How to Set Up a Small Business


The first thing anyone needs before setting up any kind of business is an idea, or perhaps more precisely the idea of starting in business at all. It sometimes happens in a blinding flash, but more than likely it insinuates itself and gradually the idea of setting up a business develops until it is hard to remember when it was not there.

Before the idea takes over too much, certain questions need to be asked in order to keep things realistic and in proportion – not to kill off the idea, but rather to have a controlled development of it.

Small Business

Talking to a neutral business adviser could be a sound way of doing this. For example, good Business Link managers say that the most important part of their counselling work for potential business start-ups lies in dissuading people from investing their life savings and re-mortgaging their houses for a business idea that is flawed and will never succeed. The majority of people who get as far as going to their local Business Link for advice turn up with ideas that could spell disaster for them if the ideas are not at least adapted significantly and they are often abandoned. Of those who go ahead and launch businesses, many will fail within three years, and only a small minority will actually grow. So while not wishing to put a damper on things from the start, it is only fair to point out how important it is not to get carried away with an idea just because you want to believe in it. Ask an objective business counsellor to assess the idea before you sink your money and your family’s security into it.

Is it saleable?

A sound product or service

The first question to ask about your idea could take the following form: What precisely is the product or service I am going to offer? followed by the key question: Why should customers buy MY product or service rather than those which exist already? There is a distinct advantage if the product you are intending to offer is a legal requirement, in the sense that, potentially, you have a captive market. Items related to health and safety, for example, fire extinguishers or even Fire Exit and other related statutory signs would come into this category. You can probably think of other areas which could apply.

Nevertheless that key question still needs to be answered, and answered realistically: Why should customers buy MY product or service rather than those which exist already? Make a list of the good points about your product – they could form the basis of your marketing strategy.

The market need

Continue to question your idea:

  • How many people are likely to want to buy my product or service?
  • Will the numbers be sufficient to justify my proceeding with the idea?
  • What competition already exists?
  • How well established is it?
  • Will I be able to compete?
  • Is there a particular segment which I could concentrate on?
  • Is what I am considering generally an expanding or a contracting market?
  • Will I be infringing, even inadvertently, other people’s intellectual property rights?  Is your idea really your own, or are you copying someone else’s?  Visit the Patent Office website, www.patent.gov.uk.

The finding of the answers to these and other related questions forms the basis of the market research exercise which is necessary at this early stage to turn a hunch or idea into something more down-to-earth and practical, or to confirm that the original idea is sound.

As a small trader or partnership, you cannot afford to embark on a very large market research exercise, but it is worthwhile trying to establish whether what sells well to friends and colleagues will be bought by the public at large. Try these five basic rules for marketing your small business:

  • Pretend you’re a customer
  • Set objectives for everything you do
  • Make mistakes in your head
  • Don’t try to be too perfect
  • Know your limitations

Teach Yourself Marketing by J Jonathan Gabay contains many practical ideas on key marketing techniques, including market research.

Your local Business Link runs market research courses for people starting up in business. Ask at your Job Centre, your local Business Link or your local college to see what courses are available.

Suppliers

If your business idea involves selling a product, you will need to obtain either the raw materials which you are going to transform into something else, or the components which will create your finished article.

Small Business

These items will need to be obtained from suitable suppliers. You will find that there is no shortage of people wanting to sell you things for your business. What you must do is draw up your product specifications very carefully and decide on the suppliers (and it is probably better to have more than one source) who will provide that quantity and the quality you need at the price you wish to pay.

Make a list of the components you need, and for each component write down the potential suppliers, their prices, delivery dates, settlement terms and product quality. Making such a list helps you to think clearly and objectively.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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