Choosing to start your own business is a major decision. Entrepreneurship can be hard and time consuming but if you have a great idea and plan carefully all your hard work can pay off. As most of the learning happens on the job it can be hard to know what to consider before starting your own business in London. Here are some suggestions of things to consider whilst you’re in the brainstorming stage which can make all the difference to your success.
What type of business?
First, you’ll have to think about what sort of business you want to create. What would be a good fit with your background, skills and the marketplace? The main types of businesses are usually service, merchandising or manufacturing. For a service company you might be selling your time and expertise – for example as an event organiser or as a restaurant. If you want to set up in Merchandising or wholesale, you buy and sell goods, like a department store or an online retailer. If you want to go into Manufacturing you’ll be responsible for creating something new using raw materials and human or machine labour, for example such as producing furniture.
What’s your target market?
This is something that you need to think about alongside what type of business you want to run. Often a target market can dictate the direction of a business as you can’t have a product without anyone to sell it to. Do your research into similar businesses and try and establish who their customers are.
Location?
Location is key to the success of your business. If you’re looking to set up your business in London do your research and find the most suitable area. This will likely be determined by where your target demographic is based. It’s no good, for example, setting up a trendy artisan doughnut shop targeted at millennials in an area where most of the residents are retired.
Funds
When you’re starting out you’ll need Capital to get your business set up – otherwise known as cash. Capital is the amount or value you will need to invest in the business to get it going. To work out how much capital you’ll need you should note down all the potential costs you’ll have to start your business – this should include assets to purchase, renovation and rent payments, operating and staffing expenses and so on. You will also have to plan in detail what assets you will need in terms of computers, equipment, furniture, vehicles, etc.
Operating Costs
Once you’ve identified and listed all of the above costs you’ll need to work out the monthly costs attached to running your business such as staff salaries, rent, office supplies, utilities and so on. This is a key step as usually you have to retain at least six months to a year’s worth of your monthly spend as capital.
Formation
Once you’ve decided what shape your business will take you’ll have to consider its formation. You can choose between sole proprietorship, partnership or corporation. Having single proprietorship means you’re the sole owner of the business- which is a lot of responsibility but also you get more control. If you want to share the workload you can decide on a partnership where you divide the business with another person (who will be called your business partner). Please note at least two people are required to form a partnership. The other option is turning your business into a Corporation which means it’s divided between multiple people (stockholders). At least five people are required to form a corporation.
Business space
Next item you’ll have to think carefully about is whether you’ll want to rent out a space for your business. Some businesses need this more than others, for example a café vs an online store which could operate out of a spare room at home. If you’re considering renting you will normally need at least 3-6 months of rent in advance as well as a security deposit. Furthermore, rental spaces are often basic and may need renovations and purchases which you’ll have to factor in.
Suppliers
Identity your potential suppliers which will produce your products or services. Thinks to take into consideration are their reputation, their price, location, reliability and operating hours.
Hire staff
One of the biggest decisions you’ll have to make when starting your own business is whether to hire staff members or use outsourcing.
Outsourcing has become more popular in recent years due to the amount of extra work involved in people management. If you decide to hire, you’ll have to consider the salary for your staff and make sure you’re in line with all government regulations. If you decide to outsource everything you’ll have to research who you’re hiring but it will be easier to change if something goes wrong.
Marketing plan
Thinking hard about your marketing strategy in the early stages can pay dividends later. No business can survive in these times without a good, sustainable marketing plan. Go back to your research into your target market and look at the platforms that those people use and make sure you’re on them.
Plan a content strategy so you have something to post throughout the year and mix it up with different types of media to keep it looking fresh.
Setting up your own business is never easy but hopefully with these few tips you’ll be closer to your dream of setting up your business in London.