History shows, successful companies can be born in tough times. Previous financial crises have given rise to high-profile business. For example, WhatsApp, Instagram, Uber and Airbnb were all founded during economic downturns.
We are certainly in a downturn again at present. Small businesses across the country were shutting down amid the spreading coronavirus pandemic. At the same time, new businesses are forming in this environment. Some will be “necessity entrepreneurship”- arising when jobs are scarce and so more people choose to start their own businesses. For many, a challenging time like now is seen as a good opportunity, as all the changes we face, whether positive or negative, bring up new customer needs and customer needs are at the core of any business.
Determining what customers need now, rather than before the pandemic, is crucial. Entrepreneurs see the business opportunity in offering solutions to the challenges that people face now, such as keeping safe, educating their children, working from home, managing supply chains, getting a haircut or the house cleaned, seeing doctors and therapists, entertaining themselves.
When pondering your business idea, try to ask yourself the following questions.
If you are happy with your answers, but not sure about what stages are required to develop your business from an idea to a viable business, here are some essential things to consider.
Unexpected costs and poor budgeting are two of the main reasons for high business failure rates (on average, only 44% of business survive beyond five years). A well-thought-out business plan will not only provide your start-up with a clear direction and options in the case of unexpected events, but it can also be vital in securing investment.
It will require you to research and understand your market thoroughly, analyse your competitors, undertake financial forecasting and details of marketing channels, etc. It will need to answer questions like: How many people will buy your product or service, who are they and how will you be able to reach them?
Revisit your business plan regularly and review and amend it as you continue your journey.
You’ll need to decide if you’re going to start a business as a sole trader, in a partnership or as a limited company. All of these have different tax implications to consider, as well as different liability considerations.
Many businesses will set up as a sole trader to start with, as this involves minimal red tape. However, it’s worth assessing whether a limited company, for example, might offer more benefits. It’s possible to change your business structure once you’ve started, but it makes sense to think about it now!
Every business must fulfil their legal obligations, make sure they are properly insured, legally secure and registered for tax. Inform HMRC in time whilst trading, and pay your tax properly –you can use the HMRC website to get set up and registered. It may be worth speaking to an accountant to help you with this.
It is also important to keep a start-a-business-checklist – setting up a public liability insurance policy and getting organized with any licenses or permits you might need. For instance, you would need licenses for working with children, running an accountancy firm, carrying out health and safety checks. You need to research your industry thoroughly and keep an eye on any changing requirements.
You’ll need to keep track of your business transactions. If you are working as a sole trader or you have opened a limited company, it is highly advisable (though not a legal requirement) to open a commercial bank account to separate business transactions from personal ones. This will make your life much simpler when it comes to your bookkeeping. There are a number of tools to help you track transactions, such as QuickBooks and Xero, although a simple spreadsheet may suffice to start with.
If at this stage you also need to begin thinking about employing staff, then it is always worth considering the use of an external HR agency or payroll specialist to ensure that your business is compliant and your operations are managed professionally.
In addition to the internal tracking required to monitor your company, you may also need to implement new systems to track sales and revenue such as via EPOS systems, and managing a company’s interaction with current and potential customers via CRM products.
A business’ name, logo and business cards can be the difference between failure and success. When the time comes to settle on your branding, you may want to check the business name you want is available as a web domain, before then registering this. If you choose to register as a limited company, then you need to search the register on the Companies House database to see if your ideal name is still available. You can then look into the visual aspects of your business name, which will include your logo, web design, business cards and other branded items you may need.
Given the pandemic, now is the time to focus more on your digital marketing strategy, and how you are portrayed to your customers online. Here are some common tools to consider.
Think about what equipment and resources you will need to start your business. Many may be allowable as a business expense, such as a computer, a mobile phone, insurance, travel expenses, rent, etc.
You need to know how you will promote your product or service and who you will target. This will already be in your business plan, but now it’s time to put it into action.