A Basic Guide To Starting A Business Later In Life
Evaluate Your Idea
You may already have a vision of what your new business might be, even if the idea is a bit rough. But the experts agree, now’s the time to drill down into the detail to find out if it’s viable. “It’s important to do your research before starting up your business and find out whether there is a genuine market for your venture,” explains Piper Terrett from Fluent Money Group. “This may simply involve speaking to a small group of potential customers to find out if they would buy your products or services and analysing the competition.” It’s also worth looking at potential innovations in the space by reading consumer reports to find where the demand is coming from. Research like this can be helpful when it comes to finessing your idea and increasing its chance of success.
Ask Yourself Some Tough Questions
At the beginning, it’s important to ask yourself some tough questions. According to the team at business advice website Startups, these questions should include: Does the idea fit your skillset? Do you have the knowledge you need for this business? If not, what qualifications and expertise do you need to learn? Is it original? What makes your business idea stand out? What problem does it solve for customers? And, finally, is it realistic? “In light of your existing financial situation and the industry you’re trying to enter, you might need to scale down your idea based on what’s achievable for you at this stage of life,” the team adds.
Look At The Sector
Post-pandemic, and certainly if you’re over the age of 50, it’s a fact of life that some sectors will be easier to enter than others. Take digital businesses – most have not been hit hard because most workers can work online, making them somewhat bullet-proof to future challenges. Others, like leisure or hospitality, are dealing with major staff shortages and soaring inflation. That doesn’t mean you should abandon the idea outright, say the Startups team, but it does mean you might need to take additional steps to ensure you can still operate in a compromised economic climate.
Use Your Experience
The advantage of being older is that it gives you a wealth of experience to draw on. Ideally, you want to pursue a business idea that makes use of that and gives you credibility in the field. For example, if you spent most of your life teaching, you could set up a tutoring service or, if you worked in a profession like accounting, you might be able to start consulting. Either way, having lots of experience in a field will allow you to consider problems that other younger entrepreneurs have never come across. This isn’t to say that you can’t break into a new industry – plenty of skills are transferable after all – but you may need to be prepared to learn new things too.
Do Some Research
You shouldn’t start a business without first understanding your market – which is what makes market research an essential part of the process, no matter your age. While you’re likely to have read up on your subject, you might think about sending out an anonymous survey to friends, family and old colleagues to get more of a feel for demand – just remember, the more independent participants the better, as the data will be more reliable. Questions you want to try and answer include: What are the best communication channels to market your business to your audience? What are the costs involved? What products or services already exist that you’ll compete with? What makes your product or service worth the money? How much would your customers be willing to pay?
Consider A Franchise Or Social Enterprise
If you’re worried there are other businesses or individuals offering the same product or service as you, joining a franchise could be the answer for someone over 50. The advantage of a franchise is that the product or service has already proved itself and may be well established – famous examples include The Body Shop and McDonald’s. The disadvantages are the constraints of the legal agreement you make, and you will need to take independent legal advice before signing anything. To find out more, visit the British Franchise Association website here.
Alternatively, social enterprises are businesses with a social purpose, and their profits are often used to help others in the community, which makes them particularly well suited to people looking to fill spare time. They are usually set up to make a positive difference, so it’s a good choice if your motivation is to give something back. Some types of social enterprises include furniture recycling projects; businesses which train and employ people released from prison; or employment agencies for people with disabilities. Visit the Social Enterprise UK website here for more information.
Draw Up A Business Plan
If you’re satisfied that your idea will fill a gap in the market, then it’s time to come up with a business plan – particularly if you plan to raise money to fund your venture, says Piper. “A business plan will include a breakdown of your new business idea, how you plan to fund it and projected costs and cash flow,” she says. “However, even if you don’t plan to borrow money from a third party, writing a business plan is still a vital part of getting it all down on paper and making sure that your venture is well thought out.”
If you’re not sure where to start, lots of entrepreneurs use an online template to draw up a business plan. You can download the one from the Startups team here. “The good news is that with an effective business plan template, you can capture all the essential details you need,” explains Helena Young, a member of the Startups team. “We've gathered the core features of a business plan in our chosen template, helping you to map out an overview of your idea, market opportunities, key competitors and cash forecasts. Whether you want to run your business as a sole trader, in a partnership or as a limited company, your business plan is the document or tool that adds structure to your proposal and helps you focus your objectives on an achievable and realistic target. It should cover every aspect of what your potential firm might look like, from licensing to predicted revenue.”
Most importantly, a good business plan should contain a careful estimate of expected income and expenditure over the first years of your business, based on your market research. You will need this to seek a loan for your start-up costs.
Secure The Right Funding
The business plan should give you a good idea of how much money you need and where you might look to get it from. Banks may not be willing to lend money if you have a low credit rating, no credit rating at all, or you have no collateral (e.g. a house that could be re-mortgaged if things went wrong). According to Age UK, if you can’t get a loan from a high street bank, you could approach a Community Development Finance Institution, as they lend to disadvantaged groups. Equally, many older entrepreneurs have obtained funding via peer-to-peer lending platforms such as FundingOptions.com or on other crowdfunding websites.
It's also a good idea to take professional advice about how becoming self-employed or starting your own business later in life will affect your taxes and any benefits you receive. Contact HMRC or read their online information on self-employment.
Find Some Extra Support
For older people looking to start a new business, there are plenty of ways to find the right support to ensure things get off the ground properly.
Enterprise agencies provide free support, training and advice. Many offer a mentoring service, although each enterprise agency follows a slightly different process. Some may offer a one-day or two-day course followed by counselling and advice, others start with counselling or advice sessions. There may be optional training courses but, after you’ve been trading for a while, they may begin to charge you.
The Start-up Loans service is run by the government and it’s for people planning to start their own business in the UK. It lends £500 to £25,000 at a fixed interest rate of 6% a year. To be eligible, you will need a business plan and to pass certain credit checks and have started your business within the last two years.
Register Your Business
Once you’ve decided what type of business you’ll be trading as, it’s time to register your company legally on Companies House. The cost of business registration depends on several factors, such as whether you complete it online or by post, or if you require a same-day service, but you must be fully registered on Companies House to receive your ‘certificate of incorporation’ and register for corporation tax. You will need to have confirmed the following:
- Company name
- Company address
- The name of all directors
- Nominated shareholders
- Your Standard Industrial Classification (SIC) code
- Details of people with significant control (PSCs) of your company
Trademark Your Name
Another important legality that isn’t worth skipping is trademarking a name – particularly if you intend to grow the business to a certain size. Trademarks are valuable assets – once registered, you can use the ® symbol to prove you’re protected. If you trademark a name, you can also license it to other businesses – this is what’s known as setting up a franchise – and use the trademark to prevent other companies from copying you. It’s an important part of brand building, which is something you can focus on once the legal protections are all in place.
Before applying to trademark a business name, you’ll need to check for existing or similar trademarks using the UK Intellectual Property Office’s (UKIPO) database. Once you’ve established what you want to trademark and the classes of good or services you wish to register in, you can apply to the UK Intellectual Property Office online or by post.
Embrace Modern Tech
Modern technology will help you to make your business faster and more efficient. For that reason, it’s important to determine how tech savvy you are and whether you need to develop your knowledge. If you don’t have the patience for web design or social media, you can always hire a digital marketing company – or your grandchildren – to do this for you. That said, you’ll need to understand some basic software and gadgets, so you could take a course if you feel you need it.
Finally, Start Marketing The Business To Find Customers
Once the business is set up from a legal point of view, it’s time to start marketing your business to find customers and generate sales. One of the easiest ways to do this is building a website. As the Startups team explain, “The importance of your website will depend entirely on the form your business takes. It might be that your venture is entirely web-based, meaning that you will likely be investing a lot of time and money into creating a functioning, state-of-the-art domain. For others, a website may just be a nice addition – a form of marketing to let people know that you’re around.”
Ultimately, there are three ways to build a website:
- Do it yourself: this requires experience and knowledge that is quite specialist; if you’re not experienced in this area, then it may be best to choose something else.
- Pay someone to create one for you: this allows you to build a bespoke site but it can be expensive, so it’s worth factoring that into your business plan.
- Use a website builder: platforms like Wix and Squarespace are both simple and efficient tools for easy web creation, if you have a little bit of knowledge already.
For more information visit FluentMoney.co.uk and Startups.co.uk.
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