Starting out as an entrepreneur can be a scary process. Will it work? How much money will I need? Will I be able to afford to pay myself a salary? How will I persuade people to buy from me?
This process is often made more unsettling by the fact that it can be confusing. What should you do first? What are all the steps that need to be taken? So here are the five essential first steps that any budding entrepreneur needs to take.
1. Do your market research. After all these years of working with start-up companies, it's still amazing to me how little attention is often paid to investigating a business idea by start-up companies. You need to know that what you plan to do is viable and, if it's not, you'll need to adjust it as necessary. You should do both primary and secondary research. Primary is where you gather your own data - for example, by conducting a survey - and secondary is where you find and examine relevant data and research that has already been conducted.
2. Decide on the legal status of your business. This is a crucial issue and will have long-term implications so you must decide carefully. Essentially you have four options - sole trader, partnership, limited company or limited liability partnership (LLP). Each structure has its own set of pros and cons. As a sole trader, you fully own the company meaning that you are entitled to keep all profits, but it also means that you are personally liable for any losses. A partnership means that two or more people share the management of the business, including the financial aspects. A limited company arrangement offers owners some kind of financial protection because the extent of their legal responsibility for its debts is limited to the amount of capital that they invested. An LLP is similar but relates to partnerships.
3. Write a business plan. You are about to build a business and 'build' is a key word. Think about this ... would you build a house without a plan? Would you buy some land, purchase bricks and other building materials and then randomly set about the task with no idea what your house will eventually look like or how you are going to construct it? Of course you wouldn't, but it's surprising how many business owners do exactly this. So however boring or difficult you might think it'll be, you must write a business plan. Doing so will clarify your thinking, will give you confidence and will give your business a clear sense of direction.
4. Sort out your finances. The issue of money can very quickly get out of hand for start-up companies. So get things right from the start by hiring an accountant, a bookkeeper if you think you'll need one and a suitable accounting system such as Sage or QuickBooks. Set up a system for your paperwork so that you are organised from day one and register for VAT if you think your income will be above the threshold. If you want to take card payments, then research your options and apply for a merchant account.
5. Develop your branding and build a website. How your business looks in print and online is extremely important these days. So hire a graphic and a website designer give them a brief as to what you are looking for.
With those steps taken, you're now ready to start. So go for it full on, good luck and enjoy the journey.