How to start your own business-The things you need to consider
Hello Everyone, this may be a blog post that is bit unusual for an interiors site, and if you follow me purely for interiors, it may not be for you. However, when I started this blog, I said that part of the idea behind it was to support small interiors businesses and help them get off the ground and so I am unashamedly going to include bits of business advice as I go along.
top image credit: http://www.firststopshop.co.uk/wp-content/uploads/2014/12/Business-Plan2.jpg
Remember that this is personal ramble based on my own experience and should in no way replace professional advisors and professional advice.
So, what do you need to think about when starting you own business...
The first thing that I ask a business when I first meet them, is "what are you trying to achieve as your end goal?" which is relevant to me as at some point in time I want to exit the businesses I look after and make money back for my investors, but it is also relevant to you. Are you starting out to make millions and retire to a life on the beach? are you just enjoying running a small one man/woman business that allows you flexibility around the children? is this a hobby that makes you a bit of spare cash? are you trying to promote a social cause?
The answer to this question will depend very much on what you need to do along the way. Growing a business that makes you millions is probably a very different journey, perhaps requiring a significant influx of cash, than say running a business to make a bit of spare cash. Some of you might end up on the beach even if you never intended that to be your outcome. You will have had the magic ingredient in business called luck.
For others it will be mostly, about hard work ( and we hear about that in the post from Gigi at Bag and Bones and Dawnelle and Kirsten at DK Renewal), believing in yourself even if it appears that no one else does and continuing with you passion until one day, you look around and you've achieved what you set out to do.
Remember if your plan changes, it doesn't mean you have failed, just adapted to a different situation, something known as a pivot which I describe in the lean start up blog post. (I reckon 90% of businesses I see change their plan in the first 12 months and I see around 200 per year).
The second thing all business that are serious about growing need is to consider is a plan.
Who Needs a Business Plan?
You do not need a plan to start a hobby or to moonlight from your regular job. But anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of plan.
A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the "back of a fag packet" describing your business strategy, you've written a plan, or at least the beginnings of one.
These plans are strategic; you start here, today, you want to get to there, a point in the future at which time your business will have a different set of resources and abilities as well as greater revenue and hopefully profitability and increased assets. Your plan shows how you will get from here to there.
Even if you don't write a fully-fledged business plan, perhaps you subscribe to the Lean Start Up model, you need to at least have looked at some aspects of a business plan before starting your business.
Market and Product
What does this company really have that will make it stand out and be able to sell its product or service to people in a way that they will want to buy it? How are you going to do it? How many people will buy it and what will they pay? Collectively this is known as the addressable market, the amount of a very large market that you think your business can grab hold of.
All of my business case studies this week had found a gap in the market that they thought they could fill, which was the bit that inspired them to get started. Jessica at Piglet in Bed highlights how she almost went down a completely different route until she realised that there was not a big enough market of her to get into. Do your research.
Remember to talk to people before setting up, just because a number of people say your product is fabulous, does not mean they are going to buy it. Creating demand is one of the challenges that Ross and Chris at the Curious Department faced in their early days.
Remember to articulate what you have, what is it about you that's unique, and hold onto that thought, even if it’s on the "back of an envelope", as it can get lost in the day to day of juggling all the things you need to do, remember this point when you come to read the surviving cash shortfall blog.
An important part of this will be how are you going to actually advertise and market your product to people even if you know they will likely want to buy it? do you have a website? do you own a shop? are you using social media to grow your business? are their trade groups or influencers that can help? do you have a budget or are you going to have to get a bit creative to get the word out there? Be persistent, not everyone will understand or go for your idea straight off, they may have other priorities or you might find seasonal fluctuations come into play.
I find that while a lot of businesses can't necessarily put a figure on their addressable market (although Jessica from Piglet in Bed is a good reminder that it’s important to try) most of them have an idea of how their product will sell and a plan for how to do it, and if not, often with interiors products you could make one or two and see how it goes, assuming of course you are not running the overheads of a shop and can afford to support yourself while the business grows. Use the minimal viable product route to learning about your customers (described in lean start up blog).
People, people, people, no business is going to get anywhere without the right people behind it. The right set of skills at the right time. I'm not just talking about you and your business or your staff, but your suppliers, your advisors, your banker, a lawyer. A friendly advisor who's ear you can bend just to say, "am I doing this right?"
Predominantly though it is you, that is going to drive this business forward and it’s up to you to surround yourself with the right people to help you along the way. If you don't, especially when you are small, you may have a lot of problems, stumbles, backward steps, which is natural part of learning.
Being an entrepreneur can be lonely, I have heard many people say, "I wish there was someone who I could ask about that". Everyone needs a mentor, someone who has done it before. This may come from your investors. For example, I sit on the boards of several businesses and mentor them, having done it myself, or it may come from a community set up for like-minded business. Find yourself someone too.
Both Ross and Chris (the Curious Department) and Gigi (Bag and Bones) both identified the need to have someone occasionally hold your hand when you start out. Try and make that person independent, i.e. not a family member or friend, someone who can give impartial advice.
Operations and Staff
If you are one person running your own business from your bedroom, this probably doesn't apply to you (yet) but everyone who wants to grow will need some sort of operational plan. If nothing else you might need a week off once in a blue moon and someone to cover for you. Think about how you are going to manage if your turnover trebles or multiplies by 10, if you cannot meet your orders or if a big brand suddenly wants your products. What type of people might you need and where will you find them?
Cash is King
I have written a separate blog on this, but it goes without saying, you need enough cash to be able to pay your suppliers and employees, especially in the troughs that inevitably come in running a business (the peaks bring a different challenge). You also need a plan for if cash is in short supply, you do not want to get caught out and have to close your business, for lack of forward planning.
It is worth knowing your options to raise money to, say develop a new product line. It is an important factor to consider if you are wanting to grow a business, especially if you dream of the beach. I've written a blog post about Chris and Ross at the Curious Department, who used a Kickstarter campaign to raise money to develop their lovely bone china. Others I know have used friends and family (like Gigi from Bag and Bones) to fund their start up and expansion, or savings (Jessica from Piglet in Bed). There is not enough space to go into this now but head over to their blogs or my raising money blog for ideas.
The Legal Stuff
What are you going to look like? are you going to be a sole trader? a partnership, a limited company? legal advice here is key as well as tax and VAT advice. You will need both a good accountant and a lawyer.
Do not fall foul of retail and consumer laws, of direct selling responsibilities, the number of laws you need to comply with are actually quite large, falling foul could end up in a huge fine or even imprisonment. Get advice before you start.
so, I have written a whistle stop tour to the things to consider when starting out. If I could give only one piece of advice it is to find someone to mentor you and make sure you have something that people want before you invest your money in starting out. I hope this is useful to those of you who are joining me on this journey from a business perspective. I will be digging into some of these sections in more detail in due course. Let me know if you've got a particular challenge or an area you want to cover off
The Girl with The Green Sofa