Launch a small business in 10 steps (part 2)
In part one of “launch a small business” we discussed researching your business’ market, developing a start-up plan, getting business funding and selecting premises for your new business. This section covers start-up equipment, recruitment, product development and marketing.
6) Buy the right tech and equipment
If you’re lucky enough to get funding (especially if you get a large amount) it’s tempting to splash out on the best equipment going. Equally if you’re counting the pennies it’s easy to under-estimate your technical requirements and spend too little.
Predicting your technical requirements is tricky, and it’s worth calculating them as part of your business plan. Your business will grow (hopefully) and as it does you’ll need more capacity, faster widgets and bigger just about everything.
You can buy new equipment in dribs and drabs so don’t pick five laptops when two will do. But make sure those laptops have enough memory and power to help develop your businesses until you buy new ones.
The same goes for factory machinery and office furniture. You don’t need an oak desk but you do need a comfortable chair that helps you to sit upright. You also need machines that can cope with surges in demand as well as the steady growth of your business.
Read on:
Application service providers (ASPs)
Choose the best software
Find and fund technology at start-up
7) Developing products and services
Product development starts with your marketing and your business plan. Before start developing your product or service you must know if people want it and if they’ll buy it for the price you want them to pay (see part I).
That means committing your concept to paper. Write down what the offering is, why people will buy it, how much it will cost to develop and how much you plan to sell it for. Fail to do this properly and you could find that your manufacturing, supply or development costs outweigh the price customers are will to pay.
Once you have uncovered a need for your product or service, you’ll need to find a way of getting it to your target market. This process is what makes your business unique. If it’s a tangible product you’re selling to retailers, your route to market will be completely different from someone founding an art gallery or accountancy firm, for example.
Broadly, the best advice we can give is to research the right suppliers and don’t forget these may lie overseas, especially if you want to manufacture goods cheaply and efficiently.
Use companies that can offer references and who will let you speak to existing customers. Ask how much contact you’ll have with your suppliers, how often they’ll update you on progress and what options you have if the relationship sours.
Read on:
Pricing your new product or service
Protect your new product
Launch a new product or service
8) Recruiting staff
Businesses begin taking on staff at different times. For example if you’re working alone you may need hired help earlier than a business started by a team of founders.
But once you start recruiting people they’ll quickly become a drain on your cash reserves. It sounds obvious but a £24k salary will remove £2k a month from your bank account, be sure that you can comfortably afford new staff before you take them on.
They say your people are your business’ strongest asset, and this is no truer than in the case of start-up businesses. So choose wisely. Many start-ups headhunt people they have worked with in the past and have direct experience of managing.
But you have no one who springs to mind, then prepare before you recruit. Don’t just slap an ad in the paper and wait for responses, consider who you are targeting and what types of media they read.
Think about the interview process. Once you receive people’s CVs, whittle them down to a group of candidates who are most relevant and experienced. Try not to prejudge candidates before you interview them and resist the temptation to pick out a favourite too early.
Decide how many interviews you want to conduct for each candidate and who from your business should be present. Also, should you include a practical examination or test to let candidates ‘prove’ their abilities?
Always follow up references and speak to previous employers. Recruiting is a costly business and you don’t want to start a revolving door of hiring and firing. Lastly, read up on your employment law; your paperwork and tax responsibilities change when you take on staff, so make sure you know where you stand.
Read on:
Finding the right team when starting up
Attract and retain staff
Business HR (if you’re not an HR pro)
9) Advertise and market your business
It doesn’t matter how good your offering is, you won’t sell it if no one knows about it. This is where advertising, marketing and PR come in. As with many things in business your campaign for global domination will depend on your business type, budget and goals – for a start you might not want to dominate the globe!
Think about your market and come up with ways to target it specifically. There’s little point getting your name out to people who won’t buy from you because they don’t fit the right demographic.
Advertising (in particular) is expensive, so pick mediums (magazines, websites, directories, leaflets etc) that will give you the biggest return. Google and Facebook adverts allow you to target specific customers, see if they’ll work for you.
Marketing and PR range from ‘free’ to ‘very expensive’ and it’s possible to get your business known without spending any money at all.
Creating your own press releases and offering yourself up as a spokesperson to the media for stories relating to your industry are two examples for free PR. You could also write articles for trade magazines in your market, contribute advice to online forums and take advantage of online social networks such as Facebook and Linked In.
Read on:
Integrated marketing
PR your business
Launch marketing, part I
10) Get paid
There are two broad ways businesses get paid: at the point of sale (such as shops, restaurants and hotels) and by invoicing customers once a product or service has been delivered.
In the latter case, making sure you get paid on time is an essential part of keeping your business running. Late payment is a big problem for small businesses that rely on regular and dependable cash-flow.
It’s impossible to guarantee being paid on time, but there are things you can do to give yourself the best chance. Making sure your payment times are displayed clearly on contracts with new customers and setting up regular reminders for customers who pay late are two basic ways.
You are protected by law, and have the option of charging interest on overdue payments. You can also employ a third party to chase payment for you, but be careful not to upset important customers unduly by threatening them with legal action.
Finally you can use invoice finance to solve the problem. Companies who offer this service take control of your sales ledger, chase payments for you and, for a percentage of your deal value, pay you upfront for sales made.
Read on:
Invoice finance
Identify business cash-flow problems
Overcome late payments
The 10 points listed above here and in part I are meant as a brief introduction to launching your small business. For more in-depth advice click on the links which follow each section.
