Six things every start-up should focus on

It may seem obvious, but doing research, and doing it thoroughly is key.  

There’s an estimated 5.6 million SMEs at the start of 2023 [2], and around 800,000 are starting up each year [3]. Keep this in mind and there’s a good chance that you’re not the only one who’s come up with your business idea.  

Do your homework and research your chosen market. Ask yourself: 

• What businesses are already operating in that industry? 
• Is there any demand for your services, or a gap that you can fill? 
• Who are your main competitors? 
• What are their strengths and weaknesses? 
• What can you do to stand out and compete effectively? 

Doing a better job than your competitors is key. Put yourself in your potential customer’s shoes - what would make you switch from your local drycleaner, or hire a different electrician, when you’ve been using the same company for years? 

So, you might know that there are 10 main competitors in your industry, 5 in the vicinity of where you plan to trade and 3 that are targeting a similar demographic to your chosen market.  Now, how are you going to make your business more appealing to potential customers?  

• Think pricing – is it economical for you to trade at a price slightly lower than your competitors are? Could you do an introductory or bundled offer that will give you an edge 
• What about advertising - how will you get the word out? 
• Are your competitors advertising online or offline, or at all? How are you going to reach your potential customers? 

These points are only a starting point, there’s no limit to how you pitch your services to effectively rival your competitors. 

Once you know what you want to do, don’t cut corners to make it happen. Creating a business plan might seem like an arduous task, but it’s unavoidable. Even if you feel like creating a business plan is distracting you from getting your business off the ground, don’t skip it - even if you’re the only one that’s going to see it. Noting everything down will help you spot flaws and gaps, and hopefully, stop you from making a mistake later down the track. Check Gov.uk for useful tips on writing a business plan, including templates and examples.

When you create your business plan, don’t neglect your financials. Estimate all possible incomings and outgoings, so you know how much you’ll need in start-up funding from the outset, how many sales you’ll need to make to cover any outgoing payments, and eventually, to break even. 

• Outgoings – there will be costs for office space, utilities, equipment and office supplies, tax and contributions, any loan repayments and so on. 
• Income – include any money that will be coming in from sources such as a second form of employment, benefits or working tax credit. 
• Sales and costs forecast – estimate how many sales you’ll be doing each month, accounting for any seasonal or other trends and align these figures with your estimated costs for making and fulfilling sales. 

You can then use this to create a cashflow forecast, to give you a better idea of your revenue vs profits and what is available to invest in and grow your business. You can read more about how to create a cashflow forecast in our step-by-step guide here.  

Creating a good process from the start will leave you in a better position later down the track. This should extend to all areas of your business. Key processes to put in place include business expense management and reconciliation, employee expenses – disbursement and reconciliation, and cashflow management.

Our last tip is to make sure you’re flexible. Things might go wrong, your industry can change, and there are always external factors beyond your control. It’s much easier to adapt and overcome challenges if you have done proper planning from the start.