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Sep 2015
8 MIN READ

Necessary functions of a start up business

simon ensor

There are an incredible amount of potential businesses just waiting to be started, with more emerging daily thanks to new technology and the internet. In fact 13.5% of all purchases were conducted on the internet in 2010, according to BCG, and this is projected to rise to 23% by 2016. So with that in mind and so many new start up businesses coming through the woodwork there’s never been a better time to start a business. Yet despite the vast quantity of possibilities, there are a few essential steps you need to take before starting a business: Do your market research Just because you have a product or service it doesn’t necessarily mean anyone will buy it. The first essential step is to research your potential market.

– Who is ideal customer or client ?

– Are you satisfying your customers needs?

– Is there space for your product or service in the market or is it saturated?

– Talk to potential clients, competitors & suppliers for industry knowledge and opinions on your idea

These are all questions that need to be answered before you even consider starting a business, especially considering half of UK businesses fail within the first 5 years (source:http://www.telegraph.co.uk/finance/businessclub/11174584/Half-of-UK-start-ups-fail-within-five-years.html) and too many entrepreneurs are finding out the hard way that there isn’t enough market share for them to capture. Others are realizing that their target market is far too limited to create a viable business. Research is key to ensuring that you do not enter a space which cannot accommodate you. Write a business plan Whether or not you need funding to set up your business, writing a business plan will allow you to focus on all aspects of your business and force you to think realistically, objectively and unemotionally about the situation. A well written business plan will also assist you in the future by helping you to:

Question past and future assumptions

– Make it easier to communicate planning objectives and strategies to partners, employees, banks, investors and more

– Ensure that all aspects of the plan are clear and integrated. Identify any areas where you may need external assistance

– Plan the growth of your business and associated costs

Don’t spend any more than you have toBig businesses need to start somewhere: Tesco was just a couple of local grocer’s shops at the beginning, Laura Ashley began on her kitchen table & M&S started as a market stall, so before you fork out unnecessarily, consider:

– Your office can be a laptop in your bedroom or even a computer at your kitchen table. I remember our first office in an old barn on a strawberry farm, it was far from glamorous and it didn’t have any insulation or heating. In the winter we wore fingerless gloves and wooly hats and in the summer it was almost so hot you couldn’t breath….but the point is that it did the job. Small start ups don’t need swanky offices in skyscrapers, they need just enough space.

– Set up a separate bank account for your business. If you mix up your personal account with your business account you’re asking for trouble – it’s extra hassle, no benefit to you at all and confusing when it comes to planning your personal life and business as a whole. Even an everyday current account will do!

Sales, Sales, SalesDon’t shy away from the sales and marketing aspect of your business. It’s simple, without any sales you don’t have any revenue and without revenue you don’t have a business. Learn how to sell and the best practises that are associated with it. Unfortunately in the UK sales is a dirty word, conjuring images of second hand car salesmen. Sales is only bad when you don’t deliver, if you deliver exceptionally on what you sell then everyone wins. You will no doubt find it nerve wracking at first, however it’s a great feeling when you get through and make your first sale! I was absolutely petrified to begin with, I remember working in telesales selling magazine advertising in my teens. I was thrown in the deep end and given a list of businesses to call on my first day but despite how scary it was and freezing up on the phone, looking back it was the best way to learn! Work on perfecting your technique, not overselling and more importantly using every interaction to build a long standing relationship based on trust and delivery. Maintain a healthy cash flowDon’t assume that people will pay on time because they normally don’t. Instead:

– Cut down your waiting time by getting them to agree payment terms in writing before starting any project or shipping any products.

– Don’t spend money assuming that you’ll receive payment from your clients – plan your business expenditure so that you are not creating debt and are not dependent upon anyone paying on time.

– If you have costs attached to sales, ensure you transfer the funds somewhere safe until your purchase invoice is due for payment Starting up a new business is always hard and can be made even harder if you have borrowed lots of money and need to make repayments. Avoiding debt is usually a lower risk strategy. Try to grow organically. Use your own savings or earnings from another business or income stream to fund it. Also bartering services is a great way to save money. Offer your skills in one area in exchange for someone else’s.

In regards to collecting debts, you must be very proactive about this. The majority of companies do not dodge paying bills because they have the money, but simply because they have better things to be doing than paying debts. Furthermore, the majority of people will understand if you put in a polite phone call regarding that overdue invoice, after all there is no such thing as a free lunch! Have Fun Running your own business should be creative, enjoyable, satisfying and fun. It’s a chance to work with and meet new people, hopefully make a lot of money and live your own life.That’s why we’re all in business right? So make the most out of running your own business and most importantly enjoy yourself. Times can be tough and we all have bad months. However always think back to why you started your own business in the first place and use that same drive to help grow your business.
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