Top five tips for starting a small business

Launching a small enterprise is an exciting period, although it can be daunting, especially as there’s so much information to absorb. Statistics indicate that the rate of failure in the first year of trading is high, so careful planning is necessary.

Business plan

There are a number of reasons why a business plan is crucial. If you intend to apply for finance, you will almost certainly need a solid plan that includes your goals and projected income and expenditure. A plan will also help to keep a business on track. You can make changes as you progress and discover what works for your venture, and change anything that isn’t as successful as you initially thought.

Admit your weaknesses

Although you may have limited resources, be honest about any weak points you have and outsource if necessary. Struggling to deal with various tasks yourself when you don’t have sufficient knowledge could actually cost you money. One area that could potentially cost you money is the company records. HMRC expects a business owner to keep accurate and timely records, and is likely to issue a penalty for poor or incorrect records.

Research your potential market

Once you have decided what type of business you want to start, carry out lots of research to make sure that there is sufficient demand. Although you may believe that you have a great idea for an enterprise, there may be very little demand in your area. Check competitors and prices so that you get an idea of what people are prepared to pay, and how much you will need to sell merchandise or services for to make a small profit.

Start a part-time business

If this is your first venture, you may want to consider continuing in employment and running your company on a part-time basis. This will provide the security of a regular income, and permit you to launch the business gradually and not feel pressured into making hasty decisions. You may be able to save some money from your employment to invest in your venture, and may even be able to market your product to colleagues.

Look for a mentor

If you know someone who has the experience of owning their own company, ask if they will agree to be your mentor. You will learn a lot by listening to tales of mistakes they have made and how they overcame challenges.