Top 3 worries keeping new business owners up at night (and what they should worry about instead!)
Are you thinking about setting up on your own?
Going freelance, or perhaps creating a small company?
I've been fortunate to work with hundreds of new business clients.
Some are making the move from a corporate job to freelance work in the same industry.
Some plan to create a whole new business in a different industry.
Either way, here's what they are fretting about and what they should be fretting about.
1. The boring financial stuff
It's very common for wannabe business owners to sweat the small stuff. Instead of focusing on the really important questions they fret about....
How do you register as self-employed?
What do I do about paying tax?
These are easy peavey things to fix. If you want to become self-employed, you go to the HMRC website and register as self-employed. It takes about ten minutes. If you want to be a limited company, you go to Companies House and register your company name. That takes about an hour. But..... it is totally pointless to do either of these things until you have a product or service that sells. For now, set up a second private bank account in your own name, with your existing bank, through which your expenses and your income will go and focus on testing your idea.
You need a business bank account when you start trading as a limited company. You need to be a limited company when you are trading with other limited companies and when you are making enough money for a limited company to be tax efficient. If you are thinking about your business idea and its still a bit fuzzy, all this is a long way down the road.
2. The even more boring financial and legal stuff
Sigh. Just when I think we are going to get into the juicy, exciting bits...clients go off on another boring tangent. We go on to this stuff.
Do I need an accountant?
Do I need a lawyer?
No, you need a business idea that works!!
You only need an accountant to help you make sense of your year-end and file your returns. Having a limited company means you have to submit a return, so you create work for yourself by doing this first off as it takes time and money to set up a company and then you have to pay an accountant to file a return, even if it is a nil return! You do not need a lawyer unless you have a very valuable innovation that needs patenting. Again, focus on the idea first before incurring professional fees.
However, it can be useful to speak to an accountant. A good, small accountancy firm, will give you a consultation to advise you on the best and most tax efficient way to set up based on what you want to do. But first, you need a clear idea of what your business is.
3. The 'must have a plan' worry
Clients have watched lots of The Apprentice, so they think they must have a business plan before they even begin. Business plans can be very useful for defining strategy and for projections on costs, profits and growth. You can only write a sensible one once you have done your research. You do your research through finding and keeping a customer. Then you know what your figures are, who your audience is and what is possible in your market. And you write that down.
So onto the useful frets....
1. What is my service?
Great question. What is it? When you think about the products and services you know and love, I will bet you can describe what they are really simply. Like Waitrose, my favourite supermarket. Service - posh shopping. Taylor St, my favourite coffee shops - service - excellent artisan coffee. You need to have a defined and clear offer. How do you get one?
Well, if you are in a recognised industry, you can start with the 'promise' that other brands make in your industry and be better. 'The best artisan coffee'. 'Posh shopping - through your phone'!
Or do you solve a problem for your customer? "Find a great babysitter, in five minutes flat!"
If you are offering something completely new, you need to be able to define it in a simple sentence so others can 'get it'. Then you want to think about how to package it so it is easy to buy. Widgets are easy, services are harder. But not that hard. "Three luxurious massages for £100".
2. Know Your Client
Packaging is made easier by knowing who your client is and what they want. You find this out by research. You could interview potential clients. You could send out a survey. You could visit the website or venue of a business doing something like yours and analyse who is there or how they speak to that audience. This is known as market research. If you are a one man or one woman band, the more specific you can be about your audience, the better.
Do not be everything to everyone. There is not enough of you.
Say I have a baby fashion business. Deciding who I target changes the price, the venue and the product. Yummy mummies with lots of shopping time? Cash-rich time poor aunts, shopping online for last minute gifts? Budget-conscious new parents? Consider how your product would be different for each audience.
3. How do I market myself?
Every business is in the marketing business. Every single type of new business owner needs to know how to attract an audience to their product and get them to buy. Learning how to get and keep a customer is the single most important skill you will learn. And you will always be learning more about it.
Under this question sits:
How do I build a website, do I really need one?
What about social media, where do I begin?
How do I get a client?
Here's the thing.
Your first and only challenge is not to get a thousand customers.
It is to get your first one.
And to have that customer love you.
And tell someone else.
And then repeat it.
So think about your marketing strategy at the beginning as a game, an experiment. What could I try today, to get me, my first customer? Don't spend much money. Try to get and keep a customer today. Perhaps you send an email to your network. Perhaps you take a photo and post it on Facebook with a story about your new business. Perhaps you go hand out flyers at the school gates. Perhaps you walk into a shop and ask if they would stock your birthday cards.
What can you do today to get and keep a customer?
So in summary....don't worry about the operational side before you have a business to operate. Instead focus on creating a great product or service, that answers a need or problem, for a particular audience. Get to know that audience really well. Then turn an interested passerby into a customer.
And bingo, you are in business!
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