What You Need to Know about Starting a Business E-Book

Kevin Duncan

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2011

Seitenzahl: 211

Beschreibung

Ever wanted to be an entrepreneur? Ever wanted to control what you do, when you do it and stop just making money for someone else? Now is your chance. Starting up a business has never been more exciting. This book explains what you really need to know to make your business a success: * How you'll know if you've got a good idea * The practicalities of setting up a company * How to manage the money * How to sell what you do * How to make sure you stay soon through it all. This is the book you need to swagger into the Dragon's Den full of confidence.

Leseprobe

Table of Contents

Cover

Series page

Title page

Copyright page

Dedication

INTRODUCTION

CHAPTER 1 THE IDEA

IGNORE EVERYONE ELSE, WHAT DO YOU WANT TO DO?

WHAT PRECISELY IS THE IDEA?

WHAT EXACTLY WILL YOUR BUSINESS BE?

RESEARCH YOUR MARKET THOROUGHLY

DO CUSTOMERS REALLY NEED YOU?

WILL YOUR BUSINESS MAKE MONEY?

GREAT PLANS ARE NOTHING WITH POOR EXECUTION

THE BEGINNINGS OF SELF-BELIEF

TEST-DRIVING YOUR IDEA

CHAPTER 2 THE BUSINESS PLAN

WHAT’S THE PROPOSITION?

THE ONE-PAGE BUSINESS PLAN

HOW MUCH MONEY DO YOU NEED?

GET YOUR WORKING ENVIRONMENT RIGHT

PROGRESS NOT PERFECTION

INVEST IN A DISTINCTIVE NAME AND IDENTITY

GET THE HELP YOU NEED

CHAPTER 3 LAWS AND SYSTEMS

LEGAL REQUIREMENTS

GETTING THE ACCOUNTS RIGHT

SETTING UP SYSTEMS AND TECHNOLOGY

INSURANCE

CHAPTER 4 THE MONEY BIT

CONCENTRATE ON THE MONEY

DEALING WITH YOUR BANK

SECURING FINANCE

TAX AND PAY

HOW TO HAVE A DECENT MARGIN

COPING IN A DOWNTURN

LOOKING AHEAD TO AVOID A CRISIS

CHAPTER 5 SALES AND MARKETING

MARKETING MATTERS

CRUCIAL SALES AND MARKETING INSIGHTS

THE VALUE OF PRE-MARKETING

DESIGNING A CONTACT STRATEGY

REVIEWING YOUR MARKETING

DESCRIBING WHAT YOU DO

SUCCESSFUL ONLINE MARKETING

EFFECTIVE SALES MEETINGS AND NETWORKING

CHAPTER 6 PEOPLE

CREATING A TEAM SHAPE

RECRUITING THE RIGHT PEOPLE AND KEEPING THEM MOTIVATED

HOW TO DEAL WITH PROBLEMS

SUSTAINING RELATIONSHIPS

STAYING IN TOUCH

CHAPTER 7 GROWTH AND DURABILITY

THE PROS AND CONS OF GROWTH

ANALYZE YOUR PRODUCTS AND SERVICES

KEEPING THINGS VARIED

DEALING WITH SETBACKS

CHAPTER 8 LIFESTYLE MATTERS

YOU ARE THE COMPANY CULTURE

GETTING YOUR ATTITUDE RIGHT

REWARDING YOURSELF

LIFESTYLE AND BUILD-TO-SELL QUESTIONS

WHY PLAN B IS OFTEN BETTER THAN PLAN A

TAKE THE ISSUES SERIOUSLY, BUT NOT YOURSELF

Index

This is the stuff you’ve always been embarrassed to ask about the world of modern business.

The What You Need to Know … books can get you up to speed on a core business subject fast. Whether it’s for a new job, a new responsibility, or a meeting with someone you need to impress, these books will give you what you need to get by as someone who knows what they’re talking about.

Each book contains:

What It’s all About – a summary of key pointsWho You Need to Know – the basics about the key playersWho Said It – quotes from key figuresHow You Need to Do It – key steps to put your new-found knowledge into practiceWhat You Need to Read – books and online resources for if you want to deepen your knowledgeIf You Only Remember One Thing – a one-liner of the most important information

You might also want to know:

What You Need to Know about BusinessWhat You Need to Know about EconomicsWhat You Need to Know about Project ManagementWhat You Need to Know about LeadershipWhat You Need to Know about StrategyWhat You Need to Know about Marketing

This edition first published 2011

© 2011 Kevin Duncan

Registered office

Capstone Publishing Ltd. (A Wiley Company), The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom

For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com.

The right of the author to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.

Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

Library of Congress Cataloguing-in-Publication Data

9780857082046(paperback), 9780857082053(epub), 9780857082060(emobi), ISBN 9781119979197 (ebk)

A catalogue record for this book is available from the British Library.

For Sarah, Rosanna and Shaunagh.

INTRODUCTION

Starting a business can be a daunting prospect, but it doesn’t have to be as bad as some people make out. In fact, it’s a hugely exciting time. Big plans can be inspiring, but doing the simple stuff well makes a huge difference. Some people try to overcomplicate matters, and this often leads to unnecessary delay, and can reduce confidence in the early days. This book takes a positive approach. Practical matters are kept straightforward, and there is plenty of advice on keeping in the right frame of mind. There is inspiration from people who have been there before, and plenty of back-up ideas for when things don’t go quite as planned.

Millions of small businesses launch every year so you are not alone when it comes to thinking of starting one. Picking up this book is the first step on an adventurous and challenging road. From the beginning, the knack is to investigate the possible approaches for your business calmly and simply. Too many people flap around with hundreds of spreadsheets and lose their bearings in the process. So we’ll take it gently so as to keep you saner in the crucial start-up phase.

In the early days, it is crucial to scrutinize the original idea very carefully. Of course, some are dead on arrival, and others need crafting before they make sense and can prove their value. Few are brilliant immediately, so you need patience and an open mind. Ideas are nothing if they cannot be enacted effectively, so we will be as clear as possible about this from the very beginning.

We will of course be examining the dreaded business plan. There is a skill to good business planning and anyone can learn it. Doing something is the first step. Too many businesses fail to get under way because they are still in the planning phase and never come out of it. It’s a great feeling to discover that in fact you may be able to complete this in a matter of days.

Not surprisingly, there is always some boring stuff to cover, but when it’s your own business somehow the motivation is that bit easier because you are the one to benefit. Knowing what you need to run an effective business is vital, and that means having a good working knowledge of the law, and appropriate systems to enable you to report business performance accurately.

The money bit may sound nasty but you can’t run a business without it – it’s actually what business is all about. So good budding entrepreneurs need to learn how to confront pricing, cash flow, supplier payment, and many other financial matters in a cheerful and pragmatic manner.

Nor can you run a business without some form of sales and marketing, so you need to let people know who you are, where you are, and what you do. You need to know where to find your customers, and how to communicate with them in a charming and positive way. People who start businesses often have a gift for this, but if it doesn’t come naturally, don’t worry, because there are simple things that anyone can do to promote their business.

You will soon discover that starting a business is a highly personal matter, and as such it is quite hard to take the emotion out of it. So in fact a lot of what at first appears to be factual ends up being emotional. The main reasons for this are that the original idea will be yours, pretty much all the decisions are yours, and the success of the venture is yours. So it is almost impossible to divorce the fortunes of the business from those of the owner, and that’s you.

So it’s all about you, which may seem rather scary at this stage, but in fact it turns out to be brilliant, because the rewards are all yours, and it’s great to see a direct link between the effort you put in and the satisfaction you get back.

Each chapter has a number of common elements:

What It’s All About – A quick summary at the start listing the important points that will be covered.

Who You Need to Know – Influential figures you need to know about.

Who Said It – Quotes from famous figures to remind, inspire and amuse you.

What You Need to Read – Suggestions of good sources for further reading at the end of each chapter.

If You Only Remember One Thing – A short line or two summing up the contents of each chapter.

Starting a business is all about taking action. Careful thought and planning is vital of course, but there’s no substitute for getting on and doing something. That is very much a theme of the book, and it is intentionally organized in such a way as to encourage you to get out there and do it.

CHAPTER 1

THE IDEA

WHAT IT’S ALL ABOUT

What you want to doResearching your market thoroughlyPotential customersWhether it will make moneyPlans and execution

Starting a business is a matter of choice – no one can be forced into it. That’s a very interesting thought, because so many people working in corporations don’t have a great deal of choice. Suddenly then, you do. What would you like to do? It’s a simple enough question, and yet can be extraordinarily hard to answer. It is a truly unique moment when you can decide something entirely by yourself. So it is worth taking proper care to get it right.

Copying something else is unlikely to be very fulfilling, unless of course that is a deliberate business strategy. More likely, you will have a view on how a product or service can be made or delivered in a better way, or in a manner that is specific to you. This needs to be looked at carefully before diving in. Clear the decks, create some proper thinking time, take a deep breath, and begin.

IGNORE EVERYONE ELSE, WHAT DO YOU WANT TO DO?

People start businesses for hundreds of reasons. In the UK at any given time, about 4.5 million people are at it, out of a total labour market of about 30 million, so over one in six people don’t need a corporation to earn a living.

The range of reasons for starting a business is vast and includes:

I hated my bossCouldn’t stand the politicsFrustration with current jobGot fired or made redundantI am, or I became, unemployableConvinced there must be a better wayWanted to be my own boss/have more controlThe chance to use my brain for my own benefitRun my life as I wantLife changes everythingWanted to take a riskAlways wanted toWanted the challengeWanted to create my own dream jobSpotted an opportunityHad a safety netWanted to make a lot of moneyA combination of fear and ambition

Work can be a frustrating business, as this list shows, and self-employment represents an alternative to enduring someone else’s way of doing things. The original motivation doesn’t matter that much. What matters very much is the manner in which you set about designing and enacting the business you wish to start.

The starting point is what you want to do. As far possible, this should be a pure thought, unencumbered by too many outside influences. So, your business is less likely to be a success if you start it for overly negative reasons that don’t truly reflect your character. Bad ways to start a business include:

Petulantly trying to prove a pointRevenge against a former employee or rivalJust in it for the moneyWanting a short-term fixDeciding on a whimDiving into an idea you have not considered until very recently

In other words, knee-jerk reactions to your current circumstances don’t work very well. It’s okay to be spurred on by events, but it’s not okay to jump into something without proper thought. So that means you need to ignore everyone else and work out what you want to do. The old advice from a mother to her daughter was to identify what you enjoy doing and then find someone to pay you to do it. This should be the basis on which you decide what type of business you wish to start. Once you have the essence of this, of course you will solicit opinion from others to sense check your thinking. But start on your own, and ask yourself what you really enjoy doing, and how you can make a living from that.

If this doesn’t come naturally, try looking to your hobbies and passions, considering how they can be turned into a viable business idea, and defining who would pay for your knowledge or skill in that area. If you can generate an idea from this simple central thought, it will stand you in great stead later on. There are many reasons for this, but the most important are that it is easier to be a success when you enjoy what you do and it is less arduous working through tricky times when you instinctively like the subject matter that earns you a living.

WHAT PRECISELY IS THE IDEA?

The original idea needs very careful scrutiny. Few are brilliant immediately. Ideas are nothing if they cannot be enacted effectively, so clarity of thought at the outset is absolutely vital. As Einstein once said, if you can’t explain something to your grandmother, then you probably don’t understand it properly yourself.

Something may be clear in your head, but what happens thereafter? Like Chinese whispers, everything can become distorted. The journey from your head to the wider world is a strange one. You need to have a vision of what your business could be, work out what you want to do, and find a way of explaining it clearly. Imagine you are going public and consider how you intend to let everyone else know. Your idea needs to follow this sequence:

In your headRough draft on paperRefined computer copyExplanation to someone who knows nothing about itExplanation to someone who knows something about itRefinement of the ideaAcceptance or rejection of the idea

Pitching on a postcard is a good idea. If you can’t explain in one sentence what the business will do (the ‘elevator pitch’), then it’s probably too complicated. Keep it simple. Don’t let business speak affect your clear statement of the proposition. Some businesses are easy to describe, others not. If it’s a well-known concept, then you may simply be saying ‘It’s a coffee shop’. No further explanation is needed, but it doesn’t prove that it will be a success until we examine other factors, which we’ll do in a minute.

WHO SAID IT

“The only way to avoid making mistakes is to have no new ideas.”

– Albert Einstein

If the business idea is not simple, then you still need to find the simplest language to describe it. Saying you work in IT solutions doesn’t really explain anything. Don’t get bogged down in the detail at this stage. ‘It’s an internet business that provides people with X’ is fine for the moment. If you are having trouble, try explaining the customer benefit. This is the benefit that your customers derive from what you offer. It may well not be the same as what you do. How you deliver the product or service is rarely as interesting as the problem it solves. For example, in the case of a brand of biscuits, the manufacturer may claim they are ‘lovingly hand-crafted from the finest ingredients’, but the customer benefit is simply that they taste great.

If this simple expression of the idea meets with general acceptance, from you when you have lived with it for a while and from people you respect, then you should be able to move on. Importantly, though, if there are significant doubts then you may need to scrap it. There’s nothing more boring than a person who insists on clinging onto a lame duck idea when it patently isn’t going to work. Bear in mind that most successful businesses have rejected many prototypes and initial thoughts. It’s a crucial editing skill that you need to adopt when starting a business. So, be precise about the idea, ditch all the bad ones, and refine the expression of it so that it is short, clear, and intelligible for anyone.

WHO YOU NEED TO KNOW

Seth Godin

Seth Godin is one of the world’s most prolific writers and bloggers – something of a web legend with a cult following. His main talent as a writer is to impart technical zeal without the baggage of geek jargon. He holds an MBA from Stanford University and has been called the Ultimate Entrepreneur for the Information Age by BusinessWeek magazine.

As a well-respected speaker, marketing guru and agent of change, he has stacks of advice for businesses large and small. In his book Purple Cow he encourages businesses to offer something that is remarkably different from any other product – do the opposite of everyone else and you will be more distinctive.

He wants ordinary people like us to start a movement. Stop ‘sheepwalking’ your way through work and start doing fresh and exciting work, he says. We can all create a remarkable future by running ingenious businesses. With the advent of the internet, practically anyone can do it. You just need faith, a good idea, and plenty of energy to enact it.

His general theme is all about personal empowerment, which is spot on for those starting a business. In his book Linchpin, for example, he explains that you may well be indispensable, and shows how to drive your career and create a remarkable future. With more than ten short, very readable books out, and a significant blog, it’s easy to soak up some of his inspiration.

WHAT EXACTLY WILL YOUR BUSINESS BE?

This looks like the same question as ‘What precisely is the idea?’, but it isn’t. We now move on to describing what the business will do in order to fulfill the idea. You need to define a number of important parameters to work out how successful it could be. Ask yourself these questions:

What category will the business operate in? This may not be as easy at it sounds. Starbucks could variously be described as a purveyor of coffee, a sandwich bar, an internet café, and so on. Work out which market you are operating in.Is it a product or a service? A product is sourced or manufactured and sold at a certain price. A service may have a life long after the initial purchase. Many businesses provide both.Does it offer multiple products or services? Offering one thing is straightforward. A range is more complicated and requires careful designing.What does it cost to provide or produce these? If the cost of sourcing or production is too high, then your margin will prove insufficient.What price will you sell them at? Some companies can work well on low prices if they have high volume. Others rely on lower frequency of sale and higher margin. Work out which area your business will operate in.Is that proposed margin realistic? If the base price of an item or service is too well-known, there will be a limit to the mark-up that customers will tolerate.Is it sufficient for what you need? If you need more than the market can stand, then the idea may be flawed, or be incapable of delivering what you want.What is the projected income? This forces you to provide an initial feel for how much business you will generate.And the projected profit? This highlights the difference between having plenty of income, but no profit. There is little point in this. As the old saying goes, turnover is vanity, profit is sanity.

Your answers may at this stage be vague or unknown, but you have to start somewhere. If they are numerical, don’t exaggerate them. This will lead to problems later. Bear in mind that most businesses don’t achieve what was expected in the first year, and most are slower at getting off the ground than the owners would like, so always round figures down without being too pessimistic. If the answers are factual, then keep them straight. If you don’t know the answer, then go and find out. This might lead to an explanation of your business along the following lines. Let’s look at a London plumbing business:

What category will the business operate in? Rosie’s Plumbers is the first all-female plumbing business. It operates in the home plumbing market in the London area.Is it a product or a service? Both. The largest part of the business will be services paid for by the hour, and 20% of income will come from mark-up on parts.Does it offer multiple products or services? Yes. It fixes all domestic plumbing needs.What does it cost to provide or produce these? Anticipated costs are x, with a proposed salary for one plumber of y.What price will you sell them at? £ 80 per hour, with an anticipated 20 hours booked per week.Is that proposed margin realistic? Yes. 80% of income will be derived from services paid for by the hour. 20% of income will come from parts marked-up at 20%.Is it sufficient for what you need? Yes/no.What is the projected income? Income in year one is projected at £ 1,600 a week, £ 6,400 a month and £ 70,400 in an eleven-month year.And the projected profit? 20% will yield profit of over £ 14,000, and any mark-up on parts will be a bonus.

We won’t do the full plan just yet, but you can immediately see that precise thinking leads to a clear statement. This in turn leads to an accurate plan and a clear understanding of the maths involved. Of course, you might go through this exercise and discover that the business is far too generic and so will not survive or make sufficient inroads into the competition in your area. Or you may find that the sums don’t work, leaving you either with too little income or an outright loss. These are vital discoveries. Don’t get depressed about it. Throw out dreadful plans, and think harder about half-baked ones until they look as though they will be a success.

RESEARCH YOUR MARKET THOROUGHLY

It’s not wise to dive in and start a business without doing some proper research. You might have a hunch that a certain idea will be a success, but there may well be a lot that you don’t know. Information is power, and it enables you to make better, less random, decisions. Research your market thoroughly by asking these sorts of questions:

If your business is going to operate in a specific area, will the market support it? For example, if you plan to open a restaurant, how many already exist, what type of service do they offer, and what are their prices like?How do you plan to position your business – up-market, mid-market, or down-market?Will the area support another business such as yours or is the market already saturated?What kind of people will buy your product?Can you reach all of your customers through affordable communication channels?Are there different buying circumstances, such as planned, impulse or special occasion?

This type of information shouldn’t be hard to come by. If you are planning a local business, then get out and about. Walk the streets. Get on the bus or the train. Get in the car. Work out journey times, catchment areas, and the presence of similar businesses. Obviously, if you are planning to start a fish and chip shop and there are already three in the same street, you need to have an extremely good reason or an extraordinary angle to justify going ahead.

If you are planning an internet business, bear in mind that geography could be irrelevant. Instead your research could all be online, comparing similar services and product offerings, looking at speed of delivery and pricing as more likely indicators of competitiveness. If lots of other businesses can provide what you are proposing for a similar price and just as fast, then you may need to think again.

If you discover lots of businesses that offer the same as your idea, don’t panic straight away. Bear in mind that tiny alterations to the detail can still make your idea viable. For example, moving a location 1000 yards can make all the difference. So can altering the price by a few percent. Or reducing the rent. Or increasing product quality or brand image. Or speed of delivery. Or bulk delivery. Or the presence or absence of one member of staff. Keep analyzing these elements until the proposition and the maths slot into place. Equally, if your research overwhelmingly demonstrates that your idea is not going to be a success, then face facts and ditch it for a better one.

DO CUSTOMERS REALLY NEED YOU?