10 Essential Steps To Start A Business In COVID Times
Updated: Aug 25, 2020
1. Identify the business opportunity
It is very difficult for entrepreneurs to choose a business, with a multitude of options out there. To start a business an entrepreneur should have the passion and also understand the business idea as well as the skills needed to ensure the business has the best opportunity to succeed. Research at this point is crucial – competitors, pricing, the sector – is it growing or shrinking, seeking out suppliers and profit margins. In COVID times be mindful of those areas of commerce that have been affected – will they bounce back? If not focus on another area that will or one that is not affected by the lockdown situation – mail order for example.
2. Create an awesome business plan
A business plan is a road map that helps you and your associates to gain a better understanding about your business and industry structure. It really will set you up for success and is vital. Research shows businesses with a live followed through business plan have 30-50% higher sales growth and 12% higher gross profit margins against those that don’t. This blueprint should include: Summary, Company Overview, Business Environment, Company Description, Company Strategy, Financial Review and Targets and the all-important Action Plan. A business plan should ideally look 3-5 years into the future. COVID has shown that you need to have a plan that is easily changeable and adaptable which is why it is best to have a software or cloud-based plan. Every great business needs a great business plan.
3. Start-up funds for your business
Decide if you need finance for your business. Setting up a business can be expensive. There are numerous ways to obtain start-up funds and these will be different for each individual. Start-ups such as professional services generally require less funding than a consumer product given you have to produce the product, hold stock and market your proposition – this can be expensive. Options for finance include Banks, Business Finance companies, Investors and even your family. A business plan is a great document to create to support your case. A well thought out, comprehensive plan could mean the difference between obtaining finance or not and at this time lenders will be looking for a plan and scrutinising it more than ever. After all it shows you are professional, know what you are doing and should prove your model can work through the numbers you have calculated.
4. Choose a business name
Choosing the right business name will help to distinguish your business from other competitors and also provide your customers with a reason to choose you rather than your competition through top notch branding. Depending on the complexity of your business, it is best to seek advice from a business setup expert or marketing consultancy to ensure you are making the right choice for your business. There is definitely an art in choosing the right name and branding and it’s a crucial element to consider carefully. As a tip have a look at a domain provider and for any names you have in mind check and see if the URL is available.
5. Choose a business structure
Determining the business structure of a company is not to be taken lightly and you might want to speak to an accountant to choose the right one for you. Sole trader, Limited Liability Partnership (LLP), Private Limited (LTD) or Public Limited Company (PLC) tend to be the most common types in the UK.
6. Choose a business location
This is one of the major questions to answer once you are done with all the paperwork regarding the business. The place of a business is very important for the operation of your business. Depending on your business type will help determine whether you will have a home office (perhaps a garden office), a shared or private office space, or a retail location. Seeking the guidance of a business setup expert or a local business support agency may help you to decide the best location based on your activity. COVID has shown that you should take nothing for granted if you need to rent or purchase space for your business make sure you can afford it.
7. Business Insurance
Owners of small businesses have the burden of managing the risk when initially starting the company. The best way is not to put the business at a risk at the initial stage without getting the proper business insurance to protect your company in the event of unforeseen situations or litigation. Public Liability Insurance is a common basic insurance for companies dealing with third parties, on business premises or in your home, which applies to most companies. There are other types of insurance such as Professional Indemnity Insurance that will need consideration. Often specialist sectors such as the Building Industry or Events need a number of additional policies to cover all eventualities.
8. Hiring the team for your small business
After completing all the legal formalities it’s time to hire employees if you have decided that is part of your business model, even if they are part time or external contractors. Make sure to outline the positions you need to fill and the job responsibilities that are part of each position. You might decide you initially need admin support – to start with you might consider a virtual assistant rather than a full time employ which keeps the cost and risk to a minimum. The new normal after Coronavirus will be a world of contractors and associates rathe rather than pay rolled employees. Bear this in mind, it reduces your exposure in times of crisis. You could use an agency, advertise yourself, network through your contacts or contact your local Jobcentre.
9. What can go wrong?
In our experience there are three areas that business owners and directors struggle with outside of macro-economic factors and it’s a known fact that 90% of new businesses fail, so you need to avoid potential pitfalls. These are Sales, Marketing and Cash Flow. It is therefore vital that these elements are effectively covered off in the Business Plan and acted upon. COVID has shown that cash flow is vital. It is important you have at least 3 months cash in the bank once you are up and running in case of emergencies. Ideally this should be 6-12 months. Your plan should reflect you need to work toward this buffer, aim to have 3 months in place after 12 months of trading.
10. Three ways to win
You will better your chances of success by:
· Keeping your costs to a minimum
· Offer something unique
· Focus on one customer group – a laser focused approach rather than scattergun
Excel in these elements at the start and as you grow you can branch out into complimentary products and/or services in a step by step fashion. Planning and a laser focused implementation are key.
If you would like to discuss your start-up, cash flow, business planning and growth needs please contact us. ProfitPlus are experts in helping start businesses, business planning and business growth. We offer unique services that combine creating a business plan coupled with business coaching programmes such as our 90-day PlanningCLUB’s, find the profit and cash flow programmes.
We provide interactive planning and business tools to help you through your business planning process simply and effectively. Our two-day online planning workshops result in outstanding 5-year business plans, created in just two days, to help you develop and plan your business for success, giving you higher profits (and more salary), more time away from the business, greater cash flow and increased value.