So you’ve got an idea, not just any old idea but The Idea! The idea that you think will make you a living and hopefully maybe even make you rich, what do you do next? There are 2 very important steps that you must not skip in your eagerness to implement your idea – Research and Planning. They must be done in that order too, you don’t want to waste days, or even weeks planning only to then find your research shows you your idea isn’t viable. Research first, and then if you research shows your idea is viable, then start on the planning.
Is anyone doing it already?
Your first step should be to see whether your idea is already being done by anyone else. If you are thinking of a local business then look through local phone books, newspapers, ask around your friends and neighbours and see if anyone else in your area is already doing what you plan to do. If you are thinking of an online business, or nationwide business then the internet is a good place to start your research, also trade journals or industry magazines.
If you do find other people are already doing what you want to do that doesn’t mean you shouldn’t, but you should make sure there is enough space left in the market for you. For example if you want to open a gift shop and there are already five in your town who are struggling to turn a profit then you need to consider if you will find yourself in the same position if you go ahead. Also look at how they do it, think about what you would do differently, and assess their strengths and weakness. It’s good to know your competition, and smart to learn from their mistakes.
Is there a market?
The next thing you want to research is whether there is a market for your product or service. Surveys can be a great way of doing this, you can do free surveys online through Survey Monkey or hand out surveys in your local area, e-mail survey’s to your potential customers to find out whether they are interested in your idea.
Normally a quick trawl of the internet, or a look on sites such as the National Office of Statistics, will help you assess the size of your market. Often articles in trade magazines will quote market figures too, I found some useful statistics in newspaper articles as well.
Is there a profit to be made?
This bit you really have to get right, you need to look at every single cost you will have to pay to make sure your idea is profitable. If you will be producing products then get in touch with suppliers to cost out the raw materials, work out the labour rates to get your products made up (if you are doing it yourself you will need to factor this cost in still). If you will need premises then look at rent, deposits, utilities, business rates, furnishing, staff etc. Even if you are working from home you still need to think about what equipment you will need, how much your utility bills will increase, the tax and NI you will have to pay, accountant’s bills, cost of a website, stationary, advertising... It is better to overestimate your costs and end up with more profit than expected, than the other way around. So don’t think ‘oh that’s only a few pounds here and there I won’t count it’, it will soon add up!
Try and get as many hard figures as possible at this stage, do not just estimate. You’ll also be surprised at the potential opportunities that will come out of contacting people to get the costs for your business. Whilst writing my business plan I rang Sewing World magazine to find out how much it cost to advertise with them so I could figure out the annual cost of an advertising campaign. I explained that I was in the research stage of a new business idea and they asked to know more about my business. When I explained the concept of my site they said they loved it and wanted to sponsor me! So before I had even got the idea off the ground I had a big name national magazine sponsoring me.
Also several of the people I contacted at the market research stage subsequently became customers. You’ll probably also find you will get a lot of feedback from people at this stage too. One of the ad staff I spoke to gave me a lot of advice about online advertising (ad placement, size etc) which proved very useful when I came to design my site.
Don’t forget to also research your incomings. How much will you be able to sell your products for, looking at the competition can be very useful here you may find there is a market standard price for your product or service. Are there other potential income streams you can tap into? Affiliate marketing? Sponsorship? Could you sell other people’s products as well as your own in exchange for a commission? Again err on the side of caution with your figures, better to underestimate your income and be pleasantly surprised than the other extreme.
How will you do it?
Everyone has their own personal circumstances that need to be considered at the research stage too. For instance in my case I had an 18 month old baby when I started planning my business, so I had to look into childcare costs and options and factor that in. If you are going to open a shop but have children think about how you are going to cope with school holidays, or the school run. Will you close at 3pm to do the school run? If so you need to research whether that is a busy time for shops in your area and whether you could be losing a lot of money by closing then.
If you don’t drive them you may need to research train/bus routes between any locations you may need to get to regularly (offices, shows/exhibitions, suppliers). In my mum’s case she had to look after her elderly parents and spend a day a week doing their housework and cooking etc. So she had to research which day of the week would be the best to close the shop without losing too much custom. So think about any factors which affect you personally, and research how you will work your business around them.
So if all your research has lead you to decide that there is a market for your idea, you will be able to make a profit on it and there is nothing preventing you from starting your business it’s time to start planning.
There are several places online where you can download business plans to help you with both your research and planning. I will list them at the bottom of this section. First I want to say a few things about planning.
Don’t skip this stage
It is very easy to get carried away when you have a great idea and jump straight in, before you know it you’ve got premises (and all the associated costs), stock coming in all over the place and then you realise you haven’t yet sorted any advertising or promotion so no one even knows you are there.
You need to carefully plan each stage and try to stick to your schedule. You should already know from your research how long it will take for your stock to arrive if you will be making or selling products, so if it’s going to take 4 months don’t rent premises straightaway or you will be paying 4 months’ rent for nothing.
If your website will take 6 months to be up and running then don’t take adverts our 3 months before that because if people look for your site and there’s nothing there it’s unlikely they will remember to go back in 3 months. I’ve seen this done so many times!
Also if you will be running a business purely online do add at least an extra month (preferably 2 months) to whatever date the designers tell you your site will be ready. This will allow for any unexpected delays or last minute problems which will inevitably pop up. I know of very few websites which were actually finished on the date they were expected to be ready.
I am a huge fan of lists, spreadsheets and charts but even if you just have little notebook where you jot down a rough time line plan for your business that is fine. So long as you know what you need to do by when.
It can take quite a while to set up supply accounts, so do that early on in the business. Websites also tend to take months so that is something else to do at that stage. Most magazines work at least 3-4 months ahead so send press releases early so that the print date will be around the time you launch. If you are planning to do any shows they normally take bookings many months in advance, plus if you need hotel accommodation it’s cheaper the earlier you book.
Things like getting a business phone line/internet connection fitted, or setting up a business bank account/Paypal account tend to take 2-3 weeks so after the jobs above have been done it’s time to think about them. It can also take a few weeks to order business cards, promotional flyers or posters etc so make sure you do that around a month before you plan to launch.
One the easiest ways to schedule things is to make a list of everything you need to do between now and starting your business – draw a long line with today’s date one end and launch date the other end and mark a few dates inbetween as a guide (or use Excel to make a calendar of the dates between now and then) and slot the tasks from your list onto your timeline or into your calendar. Don’t panic if you don’t get everything done on the exact date you planned, just remember to carry it over to the next day.
The most important thing when it comes to financial planning is to be accurate and make sure you include every little cost. Also bear in mind that no matter how much you plan unexpected expenses will arise, or you may have months where you don’t earn as much as expected so try and put some money aside to tide you over.
Look very carefully into how you get funding for your business to make sure you have a good rate, and ideally a flexible arrangement because not everything goes to plan. Try to avoid sticking large amounts of the credit card because you are convinced you’ll be making lots of money from the day you start trading so will pay off quickly. I’d also be wary about securing loans against your property, there are no guarantees in business no matter how good your concept and do you want to find yourself with no business and no home if something goes wrong?
There are charities, local schemes, government schemes etc that will help with business funding. It can take quite a lot of time to find out if you are eligible for them and to apply for funding but it is worth investigating. If you are under 30 I’d highly recommend checking out the Prince’s Trust, not only can you get a start up grant and loan from them but they give you a week long business training course provide you with a mentor to help you through your first 2 years of business.
As you may guess that’s where I got some of my business start up funding. I used 3 different sources, I got a loan from the Prince’s Trust and a small grant off them, I got an investor and I used my credit card for the last little bit. You don’t need to depend upon just one source for your funding; sometimes it is easier to spread it as some funding schemes have fairly low limits as to how much they will give, but offer very favourable terms.
It can take months, if not years to actually start making a profit in business and you the more interest you are paying the longer it will take you so again doing your research at this stage will pay off. It took me 15 months of trading to clear my start up loans and I put almost every penny I earned straight onto my debts, it’s a long time to work without taking a wage. So do also think about any other sources of income during that initial period, can you survive off your partner’s wage? Can you get a part time job for the first few months? For the 8 months I was working on the site pre-launch I also worked part time in my old job. Can you offer an extra skill or service that will get you money more immediately? I did social media for some of my customers in the first few months of my business for an extra income.
In summary I cannot emphasise how important researching and planning is. If you do this right it will make running your business so much easier in the long term, and more likely to succeed. So rein in the enthusiasm for the moment and knuckle down to research and plan before you start spending any money.
For some very useful advice on how to succeed in business click here.
Banks – Several banks have business planning guides an advice on their websites. I’ve linked to a few of them here, don’t forget to check your bank’s website too. Barclays Writing a Small Business Plan, Santander Business Guides and Lloyds TSB Business Plan.
Business Wales – Have some useful business guides for startups on their website.