Customers
Chapter 2: Defining Your Business Mission, Vision, Objectives and Values
Developing Your Concept
Composing Your Mission Statement
Seeing the Vision
Setting Objectives and Goals
Establishing High Values
Chapter 3: Marketing and Selling Your Product or Service
Making Up the Marketing Mix
Defining Your Product or Service Parameters
Using Advertising to Tell Your Story
Getting into the News
Selling for Business Success
Settling on a Price
Pondering Place and Distribution
Appreciating People, Physical Evidence and Process
Looking at Legal Issues in Marketing
Chapter 4: Creating and Placing Ads
Deciding on Your Budget
Writing and Designing Your Ads
Placing Newspaper and Magazine Ads
Considering Directories and Their Digital Alternatives
Broadcasting Your Message on Radio, TV and Online
Snail-Mailing and Emailing Your Customers Directly
Using Billboards and Other Outdoor Ads
Chapter 5: Public Relations and Publicity
The Relationship between Public Relations and Publicity
Becoming a News Source
Spreading Your News
Crisis Communications: Dealing with Bad News
Chapter 6: Doing Business Online
Appreciating the Power of the Internet
Reviewing What You Can Do Online
Establishing an Internet Presence with a Website
Selling Goods and Services
Gaining and Monitoring Visibility
Practising Safe Online Business
Chapter 7: Social Media Engagement
Explaining the Why, Who and How of Social Media Engagement
Watching your competitors
Establishing a social media policy
Using Platforms and More
Leveraging Audio and Video for Engagement
Considering Other Social Media Engagement Tools
Making Use of Hashtags
Book 6: Growing and Improving Your Business
Chapter 1: Thinking Strategically
Making Strategy Make a Difference
Applying ‘Off-the-Shelf’ Strategies
Checking Out Strategic Alternatives
Coming Up with Your Own Strategy
Chapter 2: Managing More than One Product
Understanding the Product/Service Life Cycle
Finding Ways to Grow
Managing Your Product Portfolio
Extending Your E-Penetration
Buying Out Competitors
Chapter 3: Improving Your Company’s Performance
Checking Your Internal Systems
Retaining Customers
Improving Productivity
Chapter 4: Franchising for Growth
Defining a Franchise
Considering Your Franchise Options
Weighing the Advantages and Disadvantages
Doing the Pilot
Finding Franchisees
Rolling Out the Franchise
Chapter 5: Funding Expansion
Dealing with Financiers Post-Investment
Investing in Future Rounds
Considering a Public Listing
Finding Alternative Funding and Online Platform Funders
Dealing with Challenger Banks
Chapter 6: Becoming a Great Manager
Building a Team
Coaching and Training
Appraising Performance
Developing a Winning Leadership Style
Measuring Morale
Index
About the Authors
Connect with Dummies
End User License Agreement
List of Tables
Book 1 Chapter 2
TABLE 2-1 Popular Business Structures (%)
TABLE 2-2 Pros and Cons of Various Organisational Structures
Book 1 Chapter 3
TABLE 3-1 Matching a Business Idea to Your Skills
TABLE 3-2 Weighing Up the Factors
TABLE 3-3 Scoring Alternatives
Book 1 Chapter 6
TABLE 6-1 Market Segmentation Analysis Example: Mountain Valley Hotel
TABLE 6-2 Channel Distribution Analysis
TABLE 6-3 Sample Size and Accuracy
Book 2 Chapter 1
TABLE 1-1 Comparing the Benefits of Lenders and Investors
Book 2 Chapter 2
TABLE 2-1 A Selection of UK Accelerators
Book 2 Chapter 4
TABLE 4-1 The Fixed Budget in £’000s
TABLE 4-2 The Flexed Budget in £’000s
Book 3 Chapter 2
TABLE 2-1 The Pros and Cons of Application Forms
TABLE 2-2 The Pros and Cons of CVs
Book 3 Chapter 7
TABLE 7-1 Sample Goals and Measurements
Book 4 Chapter 3
TABLE 3-1 Difficult Comparisons
Book 5 Chapter 1
TABLE 1-1 The Consumer’s Five-Step Adoption Process
TABLE 1-2 How Businesses Behave When They Buy
Book 5 Chapter 3
TABLE 3-1 Listing Features and Benefits
TABLE 3-2 Measuring Advertising Effect
Book 5 Chapter 4
TABLE 4-1 Sending Direct Mail versus Email
Book 5 Chapter 5
TABLE 5-1 Spotting the Good and Bad in News Releases
Book 5 Chapter 7
TABLE 7-1 Basic Engagement on Websites
Book 6 Chapter 1
TABLE 1-1 Product and Service Quality Examples
TABLE 1-2 Pros of Vertical Integration
TABLE 1-3 Cons of Vertical Integration
Book 6 Chapter 2
TABLE 2-1 Major Characteristics of the Introduction Stage
TABLE 2-2 Major Characteristics of the Growth Stage
TABLE 2-3 Major Characteristics of the Maturity Stage
TABLE 2-4 Major Characteristics of the Decline Stage
Book 6 Chapter 5
TABLE 5-1 Europe’s Main Junior Stock Markets: 2021 Capital Raised and Market Sha...
List of Illustrations
Book 1 Chapter 4
FIGURE 4-1: Assessing the content of your business plan.
Book 1 Chapter 5
FIGURE 5-1: Company Strengths and Weaknesses Questionnaire.
FIGURE 5-2: Compare your capabilities and resources with those that are thought...
FIGURE 5-3: The SWOT grid balances your company’s internal strengths and weakne...
Book 2 Chapter 1
FIGURE 1-1: A start-up five-week cash-flow projection.
Book 2 Chapter 3
FIGURE 3-1: A basic profit and loss account.
FIGURE 3-2: An example gross profit calculation.
FIGURE 3-3: A manufacturer’s gross profit.
FIGURE 3-4: Expanded gross profit calculation.
FIGURE 3-5: Business expenses.
FIGURE 3-6: Levels of profit.
FIGURE 3-7: Jane Smith Limited Balance Sheet at 5 April 202X.
FIGURE 3-8: Jane’s reserves.
FIGURE 3-9: Formula for calculating gross profit percentage.
FIGURE 3-10: Calculating operating profit.
FIGURE 3-11: Calculating net profit percentage.
FIGURE 3-12: Calculating return on capital employed.
FIGURE 3-13: Calculating gearing percentage.
FIGURE 3-14: Break-even chart.
Book 2 Chapter 4
FIGURE 4-1: Testing the revenue model.
FIGURE 4-2: Testing the payments model.
FIGURE 4-3: Testing to destruction.
FIGURE 4-4: Calculating payback.
FIGURE 4-5: Comparing investments using payback.
FIGURE 4-6: Comparing cash with the Net Present Value of that cash at a 15 perc...
Book 4 Chapter 1
FIGURE 1-1: An example of an analysed cash book.
Book 4 Chapter 3
FIGURE 3-1: A sample profit and loss account.
FIGURE 3-2: A sample balance sheet.
Book 5 Chapter 1
FIGURE 1-1: A basic overview of people’s needs.
Book 5 Chapter 5
FIGURE 5-1: This sample shows a standard format for printed news releases.
Book 5 Chapter 6
FIGURE 6-1: Richness versus reach in the book business.
Book 5 Chapter 7
FIGURE 7-1: Typical social media icons on a website.
FIGURE 7-2: A sample report from Hootsuite.
FIGURE 7-3: Popular social networks worldwide.
Book 6 Chapter 1
FIGURE 1-1: Generic strategies involve deciding whether to become the low-cost ...
FIGURE 1-2: The experience curve traces the declining unit costs of putting tog...
Book 6 Chapter 2
FIGURE 2-1: The product life cycle represents what’s likely to happen to sales ...
FIGURE 2-2: The Growth Directions Matrix describes different ways in which your...
FIGURE 2-3: The Growth-Share Grid divides your company’s SBUs into four major g...
Book 6 Chapter 6
FIGURE 6-1: Force Field Analysis Template.
Guide
Cover
Table of Contents
Title Page
Copyright
Begin Reading
Index
About the Authors
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Introduction
Welcome to this latest UK edition of Starting & Running a Business All-in-One For Dummies, your launchpad to understanding the fundamentals of setting up, establishing, running and growing a successful small business. In today’s challenging environment, with every sector of the economy scrambling for a foothold after the Covid-19 pandemic and with the Russian/Ukraine war and its consequences dominating every aspect of trade, it has never been more important to be well informed on every aspect of business.
Standing out from the crowd is getting tougher, too. More businesses closed down than started up for all of the six quarters to January 2023, according to data published by the accounting body, Institute of Chartered Accountants in England and Wales (ICAEW). That’s something the UK has not experienced in decades. Fortunately, statistics also indicate that businesses launched during downturns often fare better than those launched in a boom.
This book draws together information on the key areas of successful business – planning, funding (including new areas such as crowdfunding), staying on the right side of the law, employing staff, bookkeeping, accounting and tax, marketing promotion, social media, e-commerce and planning for growth – all in one bumper guide.
With help from this book, you can make even better business decisions and transform a simple idea into your very own business empire.
About This Book
This book is the ultimate business adviser, providing expert guidance for businesses at every stage of the start-up process.
This fourth UK edition of Starting & Running a Business All-in-One For Dummies draws on advice from several other For Dummies books, which you may wish to check out for more in-depth coverage of certain topics (all published by Wiley):
Business Funding For Dummies
(Helene Panzarino)
Business Plans For Dummies,
3rd Edition (Paul Tiffany, Steven D. Peterson and Colin Barrow)
Small Business Employment Law For Dummies
(Liz Barclay)
Small Business Marketing For Dummies
(Paul Lancaster and Barbara Findley Schenck)
Social Media Engagement For Dummies
(Aliza Sherman Rishdahl and Danielle Elliott Smith)
Social Media Marketing For Dummies,
4th Edition (Shiv Singh and Stephanie Diamond)
Starting a Business For Dummies,
5th Edition (Colin Barrow)
Starting & Running an Online Business For Dummies,
2nd Edition (Kim Gilmour, Dan Matthews and Greg Holden)
Understanding Business Accounting For Dummies,
4th Edition (John A. Tracy and Colin Barrow)
This is a reference book, so you don’t have to read it in order (unless you want to!); simply flip through the table of contents and the index to help you find what you’re looking for. You can dip into and out of chapters as you like.
Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the web page.
Foolish Assumptions
This book brings together the elements of knowledge that are essential for understanding the world of small business. As a consequence, to keep the book down to a reasonable number of pages, we’ve made a few assumptions about you:
You’re an entrepreneur looking for a start-up bible.
You’re a small business owner-manager seeking a comprehensive reference guide.
You’re a business owner with aspirations to grow your company.
Whatever description fits you, you’ll find valuable help in this book.
Icons Used in This Book
When you flick through this book, you’ll notice some snazzy little icons in the margin. These pick out key aspects of starting and running a business, and present you with important nuggets of information. Feel free to read these if you want to dig a little deeper, or skip them if you want just the basics for now:
Want to get ahead in business? Check out the text highlighted by this icon to pick up some sage advice.
They say elephants never forget – and nor should good business owners. This icon focuses on key information you should never be without.
Running a business isn’t without its dangers – be they financial or legal – and the text beside this icon points out common pitfalls to avoid.
Sometimes you’ll be presented with information that’s interesting but not absolutely essential to starting or growing your own business. If you see this icon next to a paragraph, you’re welcome to skip by if it’s not of immediate interest to you – doing so won’t harm your chances in business.
Beyond the Book
In addition to what you’re reading right now, this product comes with a free access-anywhere Cheat Sheet that provides key considerations for starting a business, factors for business success and more. To get this Cheat Sheet, simply go to www.dummies.com and search for ‘Starting & Running a Business All-in-One For Dummies Cheat Sheet’ in the Search box.
Where to Go from Here
Starting & Running a Business All-in-One For Dummies (4th UK Edition) can help you succeed no matter what kind of business expertise you have or are looking for. This book is set up so that you can dip in and out of it in a number of ways, depending on your situation:
Maybe you’re just starting out and want to get a good handle on the basics (start with
Book 1
).
If you have a great and proven business idea, you may want to plug straight into finding out how to raise finance (head over to
Book 2
).
If you need more than just yourself to get your great business idea off the ground, you may want to know how to find great employees (check out
Book 3
).
If you’re planning to take care of your own bookkeeping and finances, you may want to find out how to successfully balance the books and take care of tax issues (flick through to
Book 4
).
Maybe you want to learn more about marketing and advertising your product or service (check out
Book 5
).
Perhaps you’ve already started out and you’re looking for advice on how to take your business to the next level (
Book 6
gives some great advice).
Book 1
Laying the Groundwork
Contents at a Glance
Chapter 1: Preparing for Business
Getting in Shape to Start Up
Confirming Viability
Getting Help
Entering an Incubator
Assisting Inventors
Chapter 2: Arranging the Foundations
Structuring Your Business
Safeguarding Your Business Assets
Working from Home
Chapter 3: Can You Do the Business?
Deciding What You Want from a Business
Exploring Different Types of Business
Assessing Yourself
Taking the Make-or-Buy Decision
Chapter 4: Preparing the Business Plan
Finding a Reason to Write a Business Plan
Writing Up Your Business Plan
Using Business Planning Software
Presenting Your Plan
Chapter 5: Establishing Your Starting Position
Introducing SWOT Analysis
Identifying Strengths and Weaknesses
Analysing Your Situation in 3-D
Chapter 6: Researching Your Customers and Competitors
Anatomy of a Customer
Determining Which Customers Buy What
Seeing Your Product through Your Customers’ Eyes
Sizing Up Competitors
Calculating Your Market Share
Introducing Market Research
Chapter 1
Preparing for Business
IN THIS CHAPTER
Working up to opening up
Measuring your business’s viability
Exploring options for help (and there are plenty of them)
Considering an incubator
Finding organisations that can assist inventors
When you’re starting a business, particularly your first business, you need to carry out the same level of preparation as you would for crossing the Gobi Desert or exploring the jungles of South America. You’re entering hostile territory.
Since the last edition of this book, just shy of two million UK businesses have closed down. Many were in their first year or two of trading, always the most dangerous period. And when the going gets tough, as it surely did during the Covid-19 pandemic, even well-established businesses including Joules, Paperchase, Jaeger, Oddbins and Debenhams, can stumble. Even deep wallets may not save you. Bulb, the Green Energy supplier, gave up the ghost in September 2021, despite having taken in £65.3m from investors over its seven-year life.
Your business idea may be good, it may even be great, but ideas are two a penny. The patent office is stuffed full of great inventions that have never returned tuppence to the inventors. It’s how you plan, how you prepare and how you implement your plan that makes the difference between success and failure. (For more on start-up and failure, visit https://www.ons.gov.uk/businessindustryandtrade/changestobusiness/businessbirthsdeathsandsurvivalrates.)
This chapter sets the scene to make sure that you’re well prepared for the journey ahead.
Getting in Shape to Start Up
You need to be in great shape to start a business. You don’t have to diet or exercise, at least not in the conventional sense of those words, but you do have to be sure that you have the skills and knowledge you need for the business you have in mind, or know how to tap into sources of such expertise.
The following sections help you through a pre-opening check-up so that you can be absolutely certain that your abilities and interests are closely aligned to those that the business you have in mind requires. The sections also help you to check that a profitable market exists for your products or services. You can use these sections as a vehicle for sifting through your business ideas to see whether they’re worth the devotion of time and energy that you need to start up a business.
You may well not have all the expertise you need to do everything yourself. In this book you can find information on some of the many agencies and advisers who can fill in the gaps in your expertise.
Assessing your abilities
Business lore claims that for every ten people who want to start their own business, only one finally does. It follows that an awful lot of dreamers exist who, while liking the idea of starting their own business, never get around to taking action. Chapter 3 of this minibook looks in detail at how you can assess whether you’re a dreamer or a doer when it comes to entrepreneurship. For now, see whether you fit into one of the following entrepreneurial categories:
Nature:
If one of your parents or siblings runs their own business, successfully or otherwise, you’re highly likely to start up your own business. No big surprise here, as the rules and experiences of business are being discussed every day and some of it’s bound to rub off. It also helps if you’re a risk-taker who’s comfortable with uncertainty.
Nurture:
For every entrepreneur whose parents or siblings have a business, there are two who don’t. If you can find a business idea that excites you and has the prospect of providing personal satisfaction and wealth, you can assemble all the skills and resources needed to succeed in your own business. You need to acquire good planning and organisational skills (
Chapter 4
of this minibook covers all aspects of writing a business plan) and either develop a well-rounded knowledge of basic finance, people management, operational systems, business law, marketing and selling, or get help and advice from people who have that knowledge.
Risk-taker:
If you crave certainty in everything you do, running your own business may be something of a culture shock. By the time the demand for a product or service is an absolutely surefire thing, there may already be too many other businesses in the market to leave much room for you. Don’t confuse risk taking with a pure gamble. You need to be able to weigh matters and make your risk a calculated one.
Jack-of-all-trades:
You need to be prepared to do any business task at any time. The buck definitely stops with you when you run your own business. You can’t tell a customer that their delivery is late just because a driver fails to show up. You just have to put in a few more hours and do the job yourself.
Discovering a real need
You may be a great potential entrepreneur, but you still need to spell out exactly what it is you plan to do, who needs it and how it can make money. A good starting point is to look around and see whether anyone is dissatisfied with their present suppliers. Unhappy customers are fertile ground for new businesses to work in.
One dissatisfied customer isn’t enough to start a business for. Find out if unhappiness is reasonably widespread, because that gives you a feel for how many customers may be prepared to defect. After you have an idea of the size of the potential market, you can quickly see whether your business idea is a money-making proposition.
Aside from asking around, one way to get a handle on dissatisfaction levels is to check out websites that allow consumers to register their feelings, such as www.reevoo.com and www.resolver.co.uk. It would also make sense to see which companies are doing particularly well in their customers’ eyes. That might help you get off to a flying start. Complaints Awards, the first of its kind in the UK, are ‘Celebrating Heroes Who Make Things Right’ (https://complaintsawards.co.uk).
The easiest way to fill a need that people are going to pay to have satisfied is to tap into one or more of these triggers:
Cost reduction and economy:
Anything that saves customers money is always an attractive proposition. MoneySavingExpert (
https://www.moneysavingexpert.com
), with their maxim ‘Cutting your costs, fighting your corner’, provides a reliable window into people’s current concerns.
Fear and security:
Products that protect customers from any danger, however obscure, are enduringly appealing. When Long-Term Capital Management (LTCM), one of America’s largest hedge funds, collapsed and had to be rescued by the Federal Reserve at a cost of $2 billion, it nearly brought down the American financial system single-handedly. Two months later Ian and Susan Jenkins launched the first issue of their magazine,
EuroHedge
. At the time 35 hedge funds existed in Europe, but investors knew little about them and were rightly fearful for their investments.
EuroHedge
provided information and protection to a nervous market, and five years after its launch the Jenkinses sold the magazine for £16.5 million.
Greed:
Anything that offers the prospect of making exceptional returns is always a winner.
Competitors Companion
(
www.competitorscompanion.com
), a magazine aimed at helping anyone become a regular competition winner, was an immediate success. The proposition was simple: Subscribe and you get your money back if you don’t win a competition prize worth at least your subscription. The magazine provided details of every competition being run that week, details of how to enter, the factual answers to all the questions and pointers on how to answer any tie-breakers. It also provided the inspiration to ensure success with this sentence: ‘You have to enter competitions in order to have a chance of winning them’.
Niche markets:
Big markets are usually the habitat of big business – encroach on their territory at your peril. New businesses thrive in markets that are too small even to be an appetite-whetter to established firms. These market niches are often easy prey to new entrants because businesses have usually neglected, ignored or served them badly in the past.
Checking the fit of the business
Having a great business idea and possessing the attributes and skills you require to start your own business successfully are two vital elements to get right before you launch. The final ingredient is to be sure that the business you plan to start is right for you.
Before you go too far, make an inventory of the key things that you’re looking for in a business. These may include working hours that suit your lifestyle, the opportunity to meet new people, minimal paperwork and a chance to travel. Then match those up with the proposition you’re considering. (Chapter 3 of this minibook talks more about finding a good business fit.)
Confirming Viability
An idea, however exciting, unique, revolutionary and necessary, isn’t a business. It’s a great starting point, and an essential one, but you have to do a good deal more work before you can sidle up to your boss and tell them exactly what you think of them.
The following sections explore the steps you need to take so that you don’t have to go back to your boss in six months and plead for your old job back (and possibly eat a large piece of humble pie at the same time).
Researching the market
However passionate you are about your business idea, you’re unlikely to already have the answers to all the important questions concerning your marketplace. Before you can develop a successful business strategy, you have to understand as much as possible about your market and the competitors you’re likely to face.
The main way to get to understand new business areas, or areas that are new to you at any rate, is to conduct market research. The purpose of that research is to ensure that you have sufficient information on customers, competitors and markets so that your market entry strategy or expansion plan is at least on target, if not on the bull’s-eye itself. In other words, you need to explore whether enough people are attracted to buy what you want to sell at a price that gives you a viable business. If you miss the target altogether, which you may well do without research, you may not have the necessary resources for a second shot.
The areas to research include:
Your customers:
Who may buy more of your existing goods and services and who may buy your new goods and services? How many such customers exist? What particular customer needs do you meet?
Your competitors:
Who are you competing with in your product/market areas? What are those firms’ strengths and weaknesses?
Your product or service:
How can you tailor your product or service to meet customer needs and give you an edge in the market?
The price: What do customers see as giving value for money, thereby encouraging both loyalty and referral?
Make sure you don’t set your price too low. Undercharging is one of the main reasons for early failure. Raising your price is always harder than lowering it.
The advertising and promotional material:
What blogs, newspapers, journals and so forth, do your potential customers read, and what websites do they visit? Unglamorous as it is, analysing data on what messages actually influence people to buy, rather than just to click on a link, holds the key to identifying where and how to promote your products and services.
Channels of distribution:
How can you get to your customers and who do you need to distribute your products or services? You may need to use retailers, wholesalers, mail order or the Internet. All have different costs, and if you use one or more, each wants a slice of your margin.
Your location:
Where do you need to be to reach your customers most easily at minimum cost? Sometimes you don’t actually need to be anywhere near your market, particularly if you anticipate most of your sales coming from the Internet. If this is the case, you need to have a strategy to make sure that potential customers can find your website.
Try to spend your advertising money wisely. Nationwide advertisements or blanketing the market with free offers may create huge short-term growth, but little evidence exists that indiscriminate blunderbuss advertising works well in retaining customers. Certainly, few people using such techniques make any money. Bulb, the failed energy firm, is a case in point. They spent so much on advertising that they had captured 6 percent of the market in just seven years. Scottish Power, in business for over 30 years, had barely 9 percent of the market in 2023. They, however, were extremely profitable, reporting earnings of £1.25 billion that year.
Doing the numbers
Your big idea looks as though it has a market. You’ve evaluated your skills and inclinations and you believe that you can run this business. The next crucial question is: Can it make you money?
You absolutely must establish the financial viability of your idea before you invest money in it or approach outsiders for backing. You need to carry out a thorough appraisal of the business’s financial requirements. If the numbers come out as unworkable, you can then rethink your business proposition without losing anything. If the figures look good, you can go ahead and prepare cash-flow projections, a profit and loss account and a balance sheet, and put together the all-important business plan. (Chapters 1, 3 and 4 in Book 2 cover these procedures.)
You need to establish the following for your business:
Day-to-day operating costs
How long it will take to reach break-even
How much start-up capital you need
The likely sales volume
The profit level you require for the business not just to survive, but also to thrive
The selling price of your product or service
Many businesses have difficulty raising start-up capital. To compound this, one of the main reasons small businesses fail in the early stages is that they use too much start-up capital to buy fixed assets. Although some equipment is clearly essential at the start, you can postpone other purchases. You may be better off borrowing or hiring ‘desirable’ and labour-saving devices for a specific period. This obviously isn’t as nice as having them to hand all the time, but remember that you have to maintain and perhaps update every photocopier, printer, computer and delivery van you buy, and they become part of your fixed costs. The higher your fixed costs, the longer it usually takes to reach break-even point and profitability. And time isn’t usually on the side of the small, new business; it has to become profitable relatively quickly or it simply runs out of money and dies.
Raising the money
Two fundamentally different types of money that a business can tap into are debt and equity:
Debt
is money borrowed, often from a bank, that you have to repay. While you’re making use of borrowed money, you also have to pay interest on the loan.
Equity is the money that shareholders, including the proprietor, put in and money left in the business by way of retained profit. You don’t have to give the shareholders their money back, but shareholders do expect the directors to increase the value of their shares, and if you go public they’ll probably expect a stream of dividends, too.
If you don’t meet the shareholders’ expectations, they won’t be there when you need more money – or, if they’re powerful enough, they’ll take steps to change the membership of the board.
Alternative financing methods include raising money from family and friends, applying for grants and awards, crowdfunding and entering business competitions. Check out Chapters 1 and 2 in Book 2 for a review of all these sources of financing.
The Financial Conduct Authority, a City watchdog, ordered all banks to publish statistics on complaints on their website from 31 August 2010. Throughout 2015, Lloyds received 85,505 complaints, Santander received 80,566, Barclays received 140,584 and HSBC received just 72,356. If your bank is high on this name-and-shame list (visit www.the-fca.org.uk/firms/complaints-data/firm-level and click the link ‘Downloadable table: Firm level complaints data’), get straight on to Chapters 1 and 2 in Book 2, where all aspects of raising money are covered.
Writing up the business plan
A business plan is a selling document that conveys the excitement and promise of your business to potential backers and stakeholders. These potential backers can include bankers, venture capital firms, family, friends and others who may help you launch your business if they only know what you want to do. (Chapters 1 and 2 in Book 2 consider how to find and approach sources of finance.)
Getting money is expensive, time-consuming and hard work, but sometimes you can get a quick decision. One recent start-up succeeded in raising £3 million in eight days, after the founder turned down an earlier offer of £1 million made just 40 minutes after they presented their business plan. Your business plan needs to cover what you expect to achieve over the next three years. (Chapter 4 in this minibook gives full details on how to write a winning business plan.)
Most business plans are dull, badly written and frequently read only by the most junior of people in the financing organisations they’re presented to. One venture capital firm in the United States went on record to say that in one year it received 25,000 business plans asking for finance and invested in only 40. Follow these tips to make your business plan stand out from the crowd:
Hit them with the benefits.
You need to spell out exactly what you do, for whom and why that matters. One such statement that has the ring of practical authority is: ‘Our website makes ordering gardening products simple. It saves the average customer two hours a week browsing catalogues and £250 a year through discounts not otherwise available from garden centres. We have surveyed 200 home gardeners, who rate efficient purchasing as a key priority’.
Make your projections believable.
Sales projections always look like a hockey stick – a straight line curving rapidly upwards towards the end. You have to explain what drives growth, how you capture sales and what the link between activity and results is. The profit margins are key numbers in your projections, alongside sales forecasts. Financiers tend to probe these figures in depth, so show the build-up in detail.
Say how big the market is.
Financiers feel safer backing people in big markets. Capturing a fraction of a percentage of a massive market may be hard to achieve – but if you get it, at least the effort is worth it. Going for 10 percent of a market measured in millions rather than billions may come to the same number, but the result isn’t as interesting.
Introduce yourself and your team.
You need to sound like winners with a track record of great accomplishments.
Include nonexecutive directors.
Sometimes a heavyweight outsider can lend extra credibility to a business proposition. If you know or have access to someone with a successful track record in your area of business who has time on their hands, you can invite that person to help. If you plan to trade as a limited company (
Chapter 2
in this minibook has details on legal structures) you can ask them to be a director, without specific executive responsibilities beyond being on hand to offer advice. But nonexecutive directors do need to have relevant experience or be able to open doors and do deals. Check out organisations such as The Non-Executive Directors’ Association (
https://www.nedaglobal.com
) and NEDonBoard (
https://www.nedonboard.com
) for information on tracking down the right nonexecutive director for your business.
Provide financial forecasts.
You need projected cash flows, profit and loss accounts, and balance sheets for at least three years ahead. No one believes them after Year 1, but the thinking behind them is important.
Demonstrate the product or service.
Financiers need to see what the customer is going to get. A mock-up is okay or, failing that, a picture or diagram. For a service, show how customers can gain from using it – that it can help with improved production scheduling and so reduce stock holding, for example.
Spell out the benefits to your potential investors.
Tell them that you can repay their money within
x
years, even on your most cautious projections. Or, if you’re speaking to an equity investor, tell them what return they may get on their investment when you sell the business in three or five years’ time.
Getting Help
The fact that you’ve decided to start up your own business doesn’t mean you have to do everything yourself. Even if you’ve rejected the idea of taking on a partner or going into a franchise chain, you can still get expert help and advice with nearly every aspect of your business before you start up, while you’re starting up and even long after you’ve established your enterprise. For the most part, these services are provided free or at a low cost, at least at the outset.
Although lots of people and organisations can help you get started in business, in the end you’re the one who has to make the decisions. That’s not knocking the great advice and wisdom that many in help agencies such as the Local Enterprise Partnership (LEP) or Business Support Helpline have to offer. However, no one can step into your shoes and see the world through your eyes. By the same token, the final responsibility for choice of action rests with you. Listen to advice but make your own decisions.
The following sections introduce some of the organisations to talk to if you want to get an expert outsider’s view on the problems you’re tussling with and so get off to the best possible start.
Connecting with government services
Getting help for your business from the government can be worthwhile. You pay for that help in your taxes, so if you want value for money these schemes are certainly worth exploring. Some of this help is available throughout the country and some is tailored to the needs of a particular region.
Accessing national government support
That the UK government is keen to help small business should come as no big surprise. New small businesses are a key source of new jobs and, eventually, of tax payments. However, just because the government’s aims are selfish doesn’t mean you shouldn’t tap into any help you can get. Exactly what that help is varies, both in terms of the type of help and its amount and form.
You can expect government help, advice and support in some or all these areas:
Grants and incentives
Online information on all aspects of business
Regulations that apply when starting a business
Sources of finance, both debt and equity (see
Chapter 5
, Book 6 for more on these types of funds)
The attributes and skills needed to launch and run a business, and how you measure up
The range of issues you need to consider in developing your business proposition
The right sort of finance to start and grow your business
The steps required for informing public authorities that you’re launching your business
Training schemes
What type of business needs the help
The contact point for access to all government help is www.gov.uk/moving-from-benefits-to-work/starting-your-own-business. From this link, you can access information on the full range of help, advice, funding initiatives and other support services provided by or through central government.
Relating to a region
Some support for new and growing businesses is available at a national level, but increasingly the governing bodies of the individual countries that make up the UK provide a range of initiatives.
ENGLAND
Business Support Helpline (England)
Telephone: 0800 998 1098
Monday to Friday, 9:00 a.m. to 6:00 p.m.
Website:
www.gov.uk/business-support-helpline
You can also speak to an adviser on a webchat link about support for your business.
NORTHERN IRELAND
Invest Northern Ireland
Telephone: 0800 181 4422
Monday to Friday, 8:30 a.m. to 5:00 p.m.
Website:
www.nibusinessinfo.co.uk/content/starting-business
SCOTLAND
Find Business Support Scotland
Telephone: 0300 303 0660
Monday to Friday, 8:30 a.m. to 5:30 p.m.
Website:
https://findbusinesssupport.gov.scot
WALES
Business Wales Start Up and Business Planning
Telephone: 0300 060 3000
Monday to Friday, 8:30 a.m. to 5:30 p.m.
Website:
https://businesswales.gov.wales/starting-up/
A total of 38 Local Enterprise Partnership (LEP) Growth Hubs cover the whole of England from the North East down to Cornwall and the Isles of Scilly. These Growth Hubs provide start-up advice to get your business idea off the drawing board and flourishing. Each Hub can help connect you with specialist business coaching advisers and get you help with market research. They know all about the grants, loans and vouchers you may be eligible for. Best of all, their services are free at the point of delivery. You can find your nearest Growth Hub at www.lepnetwork.net/local-growth-hub-contacts.
Choosing small business associations
The services of government-supported help agencies are often free, but a growing army of commercial or semicommercial self-help organisations is present in the field. Their basic premise is that if small firms can band together to buy goods, services or advice, or to influence government policy, they’re more likely to be effective than on their own. The following sections cover the more established of these organisations.
Federation of Small Businesses
The Federation of Small Businesses (www.fsb.org.uk; tel: 0808 20 20 888) is a national organisation with offices in Scotland, Wales and Northern Ireland as well as London that protects small firms’ interests and fights for their rights. The FSB has the resources to take major test cases of importance to small business through the expensive legal process leading to the House of Lords and the European Courts if necessary. The FSB has been particularly effective when dealing with taxation and employment matters.
The FSB has over 200,000 members and runs a range of business support services, including guidance on business and marketing planning, cyber security and social media marketing. Thirty-three regional committees and over 194 branch committees, run by people who themselves operate small businesses and who donate their time to the FSB, complement the professional staffs.
For people thinking of starting their own business, the FSB offers legal, environmental, fire and premises tips, as well as advice on many other issues that small business owners may have to address as the business grows. The FSB also provides information on other agencies that may be of use or assistance when starting up.
Membership costs range from £147 per annum, plus a one-off registration fee of £30 for someone working on their own, up to £900 for a firm employing more than 101 people. Prices exclude VAT (value-added tax).
Among the valuable services on offer from the FSB is a legal benefits package, providing access to legal advice from qualified lawyers 24 hours a day, 365 days a year; tax advice from Revenue-trained specialists; information and documentation on employment, tax and commercial law; and insurance cover for legal and tax professional fees and statutory awards in the event of an employment dispute or full tax enquiry.
Running your own business means you have to be an expert not only in your own field, but also in marketing, social media, accounting, human resources – the list goes on. The Federation of Small Businesses has created the FSB Skills Hub (www.fsb.org.uk/skills-hub) to support you with the resources you need.
Forum of Private Business
The mission of the Forum of Private Business (www.fpb.org; tel: 01565 626 001) is to influence laws and policies that affect private businesses and support members to grow profitably. Through its 25,000 members, the FPB researches and distributes a referendum several times each year and keeps both members and government aware of how small firms feel about key topical issues.
Annual membership for a sole trader is £144, including VAT. Benefits of membership include the following:
A direct influence on laws and policies affecting your business – for example, employment law, uniform business rates, taxation, red tape, bank services and late payment
Information on tap when you need it, with unlimited free access to the Member Information Service, on any issue affecting your business
User-friendly management tools to help your business stay within the law – for example, the FPB Employment Guide, the FPB Health & Safety Guide and the FPB Bank Finance Review, which looks at areas such as bank performance, bank switching, tracking transactions and transmission charges
The FPB also has a number of useful tools and calculators to help you with areas such as break-even, VAT, loan repayments and late-payment interest charges.
British Chambers of Commerce
Though not aimed exclusively at small businesses, the British Chambers of Commerce (www.britishchambers.org.uk; tel: 020 7654 580) offer an extensive range of services for business starters. Their national network of accredited chambers is managed and developed by their business membership and monitored at the national level to ensure that they deliver appropriate products and services to prescribed standards. They’re funded by membership subscriptions.
Currently, over 135,000 businesses belong to a chamber in the accredited network, from growth-oriented start-ups to local and regional subsidiaries of multinational companies, in all commercial and industrial sectors, and from all over the UK.
The British Chambers of Commerce have access to a range of benefits geared to help businesses big or small succeed and grow. With over 2,500 staff operating from 53 accredited chambers, their network provides a ready-made management support team for any business anywhere in Britain.
Business training, information resources, networking and savings on essential overheads, all of which are tailored to individual business needs, are on offer from local chambers. Increasingly, many of their services are also available online.
The British Chambers of Commerce are also part of the global network of chambers of commerce, and for existing or potential exporters no better route exists to the global marketplace.
Their regular surveys, consultations and reports provide grass-roots business opinion and have strong influence on government ministers and officials, members of Parliament, and other decision makers and opinion formers.
Chambers of commerce have a long history of providing global business connections. Members can benefit from international B2B connections, support services and solutions, practical advice about the local business environment and potential market opportunities in many countries and regions in the world. Visit www.britishchambers.org.uk/page/global-business-network to find out more.
