Planning a business is no easy feat, but if you want a concise guide that touches on the most important elements of launching your own business, you’re in the right place.
Having worked with, helped and analysed the strategies of over 100 business owners, I’ve seen what works and what doesn’t. I want to share my experiences, so that you can make sure your next business venture launches successfully and grows quickly.
If you’re in the process of launching your own business, you’ve just launched it or your existing business is struggling to generate more than £75k a year, there’s going to be a lot of useful information, tips and advice in this post for you too.
It’s not easy, condensing almost a decade of professional experience into one blog post, but I’m going to give it my best shot! Instead of covering everything, I’m going to focus only on the most important areas, but in a good amount of detail.
The goal here isn’t to create a 50 page business plan. I want to get you thinking like someone who’s been running a successful business for the last three years, and stop you from making the same mistakes I’ve seen made by new business owners time and time again.
It goes without saying that if you’re looking for a sounding board or want to discuss your plans (or lack of!) for a new or struggling business, get in touch and I’ll personally help you figure out what’s what – no matter what size your business is.
Define the Vision of Your Business
The first thing to think about is where your vision starts and ends. What are you trying to achieve? Are you happy turning £30k a year for the next decade or would you consider £100k a year to be a failure? Are you wanting to build a legacy, change the world in some way or is simply going away on nice holidays every year enough for you?
There’s a lot to consider at this stage, and everything is connected in some way, but this is an important one because it sets a benchmark for almost all decisions going forward. If you plan to sell your business after three years, your challenges and targets will be a lot different to someone who wants to work alone and hopes to grow by 5% every year, for the next 20 years.
I like to think about it as a whole load of races. You’ve got running, cycling, driving, sailing and loads more. The goals are really all the same, everyone wants to win, but the challenges, priorities and strategies are all completely different. What works in one race simply won’t work in the other. In this metaphor, I see business owners turning up to formula one races with a rusty old bike all the time – wondering why they came last.
Be clear about what is and isn’t a business priority
Take a freelance photographer that’s happy making £25k a year. How important is it for them to invest time and money into creating a strong brand that’s recognised all over the country. It’s not at all. Single person businesses can largely get away with having a terrible logo because they get most of their work locally, through word of mouth.
People couldn’t care less if the best photographer in town has a crap logo, so spending a fortune on a high end logo, super luxury business cards etc. is not money well spent.
Now, if that same photographer recognised a particular issue within the industry, perhaps that reliability and consistency were in short supply, they may decide to start building and training up a team of photographers to service a much larger area. Now they’ve got to convince people why they should work with them instead of the top dog in their area – that requires marketing and strategy.
Know what you need and focus on that. The “wants” can come later, when you’ve proved that your business can survive on its own two feet.
Plan For Your Plans to Change
Think about these questions…
- What are the top 5 highest converting conversations you can have when talking to a potential new client?
- What’s the most effective product pricing model for a company in your industry or sector?
- What’s your biggest mistake going to be in the next two years?
Most first time business owners can’t answer questions like these, because they don’t have enough experience yet. Don’t feel bad! We all start out in roughly the same boat.
Some people are never able to answer these questions, we all row at our own speed, but it pays to recognise that you’re in this position and you shouldn’t get too attached to decisions you make.
At the same time, flip flopping around and getting everyone else to make the big decisions for you is just as bad. Just do your best and actively seek regular feedback from people with similar experiences. Please also be aware that in most cases you’re not going to find those people in your family or friendship groups. Don’t just take advice from everyone, willy nilly.
Over time you’ll develop, personally, and your understanding of whatever you do will improve, a lot. In the years to come you’ll have answers to questions you didn’t even know you needed to know about, and solutions to problems that you won’t be aware of for months, even years to come!
Because of this, no matter how good your plans, calculations and predictions are now, you will start replacing existing decisions with newer, better ones.
Try not to think too rigidly. Always have backup plans and evaluate past decisions impartially, otherwise they may hold you back.
Separate Your Vision From Your Business’s Vision
Ask yourself this, what will you be doing in 10 years time? Most people don’t know the answer to this question and a lot of those who think they do, don’t.
People discover themselves during the journey of building up a new business, and that can mean a complete change of direction. You might be three years in to your business and suddenly one of the following happens:
- Something you thought you’d enjoy actually turned out to be really boring
- You realise that your skills were better suited to a different area of business
- A personal injury stops you from doing what you love
- The industry collapses or becomes too competitive
- New technology is developed that makes your business obsolete
Any number of things can change your personal direction, but you should do your best to ensure that years of blood sweat and tears aren’t wasted if you suddenly need to move on to something else.
Make Business Decisions Through The Eyes of Your Customers
As a new business owner you’re going to be faced with many questions.
What should the logo look like, what needs to go on the website, how should we design this, where will we get our supplies from, is organic/fairtrade/environmentally friendly sourcing important, the list goes on.
Think about your customers first and foremost when making decisions because you don’t put money into your business, your customers do. Without them you have nothing.
If your vision is greater than just having a nice house and going on regular holidays, you need to make sure that you’re asking “What do my customers want” and stop asking “What do I want?”.
It’s like choosing your friends. Would you rather spend time with someone who only cares about themselves and what they want, regardless of how that affects you, or someone who actively thinks about what would make you happy?
Focusing on the customer helps your business start off on the right foot
Let’s run through an example of how a “What I want” approach can lead to an entirely different outcome to a “What do my customers want” approach.
All new businesses need a logo, but you can’t really do much with it on its own, it needs to be combined with marketing materials, such as a flyer, website or brochure. These are used to deliver a first impression to people who have probably never heard of you or your business before.
If someone comes across one of your leaflets and they like what they see, are convinced that you can help solve a problem or give them what they need, they are much more likely to want to find out more about your business, rather than throwing your flyer in the bin.
Whether you’ve hired a designer, a design and digital agency, or you’re doing it yourself, questions about colour, font, style, content, use of language and complexity will be asked when creating your logo and marketing materials.
It’s not about you 🙂
Reacting to those questions with phrases such as “I really like these colours, and I think that font looks the best!”, makes it very clear that your mindset is focused on you and only you.
But it’s not about you, it’s about who you’re selling to.
There is a difference between quality and subjective preference. Your website could win a design award, but if the people using your site don’t feel like it relates to them, and their problems, they won’t care. They won’t buy from you, they’re more likely to look at one of your competitors.
Take service pricing for example. I know that startups often don’t want to look like startups. But this requires a more involved level of service than they can often afford. I also know that many startup owners are still in part or full time employment, to maintain a level of financial security.
At Square One, we’re more about strategy than simply building brands and websites. So we allow our smaller clients to pay off their projects over a longer period of time. For example, a 2 month web development and branding project might be paid off over 6 or 8 months.
I know that the chances of their business failing are drastically reduced with our input, so it’s not so much of a concern.
Validate Your Business Model Before Getting too Serious
Did you know that around 30% of UK businesses fail within two years? That includes businesses run by professionals with a lot of experience.
If we drilled down into those failed businesses, a much larger proportion would have been run by first time business owners, which is why it’s so important to get regular feedback on your business plans by someone with relevant experience.
If you want to check the average survival rate of your industry, give the Industry Survival Calculator a go.
Here’s a simple little 5 step process that helps you map out what your business needs in order for it to succeed. It’s easy to overlook things, especially if you’re new to this, so don’t dismiss it before you’ve given it a go!
Focus only on the first phase, it could be a year, it could be two, it’s however long it takes to generate enough income to offset all costs and make a profit.
- Money out – Write down all one off and ongoing costs relating to your startup. Total it all up when you’re done. Costs could be related to your premises, branding/marketing, web hosting, materials, equipment, labour, business incorporation, accountants fees, industry regulations and anything else you can think of.
- Money in – Write down every income source you want to launch with, as well as how much and how often each one will generate revenue. Total up what you’ll make per year and then divide by 12 to give you an approximate monthly revenue.
Retailers, you can average the profit of groups/ranges of products and work out how much you’ll make if you sell X amount per month – be realistic.
Service providers, or anyone businesses without fixed prices, think about what you can realistically do in a month and plan around that. For example, a freelance web designer might be able to build 2 basic and 1 complex site every month. Basic sites might cost £800 and complex sites £1,500, giving a total monthly revenue of £3,100
- Finding customers – Write down every activity that you’re going to carry out that will generate sales and leads, where they’re coming from and why. It’s all well and good saying that you’ll sell 400 pairs of shoes a month but how are you going to do that?
Equally, ten leads does not equal ten sales and if you can only deliver 2 projects a month which only just covers your costs, I’d be worried.
- Add it all up – Subtract your money out from your money in, this will give you your projected income. How many months will it take you to pay off your startup costs? After that, how much profit do you make per month?
- Get feedback from other people – Your projected income is your big, ballsy statement, that you’re confident your business will work. Your “Finding Customers” planning is the proof of why you think you’ll succeed. Find some business owners and ask them to give you some feedback on your plans. Most can spot assumptions and unrealistic numbers a mile off and be happy to help you set better expectations and put a better plan in place.
Just having a basic understanding of what it’s actually going to take to make your business work will help you find a better path and get you thinking about things you perhaps wouldn’t have done before.
Don’t Sell What You Do, Sell Why You Do It
The planning and decisions you make now will determine which path your business journey takes. Every path is different. Some paths are nice and flat, some take you up steep hills. Some paths are short, some are long. Some end in success, and others failure.
You can change paths at any time, but in reality people often spend years on the same path before realising they need to change what they’re doing. How you choose to sell what you do will determine the path you take, and what I’m about to share with you can take years for people to realise.
The “I/we offer a service or product” approach to selling what you do will put you on a path that involves long hours, low income and constantly questioning why you ever started this business in the first place.
When businesses fail people tend to blame external factors, which ultimately boil down to one of three things:
- We didn’t have enough resources or capital (e.g. a bigger company beat us)
- We worked with the wrong people (e.g. my team were useless)
- The market/industry wasn’t in a good place (e.g. no one has any money to spend)
When you see past the excuses, at the heart of every failed business is simply an inability to generate enough interest in the products or services being offered.
People don’t buy what you do, they buy why you do it
Wise words spoken by the author and motivational speaker Simon Sinek.
Why do people buy from brands without even thinking about it? Because they know, trust and relate to them. From past experiences and the marketing they put out, consumers know the business, at its core, has the same beliefs and are fighting for the same causes they are.
From civil rights movements to solving problems or flaws with existing products, to delivering a decent level of customer service when no one else in that industry or sector will, it doesn’t matter what it is. If you tailor your offering to tackle the why behind the purchasing decision you’re going to have an easier time selling, plus, you’ll discover what else they want help with.
If you’re looking to put on an upmarket event, where guests need to be impressed, which of these sound like a better supplier proposition to you?
“We sell cakes”
“We help event planners deliver premium experiences. Your guests will love our cakes and we’ll do all of the hard work for you”.
It’s a no brainer.
It sounds like an oversimplification but when you analyse all of a company’s marketing materials and how they engage with customers, they’re either saying way too much, just what their audience wants to hear, or way too little.
You need to connect with people, not their wallets.
No matter who you are, what you do, B2B or B2C. 99% of the time it’s another person in charge of whether or not you make your next sale. So it’s really important to consider this process and not end up like so many other companies out there, who “just sell” without any method to their madness; those are the businesses that will be gone in a couple of years time!
Define your audience
In order to tell the marketing story of why you do what you do, you need to understand who you’re doing it for. This now falls into the territory of branding – yes a brand is much more than just a logo. A lot of thought, knowledge and expertise goes into this process.
It’s easy to think that everyone is your customer or client. They’re not, you just haven’t worked out who your company is best suited to help or work with yet. When customers are forced to choose between one company and others, they have to start comparing – if you focus on everyone, you’ll always lose out to competitors who focus on and truly understand a specific audience.
Knowing your audience also helps you stay ahead of the game. Times change, people change, markets change, the world changes, constantly. You don’t want your business to go the same way as companies like Blockbuster or Yellow Pages.
Why didn’t Blockbuster think like Netflix, or Yellow Pages like Google? At their core, both companies offered exactly the same thing, it’s just that two of those companies focused on what people wanted now and next, rather than what they wanted 20 years ago and what they’d put up with today.
Think about each type of person you want to attract. You might need to focus on a number of different audiences, these become your audience segments. Create a list of the following for each segment:
- Age Range
- Values and Beliefs
- Ethnicity, race and cultural background
- Education level
- Socio Economic status
- Location (village/town/city?)
- Marital and family status
- Interests and hobbies
- Personal and business affiliations
It’s good to have at least two or three segments to focus on, but at these early stages, even one will put you ahead of some competitors.
Now you know who your audience is, think about what they want and why.
For each audience segment list the following:
- What they need right now
- What you can offer right now
- What they’re going to need in the future
- What you can offer in the future
This forms the basis of a real business plan! You’ll be able to meet some needs straight away, some may take a little while to get to, and others will be a long way off.
Start thinking about how your business is going to expand over time and what objectives you’re going to work towards.
Plan Out Your Business Growth In Phases
Now that you’ve defined your audience and have an understanding of their short and long term needs, you can start planning your business and its growth around that – rather than losing momentum by “taking each day as it comes”!
Breaking your business down into multiple smaller chunks makes it easier to plan and achieve your goals. Growth comes in many different forms and each part has their own positive and negative effects on a business.
You need to decide which areas of growth will help your business the most. Consider the following areas of growth:
- Invest in personal development
- Invest in new or better marketing materials
- Hire your first employee
- Buy bigger batches of stock
- Invest in a new or larger premises
- Invest in training for your team
- Bring in the first intern/apprentice
- Start growing a larger team
- Buy new equipment
- Start new marketing campaigns
This isn’t a comprehensive list, I’m sure you can think of some others.
Write down each growth area you think is important and then make a note of what value that growth will add to your business. It might allow you to reduce your prices, offer a new service or give you a new unique selling point (USP).
Straight away you’re going to start seeing which are the highest value growth areas to your business and what needs to be focused on first. Now all you need to do is assign each growth area you wrote down.
Next, make columns for each growth phase and assign the growth areas to each.
Don’t underestimate how long things will take
Something a lot of new business owners struggle with is allocating enough time to get things done properly.
It’s easy to overlook how much time and energy is required to complete a task or project. Planning around unrealistic time frames will put you on the path to chaos sooner or later.
My team and I recently worked with a first time business owner of a fresh start-up. Part of their business model required the involvement of a significant number of outside partner companies. They estimated it would take three months to get enough on board to get the ball rolling.
At the end of those three months they realised they couldn’t devote as much time as they thought they could and that it was going to take more effort to bring each new company into the fold. They revised their initial 3 month period to 9 months.
This had an impact on what had been offered to all existing partner companies and our client decided to change all of their plans in a very short space of time. They lost a number of partner companies as a result.
If it’s your first time doing something, it’s worth getting opinions from people who have relevant experience doing what you want to do.
Consider the Minimum Viable Product (MVP) approach and don’t guess at what your customers want
The MVP approach is a way of thinking that results in increased efficiency by focusing on doing more with less and minimising risk. It’s great for companies of all sizes, but really helpful to companies developing new products or services with startup/project budgets of less than £50k.
The basic principle is that you start with the simplest version of your vision and progress incrementally, instead of spending 10x the time and resources building your “perfect vision” straight away.
A simpler product is quicker and cheaper to launch, allowing you to generate an income and engage with customers to find out exactly what works, what doesn’t work and what they want to see next. It also allows you to learn from your mistakes earlier on, and more cheaply.
Assumptions can be low quality, barely educated guesses. Sooner or later you’ll get something wrong which will lead to you spending money on things you simply don’t need.
MVP is about spending £3k and 6 months (instead of £8k and 12 months), building your business up (phase one) and launching with just the features/products your customers want, nothing more, nothing less.
You’ve heard of Groupon, I’m sure, but did you know that it was created from the ashes of founder Andrew Mason’s failed startup called The Point? That cost him 10 months of his time and no doubt thousands of pounds (or dollars).
Get into the habit of thinking about everything in terms of whether it’s a “must have” or “nice to have”. Being objective about the real value behind a new product, feature, service or idea is a habit which will get you far.
Leverage the Experience of Professionals & Manage Your Expectations
Just mention the phrase “first time business owner” to any digital professional and see how they recoil in fear! Take it in your stride, we’ve all been there at some point!
There is an industry wide belief that a new business owner is much more likely to be a difficult client because their expectations outweigh reality. In my experience, this belief is true, to an extent.
Digging a little deeper you’ll quickly learn that the real fear is reserved for the special kind of client who expertly blends their lack of knowledge with an unwavering belief that they are always right.
For the sake of your business, don’t be that person – you will never get the best from people who hate you!
Ask more questions than you answer
When you’re new to something, you need to be asking as many questions as you can to as many people as possible. Your biggest weakness is simply not knowing.
This is how scammers and dodgy “professionals” take advantage of new business owners like you, and it could cost you thousands of pounds and leave you with a business idea that failed before it even had a chance to launch. These risks are real.
We have two ears and one mouth so that we can listen twice as much as we speak. (Epictetus – Greek Philosopher)
The trick is not to rely on one person – they could mislead you. But if you ask the same question to three (the more the better) professionals, you’re going to be in a much stronger position to determine which path you need to take.
Discuss your expectations, people can’t read your mind
Expectations come in two flavours, the considered and unconsidered.
For example, you might expect that web hosting comes free with your web development project, but you might not properly consider it until your developer/hosting company sends you an invoice for the first month.
This is an unconsidered expectation, and in this scenario it’s too late for you to do anything about it, which is frustrating because you weren’t able to plan around it. You might even feel that you were misled or lied to. This is something that happens a lot, but it’s actually standard practice to charge separately for web hosting.
A considered expectation is something you have thought about, but maybe haven’t discussed with your digital partner, who should have their own process to help clients understand what to expect.
You’re more likely to lose out when expectations aren’t met because it’s usually very expensive to meet undiscussed expectations and the person/company you hired won’t want to work for free. So, it pays for you to be involved in this process and ask the right questions early on.
Here are some common branding, web design, web development and digital marketing project expectations that can lead to problems if not discussed early on:
It is completely normal to pay a deposit, but this should be accompanied with a contract that clearly outlines your investment and what you’re getting in return. Expect to pay between 25% – 50% depending on the size of the project.
Final Project Deliverables
Don’t be content with a one line entry that just says something like “WordPress Website”. Bear in mind that if you end up in court, they will argue that they followed the contract, and have built you a WordPress website.
If you’ve gone down the breach of contract route, they’ll probably win because you won’t be able to prove they are in breach if you put your signature against something really vague.
Specify as much as possible but make sure you cover at least the following:
- General – Who the contract involves, when the project is due to start and finish, how much you need to pay, when you need to pay and any relevant terms and conditions.
- Websites – A list of expected pages, any advanced site functionality and a description of the design style.
- Branding – Number of expected concepts/revisions, description of visual style, type of logo (e.g. typographic, illustrative, etc), any other deliverables (e.g. stationery) and if print is included in the cost.
- Marketing – Define all of the areas covered (e.g. social media, print marketing etc) and what you’re expecting to be done, what the expected “Return on Investment” or results are going to be.
Did you know that you don’t automatically own the copyright to work you’ve paid to have produced? It must be transferred to you, this usually happens on completion of the project. Some companies handle this differently and may charge you extra depending on your exact requirements.
Website Content Editing
Do you expect to be able to edit all of the content yourself? Are you paying enough for that? This is something that often doesn’t get brought up until the end of the project – when it’s too late to do anything about it.
Where will they take place, in person or remotely? How often will they happen? This should be outlined early on, ask about how much time will be allocated to feedback and general project discussion.
Believe it or not, there are still freelancers, agencies and companies out there who think they always know best and will try to overrule you instead of taking your comments on board. Ask about how client feedback and requirements are factored into the decision making process on their side. Do they have a preference on the type of feedback you provide?
For example we tell clients they can schedule as many feedback sessions as they like, because their input is valued. However, we do ask that they present problems rather than solutions, because it then gives us a chance to present the best, most viable solution.
Don’t assume that because you hired someone, they can just get on with it and you’re not needed. You need to allocate an amount of time each week to discuss the project, progress, make decisions, answer questions and provide insights for any content/copy that needs to be created.
Find out what sort of time commitment is needed from you or a member of your team.
Rule 1 is to always set a deadline. Rule 2 is to not create fake deadlines.
If you need flyers, business cards, exhibition signage etc for an event next month, make sure they’re aware of that. At the same time, every business gets busy from time to time, so you’ll create a much better partnership if you let them know that there is some flexibility by not taking advantage or enforcing unrealistic/imaginary deadlines.
What happens after the project is finished?
This should prompt a conversation about future plans. It’s always worth getting an understanding of how you might be able to work with each other after the first project. Growing businesses need a lot of support and if you’ve built up trust with a company or person then why not keep them in the loop, they may share some insights with you that can help you.
No one wants to believe that something could go wrong but the reality is that it does, quite a lot. It may be a small dispute, it may be a larger one, either way, a resolution or way forward needs to be found.
Discuss these points with whoever you are looking to work with and you’ll be in for a much less bumpy ride!
With these processes complete and your new plans in place, you will be in a much better position to secure the future you want for yourself and for your business.
Have you had any rocky periods with your business in the past? Are you currently in a difficult position? I’d love to hear about your business experiences in the comments below! Of course, feel free to ask questions if there’s anything specific you want to know about – or just get in touch.