Starting a business can often seem quite daunting. We all like to fantasise about quitting our dull day jobs and becoming our own bosses – but a whole lot of people find it incredibly difficult figuring out how to transform that dream into a reality.
Thanks to the UK’s thriving start-up scene and business-friendly regulatory environment, more and more entrepreneurs are finding out that starting a business can actually be a fairly simple process.
Since the global financial crisis of 2008, the number of self-employed workers in the UK has shot up to 4.8m. According to the Office for National Statistics, the self-employed now account for around 15% of the UK’s total workforce – and those people collectively own almost 3.9m companies all across the country.
So, how did they do it?
It all starts with a fantastic business idea – and to help you get started, we’ve come up with an all-encompassing guide outlining how you can set off down your own road to self-employment.
How do I come up with a business idea?
One of the hardest parts of starting a business is often simply figuring out where to get started. Some entrepreneurs are lucky enough to stumble upon a brilliant idea without having ever considered forming a company. Unfortunately, it doesn’t come that easily for everybody. Most self-employed workers need to think long and hard about what it is they’d like to do, and how that could be applied to a new business.
If you’re starting from scratch and haven’t got any ideas for a new business, one way to set the cogs in motion is to ask yourself: ‘what’s the next big thing?’ The most successful start-ups are typically businesses that are totally ahead of the curve. So, you should sit down and think about the industries that interest you. Then, do a bit of research and brainstorm up-and-coming trends within that industry you might be able to capitalise on.
You should also try to look for some sort of niche. Have a think about big industry players and what it is they’re offering customers. From there, try to figure out what they’re not offering customers. Sometimes, great businesses aren’t trying to reinvent the wheel – they simply complement businesses by filling an existing gap in the market.
Another way to come up with an idea for your new business is to write down a list of your skills, and then brainstorm how those skills could be useful in a totally different sector or field. For example, how could you apply computer skills to the catering industry? Or what could your engineering experience bring to the agricultural sector? It might not be totally obvious at first, but these sorts of comparisons and exercises can give birth to fantastic business ideas.
Finally, if you really can’t come up with a new business idea, just take a look at all of the products and services you use on a daily basis. Are there any products you think you could do a better job of making? More important still, think about whether you might be able to offer a particular item or service for cheaper. This is often a brilliant way to set the wheels in motion and can lead to proper innovation further along with the start-up process.
What is market research, and why is it important?
Once you’ve come up with a great idea for your new business, you will need to figure out how it will fit into the wider business ecosystem. The best way to do that is to conduct some market research.
If you’re unfamiliar with the idea, market research is simply the process of gathering information about the viability and feasibility of your business idea. By conducting market research, you’ll be able to develop a firm idea of how the people you’re wanting to sell goods or services to will react to your business and the products you’ve got on offer. Market research will also help you to develop the foundations of your new business plan – but we’ll get to that in a minute.
So, why should you conduct market research?
Without some external feedback on your business idea, you’ll be totally unable to make informed business decisions about how to make your company succeed. And although you’re able to apply market research in various capacities to answer different questions, your initial research should be able to answer for these four Ps:
- Product – You might think you’ve come up with an incredible idea for something to sell people, but you need to ask those people what they think of your idea.
- Price – Once you’re satisfied that there is some existing form of demand for your product or service, you must establish a price point. The best way to do this is by taking a look at potential competitors and what their products are going for, but also asking potential customers what they would be willing to pay.
- Placement – You need to research where it will make the most sense to set up your business, and where and how you should distribute your products. A good place to start is by comparing the characteristics of various locations, as well as looking at the value of contrasting points of sale.
- Promotion – Research the best ways to reach your target audience. Figure out who your customers are, and then think about what types of marketing, publicity and branding will speak to those individuals.
That’s what your opening market research should be able to help you find out. But how do you get started?
One of the easiest ways to gather information is to create a survey for your would-be customers. Surveys can be slightly time-consuming to carry out, but they’re very cheap – and you could even start with your own friends or family. These can be conducted in-person, by phone, by email or simply online. If you need a hand, there are loads of free survey generators around the web.
If you’re planning to create a survey, you should be sure to try and keep it as short as you can, and make it very easy to read. Try not to ask super general questions, and get as specific as you can. For example, rather than asking people what they like about going to the cinema, ask them what they don’t like about their local cinema. Don’t ask leading questions, don’t be ambiguous and always pre-test your survey to find out if any of your questions are confusing or irrelevant.
Another place to start good market research is by analysing your competition. You need to figure out everything you can about the businesses that are already doing something similar to your new business. This research often starts on the web. Take a look at how many locations they have, where they’re based and what they sell. Figure out where and how your competitors are promoting their business, what prices they charge and how those products are received. Above all else, pay your competitors a visit and develop first-hand knowledge of their customer experience.
These sort of research methods are chalked up as primary research – but secondary research methods can be equally useful. Secondary research uses information gathered by other people or organisations to help you firm up your business idea, and there’s loads out there.
Start by having a look at reputable statistics relating to your industry or target market. Trade bodies and government agencies often provide extensive online reports that are freely available to the general public, and should be able to provide you with a bigger picture of your industry. You can learn more about the economic conditions your business will be operating in, what sort of trends are influencing your chosen industry and the consumer behaviour researchers are learning about your target demographics.
Market research can be somewhat time-consuming, and so it’s often tempting to do a rush job – especially if you’re particularly enthusiastic about your new business idea. But this research is absolutely fundamental to the success of your business. You need to arm yourself with all the facts about your new industry in order to make informed business decisions, even if it means putting your dreams on hold for a couple more months.
What is a business plan, and why do I need one?
After you’ve learned about the industry you’re trying to crack, it’s time to start thinking about how you’re going to write your business plan.
What is a business plan? It’s a written document that describes everything there is to know about your new business. It should cover everything from your business objectives and strategy, to your products, sales, marketing plan and a financial forecast.
That might sound like pointless administrative work – but developing a business plan is essential if you’re planning on getting your start-up off the ground.
First and foremost, writing down everything you know about your proposed business will help you. By putting it all on paper, you’ll be able to hone in on your idea, set benchmark goals and come up with ways to measure your progress and success. More important still, reviewing your plan will enable you to spot potential oversights or mistakes you’ve made during your initial planning stages.
Business plans aren’t just for your benefit, though. If you’d like to secure a business loan from a bank, the government or other types of investors, they’re going to want to see your business plan to ensure you won’t be wasting their time and money. That’s why you need to think long and hard about your business plan, and you may need to revise it multiple times before it’s ready to be shared.
So, how do you write a business plan? There are loads of templates online that can help you to structure and format your plan, but they all tend to address certain points.
You need to start by explaining what your business is, what goals you’d like to achieve and how you plan on achieving them. Most business plans do this by including a strategy with action items spanning anywhere between one and five years into trading. Your business plan should also include detailed outlines of your products or services – avoiding jargon where possible and spelling out to potential investors what makes those products stand out.
Include the market research you’ve gathered about your competitors, market trends and the industry as a whole. You should also think about a marketing plan, sales policies and – if possible – how you will structure and manage your new business. Finally, you’ll be expected to include some form of financial forecasts indicating how you expect your business to perform. Many banks also like to see the inclusion of a SWOT (strengths, weaknesses, opportunities and threats) analysis.
That’s quite a lot to think about, but don’t stress. To help you get started, we’ve developed a comprehensive guide that explores how you should draft and structure your business plan in a lot more detail.
The bottom line
The road to self-employment is often long and winding, but that doesn’t mean it needs to be difficult. You’ve got the ability to start your own UK company and run a successful business. Simply have a think about what you’d like to do, research how your idea could operate as a business and then sit down and write a detailed plan that will clearly prove to others why your business is destined for success.
That’s certainly not the end of the journey – there’s plenty more to do before your dream is turned into a reality. But these steps are where it all starts, and they will inevitably go on to form the rock-hard foundations of your new, thriving business.