Keen to become your own boss? We reveal the steps to follow to start a business from scratch.
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You've probably heard the majority of new businesses 'fail'. But we don't like to think of it that way.
If you start a business, it might not take off. However, by worrying about the possibility of failure, you'll only hold yourself back from getting started in the first place.
Instead, shift your focus to think about how much you will learn. The skills, experiences and contacts that you'll gain from the process of starting a business will stay with you whatever happens.
And who knows, there's every chance you'll start a business that thrives and makes you millions!
As we explain below, there's never been a better time to start your own business.
Starting a business
5 reasons to start your own business
Here are the top reasons to set up a business:
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You feel able to take risks
Your student years offer a unique chance to take risks as an entrepreneur.
Especially if you haven't got any kids (or anyone else that you're financially responsible for) there's less on the line if your business doesn't take off.
For students with a full-on uni timetable, it will be harder to balance working and studying. However, if you have a more flexible schedule, now could be the ideal time for you to start a business.
You could even treat it as a summer job over the holidays. That way, you can fully focus on starting the business while you've got a lot of free time, and then fit the work around your studies when the new term starts.
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It's cheap to start an online business
Given the digital nature of today's world, it's never been easier to start a business.
Whether you're keen to create a website, sell via online marketplaces or earn money on social media, it's possible to start a business for a very low cost.
These online businesses are often easy to set up. And, if you're able to successfully build them, they can turn out to be pretty lucrative ventures.
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Being an entrepreneur can be rewarding and profitable
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Running a business is not always easy, but it can be extremely worthwhile.
For starters, there's the chance to make a good income as an entrepreneur. If your business becomes profitable, it has the potential to be your sole source of money. You might even find you reach the point where you're able to hire other people as well.
This in itself is rewarding. But you'll also have the pride of knowing that the business was started with your ideas, hard work and dedication.
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Starting a business looks great on your CV
It takes a lot of guts to start a business. It shows you're innovative, decisive and a real self-starter. These are valuable attributes to employers.
As you build the company, you'll gain additional work skills and experiences, such as:
- Responding to challenges and adapting accordingly
- Remaining calm under pressure
- Making financial decisions
- Managing projects
- Negotiating deals with other companies
- Planning and implementing business strategies
- Hiring and managing people (if applicable).
Including evidence of skills like these on your CV will give you an excellent chance of standing out to hiring managers.
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You will learn important life skills
The skills we mentioned in the last point go beyond just looking good on your CV. They can also help you in your day-to-day life.
For example, by managing a business budget, you'll learn the best ways to make your money stretch further – both in and out of work.
Negotiating prices is a key part of business development. So, if you ever find yourself needing to haggle prices down in your personal life, whether for a broadband deal or even the cost of a house, you'll be prepared.
You'll also learn how to make difficult decisions quickly. As such, you'll be able to approach life's challenges with more confidence and self-assurance.
And even if the business doesn't take off, this in itself will provide you with huge life skills. It will teach you to respond to mistakes and, crucially, learn from them.
13 steps to start a business
These are the best ways to start a business:
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Find a niche in the market
The first step to starting a business is finding your niche. What product or service do you wish you could use that isn't currently available? If you can identify this, it's a great place to start.
Granted, finding a niche is easier said than done – but it is definitely possible. You just need to take your time, do plenty of research, and don't give up if you struggle to find a gap in the market at first.
It helps if you can pick out a particular industry to focus on, like sport, fashion or finance.
Once you've chosen your industry, hone in on certain topics. Perhaps if you're interested in the sports industry, you could narrow it down to golf. You could then think about golf fashion or equipment, or maybe golfing tips.
With a focused topic in mind, you can then start thinking about which products or services to create.
Struggling to get started? Check out our list of 50+ small business ideas. -
Calculate the costs of setting up your business
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This is an important step. Having an idea for a business is one thing, but knowing how much it will cost to create is another.
If, say, you're selling homemade crafts, think about whether you'll have an Etsy store, a market stall and/or your own website.
Whatever avenue you choose for selling, look into the fees involved. You'll need to combine these charges with the cost of making the products.
For a lot of small businesses, it won't be necessary to hire other people straight away. However, if you do decide you need an employee to get the company started, factor in the cost of paying their salary.
Each business will be different, so the amount you have to pay when setting it up will differ depending on its nature. But, as a general rule, there will likely be some initial costs before you're able to earn any cash.
Keep in mind that there's a risk you might not make the money back if the business doesn't succeed.
So, before getting started, ensure you can afford the costs involved in setting up the business, and that you're not investing any money into it that you couldn't afford to lose.
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Work out if your idea is profitable
After working out how much it costs to set up the business, do some further work to decide if it's realistic for your new business to earn a profit.
When you've worked out the costs involved in starting your business, think about how much you'll need to make to earn that money back (plus a profit).
Going back to the example of selling homemade crafts, what price should they sell for, and how many do you have to sell, for you to make more money than you spend?
Your products should be priced at a cost that allows you to earn an income while remaining fair to the buyer.
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Do market research
Knowing that a business is theoretically profitable is useful... but only if there is actually an audience willing to buy the product or service that you're offering. That's where market research comes in.
Essentially, market research involves presenting your idea to the target audience to gauge whether they would be interested in your business.
The audience might immediately love it, in which case, perfect!
Or, you could find that your idea in its current form isn't yet marketable, but if you made some adjustments, it will be.
One good way to reach potential buyers is to share a questionnaire on social media.
When analysing the results, keep in mind that they might not be completely reflective of how customers will use/respond to the business when it has launched.
You might get 100 people saying they'd buy the product in the questionnaire when in reality only 60 of them would. It's often easier to say we'll buy something in theory than it is to part with our cash.
But, regardless of this, it will still be very useful to hear people's feedback. You might notice that multiple people mention the same positives or negatives. This will give a good indication of how the general population will feel about the business when it reaches the market.
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Write a business plan
Having a business plan is an important part of setting up a company. But, if you're setting up a low-risk and low-capital business, such as a new website, the plan doesn't have to be overly detailed.
It can be hard to predict what will happen in the future. With that in mind, it can sometimes get in the way of business development if you're trying to stick closely to an in-depth plan.
This is particularly true with things like the logo or general design of the brand. Try not to get carried away with perfecting every small detail and, as a result, take longer than needed to launch.
In the beginning, it's often a case of doing enough planning to ensure you've worked out your costings and you have a product or service that's ready to be sold.
Then, over time, you can fine-tune the business based on your experiences of the market.
However, as we mentioned, all of this is based on the assumption you're setting up a low-risk and low-cost business. If you're pitching to investors, your business plan will need to be much more comprehensive.
For inspiration, read the story of how Save the Student was started by the site's founder, Owen. -
Raise funds for your business
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As we've covered in previous points, starting a business tends to involve investing at least some money.
The costs will vary depending on the style and structure of the business. For low-cost businesses, you might find you can save up enough money from a part-time job.
But, for high-capital businesses, you may need to raise funding from investors before getting started. If this applies to you, a detailed business plan will be required.
When finding money to start a business, try to avoid taking on debt. This is risky and can limit growth later on.
It helps to start with a small cash flow and, as the business slowly grows, reinvest the money.
Not sure which route to follow to gain funding? Read our guide to getting startup funding for your business.
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Ensure your product or service is high quality
Ahead of launching the business, take some time to test and refine your product or service to get it up to a high standard.
Again, you don't necessarily need to wait until every small detail of the company is perfected. But make sure your customers will get good value for money when they do use your business.
To get some feedback, offer free samples to friends and family to see what they think. Encourage them to be honest as this will help you improve.
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Understand your tax liabilities
When running a business, it's vital that you understand your tax liabilities and keep on top of your accounts.
As the business grows, you might find that you need to hire an accountant. You could also consider using cloud accounting software such as Sage.
If you run the business by yourself, register as a sole trader and complete a self-assessment tax return on time each year.
Or, if you're setting up a limited company, register the business with Companies House. When signing up, you'll be registered for Corporation Tax.
For more info about registering your business and handling tax, visit the government's website.
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Open a separate bank account
From the very start, it's a good idea to open a separate bank account for your business.
By keeping your personal and company finances completely separate, you'll be able to closely track your business's incomings and outgoings.
One good option is Starling. And you can see more options in our guide to the best online bank accounts.
If you're also looking for a better deal for your main account, see our comparison of the best student bank accounts. -
Find an audience for your business
When you bring your product or service to the market, you then face the challenging (but important) stage of finding an audience.
Social media offers an amazing opportunity to reach wide audiences without spending a penny. For example, if you're skilled at making viral TikTok videos or Instagram reels, you can reach thousands, or even millions, of people.
And if you've got a small marketing budget, you could also spend money on paid social media ads to expand your reach.
Don't forget that word of mouth is a very influential marketing tool. You want to get people talking (positively!) about your business. A big part of this is ensuring you offer top customer service and value for money.
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Closely track the business's performance
As the business develops, keep a close eye on its performance.
Identify what works well and build upon this. At the same time, look out for areas of the business that are underperforming and consider adjusting these.
There might be some things that need to adapt to improve the profitability, popularity or even overall quality of the business.
It also helps to do competitor research throughout the development of the business. This will allow you to gain a stronger understanding of the market and identify gaps in your own work.
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Establish a healthy work-life balance
The entrepreneurial lifestyle is often associated with spending lots of caffeine-fuelled nights in front of the computer, designing and redesigning products. In short: maintaining a healthy work-life balance while building a business isn't always easy.
However, while there may be a temptation to spend every waking hour developing your business, this is not a sustainable way to work. There will be the risk of you burning out, which is always something to avoid.
Long hours also aren't the best for productivity. You might think that spending all day and night on something will lead to more results than if you spent a consistent 8 hours a day on it, but this isn't necessarily the case.
Often, you'll work more quickly and effectively when you set strict cut-off times each day. Having a daily deadline for when you need to stop working will give you more motivation to finish the work quickly. And, by not overworking, you'll have more energy to get the work done.
Also, if you do hire other people, we'd urge you not to put pressure on them to work unhealthy hours while the business grows – even if you choose to work overtime yourself.
It's neither fair to the employee nor helpful for the business if you create a work culture that drives people away.
To hear from another business founder, read our interview with Ben Lebus about his experiences of starting Mob after uni. -
Make an exit strategy
This is optional, but you might find it beneficial to have an exit strategy in place while building the business.
There's a wide range of potential scenarios for how the company could go. You can't fully prepare for them all, but you could think generally about what you'd do if it either doesn't work out or if it becomes super successful.
It's perhaps not the best approach to rely on making millions from the company and retiring at 30. But, if you do build a company with the intention of selling it, take some time to think about what you need to do to reach that stage.
Be realistic and weigh up your options to decide what's best for you and the business in future.
But, as we said, you don't have to create an exit strategy. If the company succeeds, you may find you never want to leave.
There aren't many people who are fortunate enough to devote their careers to building a company from the ground up. But, with these tips for starting a business, that could be you.
While you're waiting for your business to take off, find out how to make money quickly.
source https://www.savethestudent.org/make-money/how-to-start-a-business.html