We get it. Starting a small business is super exciting. But hold on. Before you get started, make sure you’ve checked all the right boxes. Here are six of the most commonly overlooked details you might have forgotten about.
1. Writing a business plan
A business plan summarises your company’s goals and your financial projections. In other words, it puts all your key business data at your fingertips.
Without a business plan, it’ll be harder to:
- Convince potential investors that you have a long-term vision for your business
- Track your progress and tweak your strategy
Don’t make the mistake of assuming you understand your business so well that you don’t need a written summary. Before you even look for your first customer, spend time compiling a business plan.
2. Estimating startup costs
Starting a small business costs money, even if all you’re doing is buying some IT equipment. That’s why it’s so important to calculate your startup costs at the outset.
But what’s included in startup costs? Well, it’s different for every business. However, they typically include:
- Equipment
- Stationery and other supplies
- Leases and utility bills
- Website development
- Marketing
- Legal fees and insurance
A good rule of thumb? Always overestimate your startup costs. That way, you’ll have contingency funds available if something unexpected crops up.
If you underestimate these costs, you might strain your cash flow and rack up business debt.
3. Organising your space
This one’s really easy to overlook when starting your business, but it’s so important. You need to choose a location and ensure it’s fit for purpose. Here’s what to do:
- Decide if you’re working from home or if you need office space.
- Make a list of the equipment you need to get going – don’t forget to include these expenses in your startup costs!
- Check if you need special insurance or business licences to run your venture legally. If you’re unsure, always consult a lawyer.
4. Opening a business bank account
Do you always need a business bank account? No. If you’re a sole trader or freelancer, you can use your personal bank account. That said, it might be easier to manage your cash flow if you have a separate bank account, so it’s still worth considering.
You do, however, need a business bank account if you set up a limited company. That’s because the company is completely separate from you, which means it needs its own account. So, as part of setting up your venture, get a business account and consider getting a business credit card, too.
5. Creating a marketing plan
Starting a small business is great, but it’s hard to grow your company without a customer base. That’s where the marketing plan comes in.
A marketing strategy helps you define:
- Your target audience
- How you plan on reaching these customers
- Which tools you’ll use (e.g. email campaigns, social media)
- The amount you can spend on marketing
- How you’ll track whether the strategy’s working or not
In other words, a marketing plan is essential to growing your business and finding customers. Don’t forget to include it in your business plan.
6. Planning an exit strategy
Where there’s a beginning, there’s an end. Just because you’re invested in your new business right now doesn’t mean you’ll run it forever. Why? Because you’ll probably retire one day. Or you might decide to invest in a new company and sell your business to new owners.
However it comes about, you’ll likely need an exit strategy – a plan for letting go of the business. Here’s why a strategy is so important when starting your business:
- There’s a clear endpoint to work towards.
- It can make your company more attractive to investors because there’s a ‘roadmap’ in place.
So, how do you write one? Well, it varies from business to business, but here’s what to think about:
- When you plan on leaving the company.
- What you hope to achieve by leaving (e.g. making a profit).
- How much time you’ll need to complete the sale.
- What’s next for you (e.g. if you’re retiring or investing elsewhere).
Review your strategy regularly to ensure it’s still aligned with your long-term goals.
Takeaway
If you’re thinking about starting a small business, remember one thing: successful companies aren’t built overnight. Spend some time ensuring that you have the right foundations in place and always get legal advice if you’re unsure about anything.
Don’t rush into any financing decisions, either. Consider the pros and cons and think about what’s best for your business in the long run.
One final tip: it’s easy to lose track of your finances if you don’t keep accurate cash flow statements and invoices, so think about getting some accounting software or financial advice to keep you on track.
