By Charlotte Fantelli
How to start a business, an easy step-by-step guide; part one: ‘From Concept to Funding’.
Part two can be found here: ‘How to start a business: Launching and Your First Year‘
Firstly when starting a new business, you must start with a concept; the idea and premise for your business. This is an exciting time where ideas flow and dreams are born. If you are thinking of starting from scratch, the ‘idea’ will be the fundamental part of starting the business. On this the whole of the rest of the process will be based. If you are thinking of buying an existing business or franchise, like the Just Shutters franchise, then the business idea will have been proven through facts, figures, existing successful business model and the franchise package on offer.
It sounds simple but ideas are ten a penny. Great ideas even, are nothing without the hard work that goes into creating the business model that makes them work. If starting out yourself you have no way of truly knowing how good your idea, or business model, until you test the market. Making sure your idea is good, and your business model great, will take lots of detective work, investment and hard work.
Ask yourself: ‘Is my idea unique?’
If the answer is yes ask yourself ‘why are other people not doing this?’ Is it because you really are a genius and genuinely have the next big thing? Or is it because the market simply is not there? Be hard on yourself here! Test the theory (and not just on friends and family), make sure that if you have a unique idea it is unique for a good reason.
If the answer is no (that is not a bad thing!) Ask yourself ‘how am I going to do something tried and tested but better than is currently available?’ And ‘how am I going to win business over my competition?’
If you can answer these questions and still believe your idea is a rational and market ready concept, you are ready for step two!
What kind of business structure is right for you? Do you want to start a limited company? A partnership? Or even look at buying an existing business or franchise, starting your own local business that is part of a existing brand? Either way the next stage is to develop the idea into a strategy. To test the market place and to understand your market sector. And know (as much as you ever can) that the idea is tried, tested and ready for investment and launch.
Creating a business plan – this is a very daunting task but one of the most important to get right. It will likely be the document you make business decisions based upon. Furthermore, this the document that is presented to investors including the bank when opening accounts or raising funding.
Start with the tag line, the business plan summary; think of this as the ‘tweet’ of the business world. This really helps you concisely sum up your business and focuses you to the real core idea. For example:
‘Just Shutters is a specialist plantation shutter company, specialising in the design and installation of the world’s finest shutters. Our aim is to be the market leader across the whole of the UK within five years.’
This is a bold statement that focuses and confidently iterates your business plan in one easy paragraph. After this you can go on and explain the who, what, where and when. However your initial tag line will give you the statement to keep coming back to and focus on. Especially when you drift off into the depths of the many pages beyond.
The financials – Any business plan must have financials; the profit and loss and cash flow forecasts. This is where many people get a little lost. Figures published in your market sector can be a useful guide but beware any market sector will have leaders and failures; you must be able to justify where your forecasts fall within them.
This stage is much easier to do if you are planning on buying an existing business or starting a franchise. This is because the ideas are already tried and in existence. In these scenarios you must ask for figures, territory/rights and look at the package you will get for your investment. The offering should be clearly laid out and the financials should be offered at meeting stage; see the Just Shutters franchise package for our own offering.
Testing, testing, testing – market research is very important when you are starting a new business from scratch. Unlike buying into an existing business, you have no trading history to guide you through the likely returns. Therefore, it is very important you test the market. Digital possibilities these days help us reach a large audience outside our immediate friends and family; so join forums, research and test those who are your target market and ask questions! Look at price points and profit margins, but most of all look and see whether your product or service is in demand.
Franchising – this is a great way to know a product or service works. To look at trading history and get the guidance, support and package you need to start your own business. If you are interested in knowing more about the Just Shutters franchise opportunity call us on 01202 233744 or fill in the form on this page for more information.
Obtaining funding in this climate is difficult when starting a business from scratch. There are various options, but before we explore them it s very important that you have your financials correct. Ask yourself ‘do I really need this amount of money?’ And ‘have I provided enough of a buffer if cash flow is not as expected in the first 12 months?’
Once you have answered these questions you may like to look at your funding options. Firstly there is the bank – this is a great option for people who are looking to have the financial freedom (from investors) and can anticipate their loan repayment structure and factor this in to their profit and loss. It is quite difficult to obtain bank funding without a trading history – however many millions your business plan is forecasting! It can be much easier to get funding on an existing business or franchise. This is because the trading history of the brand is taken into account, and tangible forecasts and accounts are looked upon in a different light than a company without this financial history.
Funding circle and other peer-to-peer solutions – over the last few years peer-to-peer lending has become popular. Businesses are finding that there are some good deals on the market for businesses with good business plans. Some, like funding circle are far more for growing or proven businesses than start-ups. However, a search of peer-to-peer lending can give you an idea of what funding solutions could be out there for you.
Investor backing – if you have a great business plan, investors are more likely to make decisions based on this than the banks. They will get a feel for a person and an idea, not just the old ‘computer said no’ system the bank uses. It is always advisable to use a company like Angel’s Den or asking your local business advice centres for local ‘Angels’ rather than relying on family and friends. Keeping personal funds and relationships out of business is a very good move!
Funding yourself – this is a great idea if you are cash rich! However, keeping yourself from going into personal debt to support a company is good advice. After all starting a limited company protects your personal finances in the event of things going wrong, it does not however protect the money you put in personally in the same way. If you are looking to put in your own cash, look at the proposition as any investor would and ask ‘is this likely to make me a good return on my money?’ If you can prove the answer is yes, then this option could be a consideration for you. Perhaps, if you have such an investment, considering an existing business like a franchise could give you more assurance than starting up on your own.
Crowdfunding – crowdfunding is becoming ever more popular for budding entrepreneurs. It started as a funding platform for the creative and is fast becoming the funding source of choice across many industry sectors; especially when you are looking to raise less than £10,000. Look at gofundme for their latest and greatest projects and get a sense of whether this funding stream could be for you.
Thank you for reading part one of our two part blog, guiding you through start-up. We wish you every success on your entrepreneurial journey and would be delighted to tell you more about the Just Shutters franchise opportunity and how it could be the start-up you are looking for: 01202 233744.