As more and more people face a living cost crisis, higher energy bills, increasing mortgage payments and a potential recession it might be seen as the worst time to start out on your own. However, it has been reported that a third of UK adults are thinking about starting a business or side hustle in 2023 in a bid to increase their income as household costs soar.
New research from small business support platform Enterprise Nation found that figure rises to almost half (48%) amongst young adults aged between 18 and 24 who said they are considering starting a business.
History has shown that many businesses start and grow in tough economic times, probably because business owners have to think more creatively and try harder to succeed. The other key drivers are the freedom of running one’s own business and the opportunity to control one’s own financial destiny.
Here are some of the stats around start-up businesses.
The good news
- One company is formed every minute in the UK (GOV.UK, 2019)
- 89% of UK startups survive their first year (ONS, 2019)
- There were 5.8 million small businesses at the start of 2019, up from 5.7 million in 2018 (despite Brexit concerns) and up from 5.5 million in 2017. (GOV.UK, 2019)
- The number of small businesses in the UK has increased every year since the year 2000 and is expected to do so throughout the ‘20’s’. (GOV.UK, 2019)
The not-so-good news
- Fewer than half of UK Startups make it beyond 5 years (GOV.UK, 2019)
- 60 % of new businesses will go-under within three years (Telegraph, 2019)
- 20% of new businesses will close their doors within just 12 months (Telegraph, 2019)
Still interested in going it alone? – read on.
If you want to make a success of your start up here are some key things to consider.
- Have a plan!
If you got in a taxi you would need to give the driver a destination otherwise you could be wandering around aimlessly for hours and have spent a lot of money without anything to show for it. Plans should be simple with clear objectives and targets. Where do you want your business to be in 1,2- and 5-years’ time? Many people advise writing long and detailed business plans but often these never get used beyond a pitch for investment and lay in a draw or on a server. A plan should be dynamic and be referred to on a regular basis, maybe every quarter or six months to ensure you are on track.
- Know your market
Who will buy your product or service? How many competitors are there in the marketplace? How do you stand out from the crowd? Are you meeting a need or resolving a pain point for a buyer? Are you competitively priced?
- Routes to market
Think hard about how you will get your message across to potential customers. If you are selling a product or service to a business the customer is likely to be very busy and short of time so ensure your messages are succinct and tell a convincing story. These days social media and email are often the first items on the list of marketing activities but there are other ways to speak to customers such as editorial in trade magazines, networking, exhibitions and trade shows.
- Sell, sell sell!!!
Creating awareness of your product and service is vitally important but sales requires a determined effort to maximise every enquiry to your website or via the telephone. Being responsive, keen and interested will demonstrate to a new potential customer that you are interested in their business. Always respond quickly and professionally to an enquiry and try to find out everything you can about the potential customer’s business so when you have a meeting, Zoom or telephone call you are well informed and can demonstrate how you could add value to their business. Selling is an ongoing process and everyone in your organisation needs to be ready to maximise on an enquiry and show a potential customer how good your company would be to do business with.
- Cash is king.
Sadly many new businesses fall down when it comes to getting paid for their products and services. Cashflow can be a major headache for business owners, particularly when starting out if you are trying to gain customers and might be tempted to offer really generous payment terms. It is worthwhile to set out your payment terms and to be firm about pursuing settlement. No business can afford to be a bank and give their customers extended credit terms. Businesses often don’t fail because of a lack of sales but a lack of cash.
- Recruit and grow a great team around you.
As your business grows you will need good reliable people who can deliver your products and services. It is worthwhile spending time with your staff to ensure they have the right attitude and ill live up to your own high standards. Invest in them with training and development as well as paying them a competitive salary, and if possible, link their performance to a bonus scheme. Build a team culture of trust and support where everyone wants the company to succeed and make sure they share in the success of the company. Many business owners are looking at employee owned structures as this incentivises everyone to make the business a real success.
- Look for outside support.
Starting and growing a business can be a challenging and, sometimes, lonely existence so business owners will definitely benefit from some outside professional help. This could be a growth advisor, coach, or mentor. Whoever you choose find someone with the experience and knowledge to add value to your business and your personal journey. They can be invaluable in providing another perspective and helping you to look at your business in a different way.
- Back to the plan – what’s your exit?
It may seem odd to start thinking about your exit when you start a business but its amazing how quickly that time may come, particularly if you grow your company quickly. Ask yourself the questions; when do I want to exit?… what price would I want for the business? …how would I ensure my loyal staff were rewarded and the company culture continued? What would I do after I sold my business?
If you would like an introductory discussion about how Corporate Counsel could help you and your business please contact Paul Vousden.