Stop dreaming about that startup – just do it

Finance

We’ve all done it – doodling logos, making lists, day dreaming about the business idea we want to get round to one day. But why ‘one day’? Why not right now, this year, today?

To paraphrase a famous saying:

The failure rate for startups that never get started is 100%. If you want to be your own boss, sooner or later, you need to take a risk and go for it.

Risk – that’s the key word. The ability to assess and manage risk is vital in business but too often, it translates as never taking any risks whatsoever. When it’s your own money and reputation on the line, that anxiety can be all the more crippling.

Of course starting a business isn’t something that should be done lightly, especially in the midst of a pandemic and a recession. As with parachutists or deep-sea divers obsessively checking their safety equipment before a jump or dive, care and planning go a long way.

You should think hard about why you want to do it – is it about getting rich, making yourself happier, or a bit of both? Are you as excited about running a business, from sales to administration, as you are about exercising your professional expertise?

If it does feel as if the rewards are worth it, and that now might be the time, here are some pointers on the first steps.

Startup business planning

Those doodles, lists and notes I mentioned earlier – that’s the start of your business plan.

Before you do anything else, sit down and challenge yourself to answer the difficult questions:

  1. What will your new business offer?
  2. How is it different to, or better than, existing products or services?
  3. Who are your customers, and how many might there be?
  4. How will you measure success?
  5. What should you be charging?

 

To answer those questions, you’ll want to conduct market research and a SWOT analysis (strengths, weaknesses, opportunities and threats).

It’s not about talking yourself out of it or being pessimistic but, rather, identifying any potential issues and thinking through how you’ll address them.

Pay close attention to the competition, too, if there is any. What do they charge for a comparable service? If you can’t be cheaper, what will convince those potential buyers that your product or service is worth the extra?

 

Bricks and mortar?

Another thing to think about is what kind of premises your business might need.

A lot will depend on whether your market is local, national or international. With specialist technology businesses, the latter is usually the case, and so being tied to one place is less important.

One way startups can stay agile and keep costs down, especially in these strange times, is by operating without commercial premises. That’s increasingly doable with a mix of digital comms and flexible workspaces.

Not having to worry about finding a building can also make the decision to just do it a lot easier – no leases, no long-term commitment.

At the same time, a physical address still carries a lot of weight in terms of credibility and trust. And, though we’ve all got much better at distributed working and working from home, there’s still plenty of evidence that having a home base is good for morale and team cohesion.

 

Startup financing

Getting a business up and running usually requires an upfront injection of cash and this is what holds many people back from making the leap.

There are various options when it comes to finding that initial funding, though, and you should take care to consider them all.

For example, you could go with an old-fashioned loan from a bank, or find an individual or firm willing to invest in you and your idea.

Though it’s less popular these days – 36% of UK SMEs reported using any type of external finance in 2018, compared to 44% in 2012, according to the OECD – it’s still the first stop for most serious, ambitious businesses.

This is where having a solid, compelling business plan pays off, answering lenders’ concerns and questions before they have a chance to voice them.

Other options for financing include crowdfunding, which can work well for specific products, or ‘bootstrapping’ – that is, aiming to operate with such ruthless efficiency that no outside investment is needed.

The strategy.tax team can help you find finance and build a solid, compliant business from day one. Talk to us today to find out more.

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