How do I go about starting a business?

The business idea

Business ideas come from so many places. You may already provide a service for free to your friends, or have a role in your company that you could market independently. Then again, you may have long-held ambitions to start a shop, create a product, or offer a new service to a market. It is often worthwhile to discuss the idea with your friends and family beforehand, as their insight may help in fleshing out your business idea and help you avoid early pitfalls. Oftentimes the least creative business ideas are the most successful! However, this doesn't mean you shouldn't skimp on researching and finalising your idea properly.

Research

Every lender and financial provider loves start-ups that perform good market research. With so many online tools and websites that help you discover what people are searching for, you can hone your product or service towards something unique and profitable. You can define your target audience, and determine the amount of customers you would potentially reach, and then identify segments of that market depending on who you feel your product or service is most likely to appeal to.

These two groups are known as the Total Addressable Market (TAM), and the Serviceable Addressable Market (SAM).

It also pays to research your potential competitors, and observe the practices and offerings they have, before you commence anything concrete.

Create a business plan

While you may have the ideas and numbers mapped out mentally, being able to showcase your projections and analysis on a document is what investors will be after. The business plan usually consists of the aspects of the business description, followed by a financial breakdown of costs, incomings and outgoings.

Business description

• Elevator pitch – A short sentence or two, describing what your business does and why it will succeed.
• Company mission statement – What your business intends to achieve and the values it shall live by.

The business plan should also incorporate a financial analysis where initial start-up costs, and break-even points can be calculated and demonstrated transparently and reliably to potential investors, giving them a fair idea of what they are financing, and how long it will take before they can expect returns.

Registering your business

Whether you decide to trade as a limited company, or a sole trader / partnership is up to you. However, each type of business will need to be registered in a defined way, and also determines how much you will be liable for if the business is liquidated.

The practical considerations

There are many other factors that will determine whether your business will succeed. Suppliers, premises, employees, and the veracity of the initial research. Likewise you should think about marketing, including building a website and garnering a social media presence. The branding of your business is integral to its reputation, and by choosing a strong brand ideal that ties in with your company mission statement, you can help clients and customers identify with your company and remember you at the right times.

Don't be afraid

You'll know your business better than anyone, but it is important to know that every new business owner makes mistakes. With good planning and research you can make sure these mistakes are cheaper and more easily managed than otherwise.