This article is part of our Business Planning section – it has a host of articles on starting up a business. Check out our Resources too – there are templates for everything you need to quickly turn your business idea into a reality, starting with a Business Plan.
So you want to turn your business idea into a reality and start your own business – Well done! You’ve taken the hardest step by making this decision.
Starting up a business can seem daunting and hard, but really it’s not. You will have to put some hours in to make your idea as clear as possible, but the clearer the idea the more likely you are to succeed. Ultimately, you can setup a business in a matter of days or even less…hours! All you have to do is tick a few boxes on your to-do list. We’ve broken this down into a easy and manageable checklist.
1. Come up with a good business idea
A bad business idea can earn you money, temporarily but may fail long-term. A good business idea will meet your customers needs, earn profit, and will most likely be something that suits your interests and passions so that everyday you get to live your dream and earn money for it.
- Understand why you want to start a business
- Determine what success looks like to you
- Make a list of ideas that suit your strengths, interest, and passions. Using a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis can help you do this
- Do you want to work for the business full-time or part-time?
- Research businesses that are successful today. Can you copy and improve their idea, product, or service?
2. Carry out market research to test and validate your idea
Researching your idea, customers, market, and competition will give you a much better understanding of how successful your business could be. A lot of this information can be found online. Test out your idea by talking to your target customers, conduct surveys or questionnaires, and ask family and friends for their honest opinion. Remember, all feedback no matter how good, bad, or critical can always be used to help improve your idea and product.
Research your customers:
- Will your business idea solve customers problem now and as time passes?
- Are they willing to pay for your products and services?
- Where are the customers located and what are the best methods to reach them?
Research your market and industry:
- Identify your target customers – use profiling to create customer profiles i.e. age, average income, location, interests etc.
- Is the market growing, declining, or saturated?
- Will there be enough room for your business to make profit?
- Is there enough demand for your product now and will this continue as time passes?
Research your competition:
- What products do they offer?
- How are your product, services, and operations better? Using SWOT analysis can help you do this
This step can help test your business idea making it more successful, but by no means don’t let market research hold you back from starting a business if you know your market or don’t know your market inside out. It’s not necessary to have all the facts, just the most important ones for your business.
3. Write a Business Plan, if you want funding or to network at formal events
If you intend on seeking a business partner or funding from third parties such as banks, investors, or loan companies then a Business Plan is essential. They will want to particularly see the business financial forecasts to figure out how much revenue and profit the business will make, how money they can loan your business and how you plan on repaying this plus interest.
You don’t need to write a Business Plan if you intend on setting up and financing your business on your own. Still, having one can help make setting up much more organised and easier to see and track business progress.
Our detailed Business Plan covers everything you need.
4. Name, Message, Logo, Unique Selling Point (USP) = Branding
Why do customers pay so much money for Apple Iphones and Nike shoes? Because of branding. They know they will get a high quality, reliable and great product. Branding is hugely important to your business success so don’t rush this step because it will determine how customers see your business and long-term success.
- Determine what your brand key message is i.e. what do you want customers to think about your business?
- Choose a tagline and business mission for what your business is looking to accomplish
A business name
- It can be fun and frustrating to come up with ridiculous, crazy, and great names. Ultimately it should be unique, stick in customer’s head, and be easy enough to say
- Once you’ve short listed names, check online on Google or the Trademark register and check your government Companies House to see that the intended business name is not already taken
- This is not essential, but can strengthen your brand when marketing to customers, suppliers, or investors
- Make sure this includes the right colours and writing fonts which are in line with your brand key message
5. Plan your financing – Do you actually need funding?
Not all business startups need financing. To understand this, the best place to begin is to plan your startup costs including that for any staff or external expertise such as accountants or legal advisors. Writing up a full business plan and financial forecasts will help with estimating costs and pitching the business to investors, banks, and venture capitals.
- Open a bank account
- Estimate startup costs
- Decide if you need funding and where this will come from. Have a first, second, and third option – Personal savings, Friends and family, Crowdfunding, Loans and credits, Investors, Government funds and grants
- Decide what to do if the funding application is rejected
- Prepare financial forecasts – Cashflow forecasts, Cashflow statements, Balance sheet, Profit and loss statement
- Apply for funding using the financial statements to support the application
- Decide and setup your accounting system. How the business tracks finances can mean the difference between long-term failure and success
Our detailed free financial reports covers everything you need.
6. Decide your business structure
Choose the right business structure for the size and type of company you want to startup. There are 4 basic options, but essentially a Limited or Public Limited Liability company can mean that the business is separate from the owner so if it goes into administration and bust, your personal assets such as your house are protected. You won’t have to sell this as collateral to cover the business failure.
There are essentially 4 choices
A. Sole trader / Sole Proprietorship – this is best if you want to be self-employed and run the business by yourself
B. Partnership – this best if you want to setup a business with two or more people owning and running the company
- General Partnership – all parties have equal ownership
- Limited Partnership – parties have different ownership and responsibilities. This is best if one or more individuals want to remain investors with little to no input in how the business is run
- Joint Venture – all parties have equal ownership but for a limited amount of time or until the startup has reached a certain point. This is best if one or more individuals want to partner for one specific project. Once the project is complete the business structure may then change
C. Limited Liability Company (LLC) – this best if two or more individuals want to go into business together and you want limit your legal and financial liability if the business fails. LLCs are more difficult to setup and require more paperwork and finance. Do your research as laws governing LLCs vary between countries, and within countries by region or state
D. Public Limited Company (PLC) / C, B, or S Corporation – PLCs are essentially LLCs that offer stock for shareholders to own shares in the company, and receive payment via profits and dividends.
- C and S Corporations – are most common in the US where individuals file personal tax returns. In an S corporation profits and losses can be transferred onto personal tax returns, whereas in C corporations they cannot
- B (Benefit) Corporations / B Lab / B Corp – are similar to non-profit organisations as they are companies with a social or environmental mission that have been given a certification by B Lab, which is a global non-profit organisation. The only difference is that B Corps shareholders earn profit, meaning B Corps are for-profit organisations. They exist to make profit
7. Get your legal documents in order
Make sure that all the necessary legalities are complete. There may be different legal requirements depending on the type of business or which country, region, or state your business operates in. For example, restaurants will need health and safety or food certificates. If you’re trying to save costs, then consider if there are any optional legal items that you don’t need to startup.
- Register the business name, address, owners, and articles of association if the business is a LLC or PLC, all at the companies house
- Employer Identification Number (EIN)
- PAYE Number
- Intellectual Property Rights – Trademarks, Patents and Copyright
- Tax number or Valuable Added Tax (VAT) number, if the country has VAT
Using a legal advisor can help with making sure that all of the business legal requirements are taken care of.
8. Setup your location – Is this physical or only online?
Where or not you choose to have a physical location, having an website online no matter how basic is essential nowadays especially for marketing purposes. It lets customers search where you’re located, what products you sell, who the employees are etc. If you do need a psychical location then consider why – is it to reach customers or be closer to suppliers and transportation routes or other reasons. A great location can help attract new customers and increase profits.
- Register a domain name and website online
- Setup the Website – using website builders such as WordPress or Wix can help you quickly setup a website for free if you want to keep costs down
- Decide whether or not you need a physical location
- Identify what legal and financial requirements are there for the location such as licenses, permits, insurance, taxes, rent, utilities and bills
- Determine what items the business needs to set up shop such as equipment, machinery, telephone lines, Point of Sales systems (POS)
- Setup IT needs – both hardware such as computers and servers and software such as Microsoft Office or virus protections
9. Employee staff, only if you need to
Hiring staff will likely be the biggest expense the business will face. So only do it if it’s essential. Always hire people that are better placed to do the role and that you trust to get the job done, as the saying goes “the better the employees at their jobs, the better the business and its service”.
- Get Employer Identification Number (EIN)
- Register with the labour department
- Setup any employee insurance or compensation schemes
- Identify any trade union laws that may apply to workers
- Choose a payroll system
- Create a training and induction plan
- Hire employees – A. Identify roles and necessary qualifications or skills, B. Advertise for the role, C. Interview and hire candidates
10. Market, launch, and keep marketing your business
Use marketing to get the word out there about the business and get customers excited about the business and its products, not just at startup but for the entire span of the business. This will mean you attract more customers and charge higher prices for goods and services. Creating a marketing plan is the first step.
- Create a Marketing Plan – include the business launch date
- Create marketing materials
- Decide what type of marketing to use, such as
A. Product Marketing
- Labelling and Packaging
- Office supplies and stationery
B. Face-to-Face Marketing
- Network – talk to your network and people you know
- Business Cards
- Posters, pamphlets
- Brochures and flyers
- Surveys, questionnaires
- Public – Press, newspapers, TV, tradeshows, business expo’s
C. Online marketing
- Business – website, email
- Social Media – Facebook, Twitter, Instagram
Our detailed Marketing Plans covers everything you need.
11. Watch the money coming in and going out
Now the easy part is done, if you want your business to keep bringing in revenue and money its important to continue improving the business, its products and services, employees, and processes.
- Track finances – cash, costs, revenues, and profits
- Update the marketing plan
- Improve and expand products and services – diversifying the business products can bring in more revenue and provide safety by making the business less reliant on one or two products
- Hire better employees
- Improve business processes
- Update business mission, goals, and aims if it’s time to change