Following a productive period of creative thinking you should hopefully have a business idea or two that you can further investigate. The real hard work starts now as you plan your business strategy covering areas such as your business structure, company name, funding and lots of research into your market. This week we’ll cover some of these essentials that you’ll need to weigh up before you do anything else. Launching a business takes time and money so be diligent thinking through your strategy to make sure you’re efficient with your time and don’t make expensive mistakes. It’s better to be fastidious at this stage rather than putting in loads of groundwork only to establish barriers to entering the market at a later date.
Structure of company – From an early stage you’ll need to consider whether you’ll register as a sole trader or a limited company. Some of the determining factors involve the level of tax you’ll pay, the legal entity and the company’s ownership. If you get into financial difficulty as a sole trader you will be personally accountable for any losses while this isn’t the case for limited companies. However, there’s a lot more regulation and paperwork involved in establishing a limited company. An article such as this one and further reading is advisable before you decide upon the structure.
Target Market – It’s important to establish your target market early on and define it as throughly as possible. The audience needs to be of sufficient scale and can consist of a number of contrasting sub markets. Be honest, can you envisage there being enough customers to support you over the first 3 years? Scale, customer loyalty, spending power and lifestyle habits need to be considered. Put yourself in their shoes and change your perspective a little. By viewing open source date you can analyse the demographic make up of an area.
Datashine uses postcodes to offers over 800 trends from census data to help you define an area at a granular level. Openstreetmap and Spendnetwork can further help you research an area.
Location – This might seem basic but where will your key catchment area be and what’s the competition like?
Don’t be intimidated by rival offerings, if you can offer a better service or have a USP you can still be a success in a competitive market. Your market can be national or across counties however a 5/10 mile radius is advisable for advertising targeting. The catchment area will often be industry specific. Openstreetmap and Spendnetwork are other open source sites that can further help you research an area.
Company name – Make sure this is relevant to your service or product. In this digital age most people will find you online so do consider what people will type in for local searches. Once you have a name you’ll need to check that it’s available at the Companies House website. It’s easy and inexpensive to register with Companies House so don’t pay anyone to complete this for you.
Domain name – Associated with the company name will be the internet domain name. If you’re lucky enough to find a .co.uk or .com name then you are off to a great start. I had to think laterally when both of these were already active on launching altspace. We are a community of coworkers so the .club domain name felt appropriate. If you are based in London you can buy .London There are a lot of options available so avoid wasting money bidding high amounts for sold names or entering auctions to get a desired domain.
Funding – How are you going to finance your startup and pay your way over the first few years? This will make for uncomfortable reading but many startups won’t turn a profit until years 2 and 3. If you bootstrap the launch yourself be honest in your calculations and have a contingency fund for emergencies. These will happen and there will be unforeseen costs. An alternative approach will involve looking for investment or a loan. Here’s a recent blog that I wrote on alternative sources of funding.
One of the best exercises I completed while preparing to leave my previous company was signing up for a 6 week series of evening classes on ‘Starting up your own Business’. For round £150 I received 12 hours of invaluable training that gave me a grounding in strategy, a lot of confidence and some great insight into small business challenges. Check in with your local education centres to see if there is anything similar close to you.