Got an idea for a business? That’s great, but remember it is vital to put in plenty of groundwork before you launch.
In this article, we discuss five key steps SMEs need to take before they start trading, to give themselves the best chance of success.
The first and most important thing to do before launch is market research, to prove there is demand for the new business’ offering.
There are a variety of ways to do this, including:
• Discuss the idea with trusted people in your professional network – especially those who work in relevant sectors.
• Do competitor analysis. Which businesses are already active in your target sector and marketplace? How successful are they? Do they get too little custom, just enough, or more than they can handle? If you are launching a bricks-and-mortar business in a single location, this probably means you’ll need to analyse rivals based nearby; whereas businesses that will trade online should take a market-wide view.
• Gauge demand by asking your target audience if they would buy what you are selling. Established methods for doing this range from casually posting questions in social media groups, to detailed consumer surveys with lots of participants.
We suggest using a mix of research methods to get a detailed picture of the market before you launch.
Set up a business address and phoneline
Clearly listed address and contact details on a business’ website or social account build customer confidence, whereas missing or hard-to-find details are an obstacle to trust and transactions.
According to research from KoMarketing (PDF), 51% of people say “thorough contact details” is the most important element missing from many company websites. 44% of respondents to the survey said they would leave a company’s website if the business address and website were not listed.
For businesses trading as a limited company, this is not just a matter of consumer preference: listing a business address and contact details is a legal requirement under the Companies Act 2006 (UK).
Supplying a registered office address is part of the process for incorporating a company in the UK. This needs to be a physical address in your country of operation, which you can effectively use to receive mail. The address you choose will be publicly listed on the Companies House online registry.
As for setting up a business phoneline, Virtual Phone Numbers are an affordable, very effective way to make your business look professional without having to fork out for new handsets. Depending on your business you should choose a number that suits you best. For example, a local landline will give a good local business impression and increases customer trust compared to a regular mobile. An 0800 freephone number is a great way to help increase enquiries and look large and established. You also have the option of 0333 numbers, a nationwide number with no geographic location, these numbers cost the same to call as a regular landline. Check out this blog on how to get a small business phone system.
Secure your online real estate
Almost all businesses require an online presence, usually in the form of a website and profiles on prominent social media platforms like Facebook and Instagram.
When a business is successful, this can draw the attention of “cyber-squatters”. These are individuals who buy or claim website domains and social media profiles relating to a brand name, then try to sell them to the brand itself at exorbitant prices.
To limit the risk of this happening, businesses should occupy as many domain names and social profiles relating to their brand name and trademarked terms as they can. The best time to do this is before launch, when very few people know about the business.
New businesses wishing to be especially cautious should also consider buying domain names that could be used as a platform for criticising the brand, such as [brandname]sucks.co.uk.
Plan for your personal income and how the business will be funded
UK businesses typically will not be profitable in the first 2-3 years of trading. Some businesses take even longer to go into the black, including many that eventually achieve great success.
The difficulty of turning a profit can leave business founders with a quandary: will they live without pay for an extended period, or will they draw an income from a business already operating on a tight budget?
According to Startups.com users, it is good practice to set aside enough money to cover your personal costs – including mortgage/rent, bills, food and entertainment – for the first 1-2 years of trading.
For entrepreneurs who don’t have enough money in the bank to do this, alternative approaches include doing part-time or freelance work on the side, or being supported by a partner or family member.
If none of these options are suitable, you should consider launching a business with low overheads and quick access to custom, such as certain B2B services.
The other side to the financial challenge facing founders is budgeting for the business and working out how it will be funded. Common funding sources for new businesses include personal savings, money from family and friends, crowdfunding contributions, angel investors, venture capital, bank loans and startup funding.
Put systems in place for planning and managing the business
This article should have given you a sense of the variety of tasks that go into setting up a business. There’s a lot to get right, and this means it is important to put appropriate task management systems in-place.
That’s our five things to do before you start a business. From market research to setting up a business phoneline, starting your business takes a little preparation. However, it’s all worth it to get your dream up and running, it’s important to keep that new business excitement going and drive it to success!