By Cato Syverson, pictured, Group CEO at Creditsafe
As of December 2017, 96% of all businesses in the UK were micro businesses[i], employing 0-9 people. These 5.5 million businesses are the backbone of the UK economy. However, getting them off the ground wasn’t easy and is a direct result of the hard work and determination shown by millions of entrepreneurs every single year. While enormously rewarding, setting up your own business is a huge challenge and the process is never simple or straightforward. If you’re embarking on this route in 2018, it’s important to remember that even the most seasoned entrepreneurs encounter multiple stumbling blocks in the first 12 months.
Here are my five top tips for budding entrepreneurs to help them on this journey:
- Know your market
Understanding the market for which your new product/service is entering is crucial to success. Don’t underestimate the importance of doing your research, observing and learning before taking a huge leap and setting up. Assess the market – who are your key competitors? What’s their pricing strategy? What do they do that’s different to you? As James Caan of Dragons’ Den has said, “ensuring your product is commercially viable can be the difference between a successful business and a hobby”.
- Check, check again and then triple check
Before entering a partnership, or purchasing stock from a supplier, do your due diligence and check out their financial history. It’s easy to be trusting in the early days of business as you’re eager to get going but working with a potentially unstable partner or supplier could leave you in serious trouble later down the line. Company credit reports can give you access to significant amounts of data that will put you in an informed position when making decisions about who to work with, and help you avoid falling foul of late payments or accumulating bad debt.
- Utilise available support networks
There is a huge array of support services available to small and medium sized businesses in the UK, and many of these are free. From the National Enterprise Network to the Federation of Small Business, these organisations are aimed at helping the UK’s small business community and should be maximised by new business owners. You could even reach out to local business owners and form your own meetups. Coworking spaces are also becoming increasingly popular as entrepreneurs seek shared services, meeting spaces and mutual support from others in a similar situation.
- Manage your finances closely
It may sound obvious, but the second most common cause of start-up failure is running out of cash. It’s imperative that business owners keep a tight rein on the financials, particularly in the first 12 months. While it may be a shock to the system to lose the stability of a salary, new business owners must be strict at reinvesting those first earned pounds back into the business – the entrepreneurs who succeed will be those willing to make a personal sacrifice.
- Keep abreast of current legislation
While this may not be top of your priority list, understanding and adhering to current legislation will keep your business safe and avoid penalties or worse, being shut down. It’s also important to be prepared for potential legal changes coming down the track so you can futureproof your business. This year will see the General Data Protection Regulation (GDPR) enforced in all EU member states from 25th May, which will fundamentally impact the way businesses can handle and store their customers’ data. This is just the type of legislative change that all new small business owners should be aware of.
Whether you’re starting out or a few months in, these five tips should provide some useful guidance on how to navigate those often challenging first 12 months. Starting your own business is an incredibly exciting time, and if you can manage the speed bumps along the way, you will be on the road to success.
[i] House of Commons Business Statistics December 2017