Hello and welcome to the very first Simply Business podcast. We are here to help small business owners, primarily in the UK, and in this first episode we will be looking at the challenges facing entrepreneurs.
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Starting a business is a daunting prospect. If you are thinking about giving up the day job, you need to be sure that you are properly prepared. So what do you need to consider before making the leap?
First of all, you need to think about your offering. What do you have to give your customers? Businesses stand or fall on the quality of their product. So, right from the outset, you need to make sure that you have a great product.
Many people start businesses without a clear idea of what it is that business will actually do. But unless you can articulate exactly what you are offering, you will struggle to find backers – and, more importantly, you will find it difficult to draw in customers or clients.
Here is a good exercise to help focus your mind on your product. Sit and write an elevator pitch. This should explain exactly what it is that your business does, what it offers customers or clients, and how it will be different from its competitors.
Your pitch should be about thirty seconds long – short enough that you could reel it off start to finish during an elevator ride. If you can’t sum up your business in this concisely, you might need to refine your ideas before going any further.
Of course, it’s not enough to just prove to yourself that you have a great product. Most new business owners need some cash to get them off the ground – and this means that you will have to prove it to the bank.
Finding finance is one of the most important tasks facing any entrepreneur. Unless you are willing, and able, to finance your new venture from your own savings, at some point you will have to seek funding from somewhere else.
Despite the much-publicised lack of business lending, the bank is still the first port of call for many entrepreneurs looking for cash.
Although new lending to businesses is slowly increasing, it is still very difficult to persuade a bank to fund a new firm. Lenders want to be sure that yours is a viable venture, with genuine opportunities for growth. Their standards and criteria are very high. So, if you are going to stand a fighting chance, you need to make sure that you have a solid pitch. Look out for our next podcast, where we will be talking about putting together your financial forecasts, and presenting them to banks.
Of course, banks are not the only source of funding. Many of the world’s most successful companies started out with some cash from friends and family, and this can be a great way of getting your business off the ground.
If you do choose to go down this route, it’s worth remembering that it is still a business transaction. Deals of this sort start out with the best of intentions, but sadly often end up with conflict. If you want to avoid arguments further down the line (and as we all know, there is nothing worse than arguing about money), make sure that you have a written agreement drawn up by a solicitor before taking investment or a loan.
The recession also poses a major challenge for small business owners. Although the UK economy is growing again, the twin spectres of public sector cuts and rising unemployment continue to loom large.
Many businesses are still operating on a war footing, as if they are still in the middle of a recession. And, as dramatic as that might sound, it may not be such a bad idea.
The beauty of the small business sector is its agility; its ability to quickly adapt to circumstance. In the current economic climate, with all its volatility, this attribute has never been so important.
You should think about ways that you can ensure that your business is quick on its feet. For many start-ups, a low overhead approach works best. It’s a simple equation – the lower you keep your expenditure, the longer you will have to find the customers and clients that you need. Even better, firms that start off with low overheads often continue this tradition as they grow – and this is a sound approach for any business.
Finally, you should remember the personal challenges associated with starting a running a business. Entrepreneurship is a full-time occupation, and you need to be prepared for your new business to take over your life. Don’t be afraid to get your hands dirty – at least at the beginning, you are likely to be doing jobs that you would prefer to give to someone else, but this will help you develop an understanding of your industry that will stand you in good stead in the long term.
Above all, though, you should have the courage of your own convictions. A good idea is the seed of any great business – but a good idea is not enough on its own. So put down the notebook, rally the troops – and get going.
Next time on the Simply Business Podcast we will be looking at finding finance for your new venture, from drawing up forecasts to meeting the bank manager.
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