12 tips for year one of running a business
Category: Business | Jun 9, 2019
12 Tips for year one of running a business
Launching a new start-up venture can be exciting, daunting and stressful – all at the same time! There are so many things to think about, so many deadlines to meet, and so many people to talk to. Beans Accounting and Business Services shops in Crewe and Warrington can offer a range of packages and expert advice for entrepreneurs who are launching, or thinking about launching a new business. Here, David Rodick of Beans shares what he thinks are the 12 most important things a business needs to do in Year One.
1. Build a business plan
The process of building a business plan will force you to articulate every aspect of your business idea and help you to test and challenge your assumptions. Make sure you build enough profit so that you can pay your living costs. Often all it takes is a very basic plan to show you which businesses are never going to work. But if it passes that test then show the plan to someone you can trust to give you honest feedback.
2. Produce a realistic 12 month budget and monitor actual performance against it
An annual budget may seem like the least sexy part of a business – far less interesting than the cutting-edge products or services that your business is eager to market. Yet creating a realistic budget and adhering to it throughout the year can mean the difference between financial success and failure.
Creating a realistic budget for your business will provide a guideline for anticipated income and expenses and enable you to compare your financial expectations with the actual numbers. In essence, it will serve as a barometer for how your business is performing – and enable you to plan ahead and determine any changes that should be considered.
Having a detailed financial forecast is all well and good – but use it properly. Keep a close eye on your expenses and revenues and develop a monthly, quarterly and annual budget based on past expenditures. Regularly monitor your expenses to see if they’re in line with your budget. If your forecasts have been over-optimistic, do something about it before it’s too late.
3. Sort out your costings – and build in a margin for flexibility
How much are you going to charge your customers for your product or service? Getting your pricing right from the start can ensure long-term success.
Avoid falling into the common trap of under pricing your product or service: Many start-up businesses work out a cost figure for each product or service and add a modest mark-up – known as cost-plus pricing. While this method is common, it is not the only way to arrive at a price. Smart businesses use “value pricing” where they price according to how much the customer values your product or service. Invest serious thought into your pricing methodology at an early stage – it can pay big dividends later.
4. Know who your target audience is
It sounds simple, but knowing exactly who your potential customers are, their specific needs and what makes them tick, can have a huge impact on the success of your business. In the early days of your venture, the more loyal customers you can win, the better. And if you can turn your customers into advocates, better still – there is no better way of winning business than through personal recommendation. Find out if your potential customers like to use a particular channel of communication – twitter, face-to-face or text, for example – and make sure that channel is always open to them. And ask your customers for feedback – and really listen to what they are saying, even if you don’t want to hear it!
5. Know the competition
Everybody says that knowing your market is everything. Saying it is one thing, but understanding why it is so important will help you stay ahead of the pack.
Look closely at your market and study your competition – learn what others are doing and why. Progressive companies should always conduct a regular competitive analysis to ascertain changes in the marketplace and in their competition; start-ups need to know the landscape before they begin.
If you’re a new business, there’s no better place to begin than with your competition. Instead of diving into the deep end, start shallow by checking out the competition. You’ll be surprised how much you will learn – not only about who you are up against, but about your own business too. This can often be the catalyst for new, powerful and creative ideas.
Researching competitors is an invaluable way to find new followers on social media, help with your marketing efforts and inform you about the best places to advertise. If it works for them, it could probably work for you!
6. Set aside quality time for business development
The life and times of a small business can be tough and turbulent. All entrepreneurs say that they have had to do every job in the company whether it’s framing the business strategy or changing the light bulbs. You will be immersed in your day-to-day commercial activities – managing customer expectations, managing finance and ensuring cash flow. However, stepping back from your regular role is vital for growth as it gives you the opportunity to develop new ideas, new ways of looking at your business and new initiatives to get your product in front of potential buyers.
Start by setting yourself small goals. Identify your learning objectives and set aside time, on a daily basis, to act on them. If you can, delegate some of your regular activities to allow you more “step-back” time. And consider forming a support group with others who are also interested in improving themselves and the business.
There are plenty of ways to boost business without it costing the earth. Take time to plan and your “step-back” time will be well rewarded rather than wasted…
7. The importance of networking
Networking is one of most powerful marketing tactics to help develop, accelerate and sustain success for any individual or enterprise.
Networking is about making connections and building enduring, mutually beneficial relationships. Business clubs, Chambers of Commerce and, of course, social media, all operate as catalysts to ensure you meet the “right” people to include in your network and expand your sphere of influence… cheaply and very effectively.
We are constantly bombarded with advertisements, emails, junk mail, special offers, and sales pitches creating a totally jumbled – and very forgettable – message. Personal relationships, on the other hand, enable you and your business to stand out, rise above the rest and make a lasting impression.
8. Don’t add cost unless you really need to
The old adage of “look after the pennies and the pounds will look after themselves” should perhaps be updated to “look after the thousands and the hundreds of thousands will look after themselves”. But the sentiment remains valid.
Whatever the size of a business, and whatever stage it is at, there are always plenty of savings to be made by the shrewd entrepreneur. Encourage family members and close friends to help out when they can.
Avoid the mistakes that other businesses make. Keep close track of your expenses and reduce them at every opportunity. In this way, you are guaranteed to stay ahead of your less astute competitors.
9. Take advantage of free advice
Every entrepreneurial venture inevitably starts with a good idea, evolves into an amazing idea and, with any luck, ends up as a successful business.
But how do you move on from that first idea and convert it into your successful venture? Advice on your next steps is available everywhere – from the government, the bank, friends, the internet, business clubs, Chambers of Commerce and your accountant. Exploit every single opportunity for free advice – especially when it comes from the mouths of experienced professionals and successful entrepreneurs.
10. Surround yourself with positive people
The company you keep is important. When you’re the founder of an enterprise, everything rests on your shoulders. One practice that successful people generally have in common is surrounding themselves with positive people. Whether you’re just starting out in business or already have an established company, the importance of surrounding yourself with the right people really can’t be overstated.
To do great work you will inevitably have to leave your normal comfort zone and take some risks which may well be unsettling. This is best tackled with the right support around you, rather than those who bring you down and aren’t excited about your success. But don’t forget your family and friends can provide the support to ease the pressure – and the stress!
11. Be patient
In the high-pressure, high-tech, high-stress commercial world in which we all live, every entrepreneur’s natural tendency is to do everything fast – quickly – now – soon – yesterday. But as most business leaders will testify, patience wins the game.
Patience is not necessarily regarded as a typical characteristic of the start-up, since everyone is more than eager to reach the pot of gold. However, in business there are no silver bullets, no short cuts, and no way around doing the hard stuff. So you might as well take your time, do it right, and be successful.
12. Speak to your accountant
If you haven’t spoken to your accountant yet, then speak to him or her now. A good accountant will do more than just your tax return. A good accountant will be an entrepreneur in their own right. They have seen many businesses such as yours and will share your excitement of what you are trying to do. At the same time they will provide the challenge that you need to make sure that you have thought through your proposals properly. In other words they should be a partner to see you through your businesses lifecycle. At Beans we like to think of ourselves as the perfect partner for your business journey.
Okay… it might take an extra few months to bank the first million, but remember Aesop’s fable about the tortoise and the hare: “slowly does it every time”…
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