Starting a business can be a solitary journey, with many decisions to take. But as we found out when Kent & Medway Growth Hub’s Emanuele Maindron-Brisley shared her tips for aspiring entrepreneurs, you are not alone.
Over the past years, there has been a steady increase in start-up businesses, with over 660,000 creations in 2016, especially in London and the south-east of England; and the trend seems set to continue. There are many people of all ages out there, unemployed or wage-earners, who dream of taking the plunge and launching their own business for greater freedom and flexibility and a more gratifying use of their skills and experience.
However, four start-ups out of ten die within five years. To maximise their chances of success, would-be entrepreneurs need to prepare and plan carefully before jumping into the venture.
So, you have a great idea, and the relevant professional background in the field; or you want to make a living out of a favourite hobby that has gained you praise over the years. You now need to make sure that this idea/those skills can translate into a successful business: Is there a customer base for your products or services – i.e. is there a market? How will you reach and convince those clients? Who is the competition? What do they offer? What is the usual price structure in the sector? Is the sector healthy and thriving?
Market research is the first starting point to explore the context and opportunities around you and the viability of your project.
Writing your business plan is the second essential step; this exercise enables you to go into greater depth and to ensure the credibility of your project when dealing with third parties such as business advisers, accountants, banks etc. It turns your idea into a business case and considers all elements involved, for instance, if you need prior accreditations or licences to comply before you start trading. This helps clarify priorities and identifies the steps to be taken for the new entrepreneur.
Your business plan will detail your market including your unique selling point (USP) i.e. what edge you will have over existing suppliers, your client base profile, your price range, etc. It will consider all aspects of the project such as storage, delivery, means of payment, timeframes, etc. This research will be confirmed by a SWOT analysis, a strategic tool that maps out the Strengths and Weaknesses of your business idea, along with the external Opportunities and Threats that will affect your project.
What legal form will your start-up take? This will depend on the activity, the size and the amount of risks you are willing or able to take. For instance, sole traders, which account for around 75% of new businesses, are personally liable for any business losses and debts as there is no distinction between their private and business assets. As a sole trader, you may find it more difficult to raise capital to expand your business whether it is with banks or private investors.
Though sole traders may have employees, you will be the only one in charge, which may be lonely at times and weigh heavily on your shoulders. Other trading forms – Partnership, Limited Company, Charity or Community Interest Company for instance – all have their pros and cons. Entrepreneurs will examine what level of flexibility, responsibility, accountability, privacy, personal investment and autonomy they require before opting for the legal form that is best for you.
Funding your start-up
New entrepreneurs not only need to cost out what capital equipment, IT and software they need but also to plan for additional resources until the company becomes profitable. In this analysis, personal finances, potential hiccups and setbacks need to be incorporated into your plan. There is a wealth of potential sources of funding, whether loans or grants, that may be available to you. Lenders will consider what purpose you have in mind when applying for funding e.g. whether it is capital items such as machinery or equipment, fitting out new premises, carbon-neutral energy effort or recruitment of new employees.
You are not alone! The UK government has deployed a wealth of resources since the 2008 crisis to boost the economy and support SMEs. At Kent county level, new and existing businesses can turn to one single point of contact, the Kent and Medway Growth Hub. The KMGH’s role is to support all SMEs, from pre-start to established organisations, and to help you find a relevant solution by providing guidance on business plan, tax, employment, etc. and signposting you to business advice or mentoring, workshops or sources of funding. KMGH is publicly funded by Kent County Council, providing free support to businesses.