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An Entrepreneur Answers The Most Common Business Questions
What constitutes a good business idea?
In my opinion, it first needs to meet a problem or need. The key questions to ask yourself include: what are common frustrations people face? Is there a service or product that could be improved? Are there unmet needs in a specific market or niche? Will people care? How much money will this need? Can you do this on your own? Or do you need to borrow money? What skill do you offer to turn this idea into reality? Finally, what are you missing? You should have an instant gut response to all these questions.
How should you research the market?
Lots of entrepreneurs who are self-funded miss this part or don’t spend long on it because they’re usually developing a business on gut instinct and are more inclined to ‘go for it’ than over-analyse. But you’d have to do this if you were going for formal funding, so it’s worth doing. Key things to do include conducting surveys, interviewing people in the industry, or hosting focus groups. You should also closely analyse any competitors. Find out what are they doing well and where are they lacking. Then, assess market demand. Is this problem widespread enough to support a business? You could also gather feedback from potential customers, monitor how your idea performs in a small, controlled environment, and refine it based on feedback and observations. If budget allows, you could even create a prototype or minimum viable product (MVP) to test in the real world. This understanding of your target audience and competition will then validate your idea – or not.
What’s a ‘target market’?
Defining your target market is a crucial step in building a successful business. It ensures that your products or services meet the needs of a specific group of customers, enabling you to market effectively and efficiently. You can get out and about, and meet your target consumer – that is free to do, so no excuses. Usually, when entrepreneurs are creating something, they create it for themselves first – you should be your first customer. There are plenty of expensive tools and market research companies out there, but you shouldn’t be spending money in the beginning. You should know enough to get started until the sales start rolling in. These would be my five steps in defining a target market:
1. Identify the problem you solve. Start by understanding the problem or need your product or service addresses.
2. Segment the market. Break down the broader market into smaller segments based on key characteristics, demographics, psychographics, geographic or behavioural traits.
3. Research your audience. Conduct surveys, interviews or use market research tools to gather data. Analyse competitors to see who they target and identify gaps or underserved markets.
4. Create customer profiles. Develop detailed buyer personas, for example: "Sophie, a 32-year-old professional who values sustainable products and convenience."
5. Evaluate and refine. Regularly revisit and refine your target market.
How and when should you draw up a business plan?
Depending on your skillset, a lot of people find business planning overwhelming. Start with the obvious parts – money coming in and money going out. More money coming in than going out is your goal. It’s that simple. The internet is littered with information on models, but don’t overcomplicate it. The simpler you keep it, the more likely you are to get your idea off the ground. We are living in a world where people assume someone else will instantly pay for their idea through investment. I believe a good and successful entrepreneur knows how to risk their own money first before playing with someone else’s. Key considerations to bear in mind include: what your pricing strategy will be; which resources and partnerships you need; whether you can scale this idea over time; and if you’ll need external investment. Ultimately, this stage is about defining how your business will operate and make money – so it’s a crucial first step.
What’s the best way to fund a start-up?
Today, the idea of having an investor is thrown around like you’re going for a coffee. But most successful people I know have never had investors, because the goal should be to have full control. Your business is yours, it’s your life blood, so giving up control should be a decision you agonise over. Always start small and grow. When you really peel back the layers of your global domination, you will see how you can get started yourself, even with a small amount of money. A lot of businesses struggle with cash flow, especially as they move past that initial one-to-two years of testing, but by this stage you will have seen if you have a viable product. With that information, asking friends or family or the bank for a loan will be much easier, as you’ll be informed about how they’re going to be repaid, which is critical.
What legal structure should you choose?
This all depends on the type of business you’re setting up. For instance, if you’re in the drinks business you would need to be PLC and VAT registered straight away, even if you're not at the VAT threshold. If you’re setting up a small agency, you could stay as a sole trader until you’ve grown to a point where it’s more tax-efficient to move to PLC. Some businesses won’t do business with other companies who aren’t PLC/VAT registered, so it’s worth exploring. If there’s more than one of you in the business, you may want to consider a partnership, which is often about simplicity, cost-efficiency and maintaining close relationships. Amazon, Mars, Bobbi Brown and many professional service firms, like Deloitte, start out using a limited liability company (LLC) business structure that combines the benefits of a corporation and a partnership. It is popular among small to medium-sized businesses due to its simplicity, legal protection and tax advantages. However, LLCs aren’t ideal for businesses planning to raise capital from public investors, as they can’t issue shares. Your goal should be a PLC – this is the global way of setting up and doing business, and if you want to start funding and issuing shares this will make your life much easier. However, please consult your accountant or financial advisor before deciding anything, and do the appropriate research into your market sector.
What are the best marketing strategies for a new business?
You can’t single out one best form of marketing without knowing what your product is and where it fits best. Digital is unavoidable for most businesses these days, although the return on investment (ROI) can be hard to track as it's such a cluttered place; and you usually have to pay to play. I would advise anyone to try and build by word-of-mouth. It is the most cost effective as it's free, it’s the most authentic, and it builds a strong foundation to create sales from and start to put money in the bank. PR is earned media, so very effective and a great way to get your business out there without paying huge advertising costs.
What’s the secret to building a strong brand?
Know your story. No story = no brand. So many owners overlook this, which is then reflected in the poor branding. Spend time getting this right. I have seen brands who have managed to get themselves big sales opportunities at retailers like Tesco only to then not get many sales and be booted out again. They hadn’t defined their story, so they were positioned in the wrong area of the shop, their branding didn’t stand out and this was reflected in their poor social content, so the whole marketing mix was flawed, despite the opportunities which came their way. Spend time building the brand and know that, when you make money, you can invest it back into your brand and develop it as you progress.
What are the key steps to registering a business?
Registering your business will be determined by which sector you’re doing business in, and if you’re a service or a product, but the essential steps in setting up a business are researching the name of your business on Companies House (this is free to do). Research any trademarks within your sector on GOV.UK (also free). If you have the green light, get your name/logo registered on both channels. Then, buy a website domain (GoDaddy is easy). Open a bank account, get an accountant, and set up all relevant permits/tax structures which are required for your line of business.
What’s the best practice for hiring employees?
Hiring isn’t just about finding someone who can do the job; it’s about finding someone who will thrive in your business and contribute to your long-term goals. Taking your time to hire right is always better than rushing the process. Clearly define the role. Write a detailed job description with specify key responsibilities, required skills, qualifications and experience. Include what success in the role looks like. Understand the must-haves versus the nice-to-haves. Prioritise critical qualities or skills, and avoid overloading the description with unnecessary requirements. Look beyond resumés – assess cultural fit and alignment with company values, not just skills and experience. If you are trying to keep on top of your costs, then look within your own network before going to a recruiter as you will pay high fees going through this channel, though you might also find someone who’s the right fit. Just take your time as hiring can make or break your business.
Finally, what are the main risks involved in starting a business?
The main risk involved in starting a business is that you lose your money. Starting a business isn’t for everyone, despite what the media has led you to believe. You must be okay with risk, you have to back yourself, you have to have a great work ethic, you need to be tenacious, you need to know how to create luck, and you need to have a small network of like-minded people around you who never doubt you. Being an entrepreneur isn’t about being careless with your decisions. It’s about being strategic while maintaining a willow tree-like approach to the everyday challenges which will be thrown your way. It's about dreaming bigger and keeping your feet on the ground at the same time. Some people talk about having a purpose, but I don’t really believe you need a purpose. It’s a mindset. An entrepreneur understands that life is about chapters, and whilst the next ten years might be about running a service business, the next ten years might be about running a product business. Life isn’t linear, so being adaptable and open to change will be just some of the main challenges you will face starting a business.
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