Looking To Start A Business? Here's How
Taking an idea for a business and turning it into reality can be a daunting experience. But as Albert Einstein once said: “Everyone is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.” The same is with business - if you start something that you have no passion, skill or ability in then you will be operating in an environment that you will never be successful in.
There are a number of things that you can easily worry about, which will prevent you from taking the plunge into realising your vision. If you are looking to set up your business, and want to progress to the next level there is undoubtedly risk involved. But do not fear, we have listed our top tips on how to get your business idea off the ground and stay focussed.
Stay calm, look forward
This seems like an obvious thing to do. But in amongst the rush of trying to turn your idea into a reality, it is easy to get caught up in your thoughts and panicking about whether your business will be successful. So much so that we often forget to start the process of working out what needs to be done to start developing your business. If this isn’t the first time you’ve tried setting up a business, do not dwell on your previous mistakes. Rather, embrace them as a learning curve.
It is equally as important to remain level-headed. Don’t fear what is coming ahead, take each step as it comes. If you really want to increase your chances of achieving your goals, it's important to act in the present and take action. Anything that is productive and a step in the right direction, no matter how small or insignificant, is a step forward.
Matching your customers’ need with your product
As NextFin’s CEO, Sacha Bright has said: “If there is no need, there is no sale.” Always establish a need before selling a product. As part of this it's important to remember that your business is not just about you as the owner. A business relies on its customers to survive. Add value for them, and in doing so don’t merely offer a product/service that you want to sell. Offer something that customers want to buy. Focus on what customers are missing and how you can fill that gap with something that is appealing and desirable.
Achieving your goals
Success isn’t something you achieve on the first day. It requires months, even years, of determination and persistence. The road to success will often involve mistakes, and even failure. A great entrepreneur views failure as an opportunity to improve their product/service, and a lesson learnt. While it's good to have ambitions, don’t let these cloud your judgement. Organic growth is the best form of growth, but it requires time. Pursuing one huge deal, for example, can be time consuming and if it falls through can leave you empty handed. Don’t be afraid to aim high, but just be cautious and consider if you can afford to do so. Taking a slow and steady approach often wins the day, and gradual progress often leads to success.
But while organic growth is often desirable, there is nothing stopping you from being creative and latching onto someone else's success. For example: teaming up with an individual who already has an immense customer base, sharing revenues, collaborating ideas, repurposing failed products/businesses. One of the biggest, most successful companies in the world - Microsoft - was founded on repurposing another company’s software for its core product. Facebook was founded by piggy-backing off a university’s intranet.
Funding
If you are lucky enough to have raised finance yourself then you are already at an advantage when it comes to getting your business idea off the ground. But if you are looking for funding, you need to consider your options carefully.
Firstly, you need to consider what type of funding you will opt for. The simplest tends to be a business loan from the bank. However, banks are tending to lend less and less to businesses and as a consequence is no longer the primary route of finance for start-ups. If you struggle with bad credit, have no security, or haven’t been in business long enough to provide an adequate financial history for your firm, then a bank loan is not for you.
Alternative finance can be a better option compared to a bank loan, take peer-to-peer lending, for example. However, nearly all peer-to-peer lending platforms consider startups to be high risk. Platforms essentially match borrowers with lenders allowing both sides to bypass the banks and cut out the intermediary. Peer-to-peer loan providers are also much more likely to take a look at applications rather than applying through a computer-based algorithm with the bank which leaves you with a simple ‘no’. This opens up your loan options to a wider environment with new providers offering new types of secured and unsecured loans.
Another alternative is equity crowdfunding, which is much more suited to start-ups who have no security, no proof of affordability or credit to underwrite a loan application which makes them more eligibl for an equity investment. Equity crowdfunding involves offering shares in your business in return for monetary investments. This can be a great method if you are unable to take out a loan but have a really exciting idea you want to finance. It is, however, a far more elongated process as you have to become what we call 'equity crowdfunding investment ready’. This involves a business plan, cash-flow forecast, shareholder’s agreement, intellectual property protection and EIS advance assurance. Then, a campaign involving lots of marketing to spark interest, to pre-pledge investment circa 80% from your friends, family and customers, and a video outlining your vision and mission.
The platform will normally take a fee of between 2-7.5% of how much you raise, plus an admin fee. You can also look for private investment yourself. This will likely be an angel investor who will take a stake in your business. If you would like to see a list of angel investors, you can visit our dedicated page.
Cashflow
Cashflow is an integral part of establishing your business. You want to see money coming in as well as going out. Cashflow is the life of a business and is essentially what will give you profits. A good tip to get this in motion is to ask for deposits on products or services and invoice the remaining balance when it’s completed. This way, you help to create a steady income of cash and balance the books.
Sacha Bright, CEO of Nextfin reflected on the use of cash flow in his first business: “Being naive, I asked my customers to pay me upfront, not knowing that this wasn’t the standard. I even convinced Tesco, and Nationwide buildings society - to pay me one month’s fee upfront, just by asking. If you don’t ask, you don’t get!”
Author: Sacha Bright & Oliver Murphy
Disclaimer
To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.
