It's the question everyone asks but finding a simple answer to how to start a business is elusive. We've all read over-simplifed "How start a business and get rich quick" blog posts and social-media lists. The truth is that there is no simple blueprint for success.
How to get going as an entrepreneur
The perfect business plan does not exist. Business encompasses a vast array of human endeavour- so it stands to reason that there is no definitive answer to "How to start your own business". Businesses require a lot of preparation and planning if they are to succeed and there is no simple blueprint or recipe for startup success. Even so - we thought we'd have a go at creating a handy guide for you.
Of course if you want the full detail you had best subscribe to our course.
Do some soul searching
What is your reason for wanting to start a business? Do you want to get rich quick or make other people's lives easier by solving a problem?
If it's rags to riches you are looking for then going into business is probably not for you. If it's a bit of extra cash you are after then a side-hustle or picking up a part-time job will probably do for you. Some people want to start a busienss to prove a point, other do it for money of acclaim.
Setting up on your own should be about solving problems, delivering value and embracing freedom. But that freedom comes at a price. It takes hard work and long-hours to set up on your own.
Whatever your reason it is important that you understand your motives. Self awareness will help you create a busienss that is right for you- one that truly helps you relise your goals.
Ask yourself what it is that you are really good at. Where do your strengths lie? Do you know your limitations and weaknesses? Have you got the capital required to get a business off the ground?
Answering these questions and many more is vital if you want to give yourself a reasonable chance of success...
Develop the right Mindset for business
We wrote our course in the belief that there is a better process to follow for business owners when starting a new venture. Even so- ours is not a "get rich quick" course. The first bit of advice for the aspiring entrepreneur? "Show up every day and put the work in".
No course or mentor is going to do the work for you. It takes hard work and a whole lot of persistance. Of course startup courses and business blogs might give you some handy insights but you will have to learn the hard way- through trial and error.
There are many pros and cons to setting up on your own. No matter how good your business idea there are bound to be setbacks along the way. You will need to be prepared for failure and not let difficulties grind you down.The trick her eis to develop your resilience muscle. Resilience is all about your ability to bounce backf rom life's setbacks.
Despite social media claims of get rich quick strategies- most successful start ups change and evolve over time. Many struggle and encounter hardship before they succeeed. There's a good case to be made for the idea that most startups are likely to be in a constant state of flux and change during their start up phase. You will need to learn from customer feedback and refine your proposition over time.
Takeaway: Develop your resilience skills and be prepared to tweak your plan constantly as you learn from experience.
Want to start a small business in the UK?
No problem. If you want to know how to start a small business and get to understand business models that work then there is plenty of resource to available to help you. Let's take it step by step:
Start by sorting your head out
Setting up a business is like taking up any serious pursuit. Whatever your business idea- you will need to learn your craft. If you want to become an actor you will need to go to drama school, appear in plays and work at developing your skills. You'll never be a good tennis player unless you spend a lot of time on the tennis court. After all- practice makes perfect.
Being successful in business is the same. You'll need to gain mastery over a broad range of skills and expertise if you want to prosper in your chosen field. YOu will need to know about sales, marketing, business processes, finance, accounting, psycholgoy and a raft of other skills if you want to prosper.
Takeaway: Make a committment to lifelong learning. Invest in your business self education and keep working at it.
Work hard at it
Whatever your type of business- if you want to learn to run your business effectively you will need to get in touch with the heroic spirit within you. Like every hero on a quest you need to prepare, to gather equipment and come up with a plan.
Try to get into a routine. Learn the discipline of working to a plan and constantly adpating your plan as new knowledge and insights come to light. A routine doesn't have to equate to drudgery- if fact, having a good routine can be liberating in the long term. You will need to train, to work out and eat well. Long before you get round to finding office space you will need to hone your craft like a true sports professional. Get to grips with the idea of being tenacious!
Taleaway: If you think that now is the time to start in business then remember that now is also the time to master your craft.
The parallels between sports and successful business is a good one. Just as you get your body into peak performance for sport, so too, do you need to get into the right head-space for business. It requires a positive outlook, informed by knowledge and self-belief.
You will need to be able to to compose yourself in front of a crowd of investors or potential customers and give a good account of yourself. You will need to get used to the idea of taking risk. Taking well-informed risks is whats set entrepreneurs apart from people who are simply small business owners. Of course, there's nothing worng with owning a small enterprise but don't confuse that with being an entrepreneur. Think carefully about how you will reduce business risks through thorough preparation. You will need skills plus sweat to succeed.
How to start a business infographic
We've created an infographic of how to start a business which you can see below. If you would like to download a super size version (it's 100cm wide) please click on the image. Please provide your email address to download the full-size image. Print it out and use it to help you through the startup process.
Start with developing a good idea for a business
It has to be something that people want, need and are prepared to pay money for- something they will gladly do if it solves a problem for them or makes their life easier. A good idea is to specialise. There's likely to be a ton of competittion out there. Bounce your idea offf the people around you and listen vary carefully to their feedback. Test your idea out on as many people as will listen to you. Research your potential competition.
Verify the idea, confirm that it's a cracking opportunity
Warning- researching your market, creating business structures and confirming ideas take times if you want to do it properly. OK, so it might sound boring spenidng endless hours researching the competition but better to research before embarking on costly investments. Research is your best possible chance of not losing your shirt on an opportunity that is doomed to failure.
Takeaway: Do your homework! Researching you market and competition is one of the best investments you can make.
As an aspiring business owner you will want to be confident that you are contesting real opportunities that have a hungry target audience that is willing to buy from you. Getting research done by a third party will cost. Whether you do it alone or pay someone else, make sure your idea is supported by facts which show demand potential. Ensure that you base your research on facts and never just gut instinct.
Test the water and then retest the water
Business is risky. It's like getting into inviting looking waters for a relaxing swim only to discover that the sea is teeming with sharks. If you really want to know about starting a business you will need to just get out there and do it. Roll up your sleeves, buy or make something better and sell it for the value your have added to it. Sure, you can read books or study a course, but all of that will be meaningless unless you actually get on with it. Testing your product in some way via a pop-up shop, market stall or by moonlighting before your take the leap into full-time business is just plain sensible.
Takeaway: Test your minimum viable product in a real-world situation before you invest life and limb in your new venture.
Don't just talk about your business. Before you draw up a complicated plan it's better to use your time creating your basic product or business including testing it on some punters. There is much debate over whether you should create a stripped down or simplified version of your product for testing (the lean startup approach) or whether you should go for a more polished product or service at launch. The key thing here is that you get some feedback along the way and use the wants and needs of your customers to help improve the shape and feel of your product or service.
Once you have started trading you will need to let the taxman know. That's HMRC if you are based in the UK. You will also need to decide whether you will trade as a sole trader (easier, but the liability is yours ), or as a limited company (more complicated, but with limited liability). To register your company in the UK go to Companies House.
Types of business in the UK
Knowing what kind of business to form might seem danuting at first. Choose from the following list acording to which kind of company best suits your needs:
- Sole trader: This is the simplest and perfect if you want to run your business on your own. Ideal for self-employment.
- Partnership: Planning to work with others? A partnership means that the business ownership is shared and so are the profits. Even though your in partnership you will have to pay your own tax and all parties are held liable for losses and debts.
- Limited partnership: A slightly more complicated form of partnership where one partner runs the operation and is liaible for debt. This partner is known as the general partner. A Limited partnership must also have at least one "limited" partner who puts up money for which they are liaible.
- Limited liability partnership (LLP): You will need to register at companies house for this type of partnership. Partners are not lialbe for debt that the business can't meet so in this respect it is similar to a liited company.
- A Limited Company: This is known as a Proviate Limited Company. It's a distince legal entity- seprate from the people that own it. You will need to register atCompanies House for this. shares are issues to those tha town the company although they cannot be traded publicly.
- Public Limited Company (PLC): The shares in a PLC can be traded publicly but you will need a share capital of at least £50k if base din the UK.
- Social enterprise: Typically a community interest company . Other types include charities and cooperatives
- Unincorporated Association: Good for community groups and clubs. These do not have to be registered and are typically non-profit organisations.
Ok, so you’ve got an opportunity, you've tested the market and listened to customer feedback. Now you need to raise some funds. That probably means needing a business plan. Having a business plan is a good idea anywhay- it helps give you a game plan to work to. You will almost certiainly need a plan if you intend to get a bank loan or find an angel investor. A plan is easier if you have already done your research and traded at an event, market or pop-up shop for a while. Your "ideas" will have been tempered by the "reality " of real life customers.
Takeaway: Write a business plan, it will help clarify your thinking and provide a blueprint for your startup venture.
Getting funding isn’t difficult but it does mean that you will need to be well-prepared. You will need more than just a a business plan. You will need to demonstrate that you really know your stuff and that you have something different to offer.
Know your market- be an expert.
You need to be able to describe your target audience and explain where they buy, how they buy and why they will buy your product. You will need to know your financials, gross profit, net margin, ROI, cost of acquisitions, payroll costs- the lot.
Oh, and you will need a very polished presentation pitch including your elevator pitch which describes your value proposition to customers. Sound daunting? It isn't. Business has its own language and once you grasp the basics its down to hard work and constantly improving yourself and your product.
Want to learn more? Check out the content of our startup course