The beginners guide to businesses

Do the market research

The best way to make a business successful is knowing your market and knowing your customers. You will need to carry out a combination of desk and field research, in order to really get a good grasp on what your potential customer wants. This will of course vary for each business, depending on the product or service you are selling. The essential data collected will help you shape your business, from pricing to the target customer. Some questions that you need to answer are:

  • Is there a place for you in the market? Think about what you are offering and how it can attract the customers from the competition. Is there too much of what you are offering already in the area? If you want to open a hair salon, is there already two or three on the same street.
  • What is going to make your service/product stand out? Does your business stand a chance against the competitors, in terms of having your own niche?
  • Who is your competition? To get a good idea of how to run a successful business, take time to look at the competition, what are they doing well? What makes them a worthy competitor? What could they be doing better? Answering these questions for your competitors, will give you an insight as to what a successful business looks like.

Make a business plan

A business plan is a crucial to any business. A great business plan can attract investors for your business, enabling it to really take off.  To create a great business plan, follow these steps:

  • Use your market research data, and have solid data backing your idea. This will make it clear what you are selling, who you are selling to and what exactly is your competitive edge over your competitor. Remember, you believe that your business idea will be a success, and in your plan you are trying to make the investors believe in your idea.
  • Have long term objectives, this will show investors about the realistic opportunities and growth that the business will have. Also include small milestones, which are likely to be achievable in the near future. By highlighting these, you are setting real goals to show progression and growth of your business.
    More information on how to write a business plan.

Choose the best legal structure for you

This is a necessary part of starting your business. There are options available depending on what will suit you and your business the best. Legal structures enable you to share responsibility in terms of finances or you can be solely responsible. All three structures have different tax issues as well as the liability of the business. Most businesses opt for the following options:

  • Sole Trader – It is perhaps the simpler to set your business as a sole trader, however the whole business is your responsibility including any business debts. As a sole trader, you are self-employed. This also means that all profits made are for you, however you also have to face any losses that the business has made, which will affect your personal finances.
  • Partnership – The partnership model is an extension of the sole trader structure. When two or more people want to start a business it qualifies as a partnership. This means that the responsibility, as well as any profits are shared. All partners must pay tax on their share and also share the responsibility of any losses that the business might have.
  • Limited Company – By opting for the limited company structure, you have less pressure on personal finances. By choosing this structure, your personal assets can be safe if your business does not work as planned. However, this particular structure does involve completing more paperwork as well as deciding how you will get paid. There are few options as to how to get paid such as a salary, dividends or directors loans. Whatever is the most suitable method, appropriate paperwork must be completed to accompany the payment method. A good limited company accountant can help you with all of this.