Thinking of starting your own company? Business adviser Helen Watson explains what budding entrepreneurs need to consider.
Helen Watson is an adviser for the Business Support Helpline, which is open Monday to Friday, 9am to 6pm, on 0300 456 3565. You can also visit the website.
Starting a business is exciting, but it can seem daunting at times, which is why people call the Business Support Helpline. Around 80 per cent of callers are at the start up stage, looking to get their business off the ground.
Each budding entrepreneur is totally different. Some of the callers are confident, looking to build not just a small firm, but a global brand. But even though they may need less support, they still appreciate being able to test ideas with an impartial advisor. Some callers however, are less certain and don’t know where to start. With these people, we offer not just practical advice, but also an empathetic and understanding sounding board.
Gap in the market
Although the business ideas vary hugely – from an arm-wrestling club to importing exotic seeds – we usually start with the same important questions for everyone. Firstly, we ask about the customer – it’s vital to understand their personality, circumstances, and reason for starting a business. Some people have been made redundant, others are looking for a way to come off benefits. Maybe they’ve taken time off and have come up with a fantastic invention, or they are making crafts at home and have spotted a gap in the market. Or perhaps they are working for someone else, but think they could do it better, quicker, cheaper or faster!
Do your research
Whatever the reason, we need to make sure they’ve done their research. Some people assure us that all their friends and family think their idea is fantastic and bound to succeed, but we emphasise that wider research is the key to success in the long term. We encourage them to visit their local library and do some thorough market research, search online for available statistics and check out the local competition. Setting up a business is exciting, but it can’t be done simply on the spur of the moment.
Another important aspect of starting a business is finance as people can often underestimate the costs of starting up. Do they have savings, are they using redundancy money, will they be remortgaging, have they got an inheritance, or do they have an investor? They might want to start selling clothes online, for example, and think that importing from overseas is always a cheaper option. However, we make them aware that they need to consider import VAT, customs duty, insurance, and all the other costs which need to be factored in.
If they’re setting up a shop, they need to realise that if they want to play music, even very quietly in the background, that they need a licence for that. Are they aware that there are fees involved in taking card payments and renting chip and pin machines? And what about all the fixtures and fittings? At this stage people often realise that there is more involved than they first anticipated.
We also encourage people to consider protecting any relevant forms of intellectual property such as trademarks, patents and design rights. We advise them to draw up terms of business to protect both their clients and themselves from any potential disputes. A tradesperson, for example, might be focused on getting started, but fail to consider customer payment terms and customer rights to cancel.
The Business Support Helpline can help people assess the viability of their idea, ensuring the potential businessman or woman is well informed and has the tools to progress in whatever direction they choose. There is so much advice and support out there we can give to people, it all depends on the caller’s specific circumstances. We can advise on all areas of business planning, understanding business legal structures, local and national resources (such as mentoring schemes and workshops), potential avenues of finance, any relevant regulations and tax. We can’t tell people how viable their business is, we just talk them through everything they need to consider, to make sure they’re as informed and prepared as they can be!