Launching a new business is not for the faint-hearted. More than half a million new businesses begin their journey in the entrepreneurial world each year, but not every business is able to operate successfully and record profits.
The following are some steps that you can follow to put yourself and your business in a better position to secure a start up loan and make your business thrive.
Be Confident About Your Business Idea
Business ideas can either be innovative and based around products or services which are not currently found on the market, or they can be aimed at providing an existing product or service which is better than the one offered by your competitors. Business ideas rarely come to people out of the blue, and usually, they are a product of much brainstorming and research.
If you are struggling to come up with a good business idea, you could begin by identifying the present needs of society and think of ways to come up with solutions to the problems that they are facing. It is difficult for businesses to thrive in the present age without having an online presence, and this should be at the forefront of your mind when you are thinking about setting up your own business.
In the year 2015, nearly 77 percent of those who use the internet in the UK made a purchase on the internet, which stresses the importance of having an online presence for startups. Online businesses are easier to set up and scale, and moreover, it is even possible for these types of businesses to test the waters before taking the plunge. Examples of online business models include advertising, stores, brokerage and subscription-based services.
Analyse Your Situation
Before starting a business, you need to carefully evaluate whether you have the flexibility and time to go through the grind which is needed to lift a business off the ground. Do you have any family or other commitments that may interfere with the efforts that you intend to put into your business? Will you be holding on to your job and manage the business part-time, or will you quit your job and run it full time?
Finding answers to these questions will give you greater clarity regarding which kind of business you should set up and also your future course of action. It takes a lot of time, resilience and hard work to launch and grow a business, which makes it important for you to be realistic about your situation. If you make a part-time commitment to a business, you may need to hire staff to make sure that your work doesn’t suffer in your absence.
Make A Business Plan
Having a business plan doesn’t guarantee success, but it certainly helps to know what you intend to do with your business in the first five years. It may include your marketing plan and strategy for growth.
Creating a business plan helps you to understand how much you need to charge for your product or service, how many customers you will need, and the prospects of your business for growth. Doing market research will test your assumptions and let you know if you should make any changes to your business plan.
Setting up a business without proper market research can have dire consequences for the business. It helps you to gain a better understanding of your market and makes you more knowledgeable about your industry and competition. The results of your market research will influence your business structure, customer demographics, resources, and pricing.
To test the validity of your business idea and demand for your product or service, you could consider interviewing your target audience. It is advisable to ask people whom you do not know personally as your relationship may influence their answers and give you a wrong impression. You must create focus groups on the basis of certain attributes that are relevant to your business such as gender, career, and age.
You can also ask your target audience to take an online survey to gauge their expectations from a particular product or service. Besides studying your target audience, you may also need to research your competitors. It will help you to identify the gaps in your niche which you can fill to offer your target audience a better product or service. Check the methods your competitor uses for things such as how they accept and fulfill orders, what their pricing is and what changes you can make to further improve their service.
Decide On A Business Structure
Once you become sure of your business concept and have finalised the name of your business, you must proceed to the next step which is to register your business. At the time of registration, you will be asked which structure you would like to adopt for your business. Your options include sole trader, partnership, limited liability partnership, or a limited company.
Each business structure has its own set of advantages and disadvantages and which business structure is suitable for you depends on your preferences, your circumstances and your ambitions for your business. If you are unsure about which business structure you should opt for, you should consult a solicitor or a business advisor for advice.
Take Care of Your Finances
Setting up a business can be an expensive affair and it is easy to end up overspending if you do not take good care of your finances. Your priority should be to minimise your operational costs and keep your expenses to a minimum whilst spending on things that are likely to bring in more sales. If you have insufficient resources or wish to grow your business, you could consider seeking a business loan from those who provide alternative finance.
While there is no established set of rules which should be followed to increase the odds of being successful, taking the measures given above while setting up a business will ensure that you are on the right track and help you to avoid making some common mistakes which often contribute to the failure of a business.