A ‘How to Guide’ to Starting a Business

One aspect of funding relates to starting a new business, SME activities and spin-out and spin-in companies.  So I thought I would start by doing a few ‘Guides’ The first goes to the basic question of starting a business, relevant to many successful projects when looking at mainstreaming but also for a range of people and researchers who have ideas and are considering whether to set up a company to commercialise their ideas.  Clearly, we are providing information here and not advice but hopefully these guides will help clarify issues for relevant readers.  So, let’s start with…

How do you find a good business idea?  That depends on the person.  If you have a successful project or pilot activity then this may be an obvious thing to do.  However, in general, how good your business idea is will depend on how you see it.  Some people follow their natural careers and set up a business based upon the work they have been doing or are trained to do.  This makes sense as you have expertise, direct knowledge and a network.  Some people start a business following on from a hobby.  I started my first company this way.  I was a Red Cross volunteer and first-aid instructor and I set up a business doing first-aid equipment, first-aid training and health & safety work.  Some people just see the business idea as if on the road to Damascus.  It is all down to the individual.

How do you assess a good business idea?  Ultimately, the success of a business is down to how you execute the business idea and business plan.  So, the main reason for writing a business plan is to assess, in advance, how likely the business is to be viable.  Remember, businesses do not fail because they are a bad idea but because they run out of money before they breakeven.  An initial business plan is based upon assumptions and, is therefore, never going to be perfect BUT if there are weaknesses in the business idea or business model it can show these up.  Knowing this can prevent you starting a business that is going to run out of money before getting to breakeven and losing you money, time in your career, time with your family and a whole lot of stress.

What is a business model?  Your business model is the business skeleton upon which everything else sits.  How is the company set up?  What legal structure?  Do have a worked-out pricing structure?  Who are your customers and what way do they buy?  Will you have a shop front, an office or work remotely?  Will you have staff or contractors?  All of these considerations affect how the business is structured.  Our Funding Master business model is straight forward; we work with clients on an annual basis and charge clients an annual fee.  When a client like a project idea and we have a grant call for this, then we put together a partnership for the call.  Partners in a project pay a project fee to cover the cost of writing and submitting the call.  That’s it: just two prices and everybody knows what it costs in advance.  So, can you develop a business model and pricing structure that is that simple and easy to explain?

What is a business plan?  All a business plan does is set out your plan to develop your business from where it is now until the end of the timeframe set out.  It sets out the strategic objectives for the period, say the next 12 months.  So, in 12-months’ time you want to increase sales by 50% or break into a new market or get a new large client.  You set these goals.  It then outlines the management, operational, sales and marketing and financial work necessary to achieve the strategic goals you have set.   Several years ago, I developed a range of ‘Write Your Own Business Plan’ programmes to debunk the myths around writing and USING your own business plan. 

Who should write my business plan?  You!  There is little point in a management consultant (apologies to my fellow professional consultants!) writing your business plan and having a load of knowledge about your business…you get a several page document without the underlying learning.  Better that you write your own plan, you learn all the details and get a deeper understanding of what you are doing.  Now, you can do a course to help you start a new business but YOU should write your own business plan.

What do you do with a business plan?  This is your plan for the next 12, 18 or 14 months… IMPLEMENT the thing!  Deliver on the sales and marketing plan.  Make sure your operations can keep up with your increased sales.  Make sure your management systems can keep up with increased sales and operational activity.  Make sure you are invoicing, getting paid and managing your cash flow.  Make sure you pay all your bills, especially staff, suppliers and your tax liabilities.  Do what you said you wanted to do.

How do I grow my business?  By having a laser focus on your customers and clients.  Know what they need and meet these needs.  Build your network and build your client base.  You grow a business with an intense focus on sales and marketing.  Management, operations and financial activities develop to address increased sales revenues.  You increase sales revenues by focusing on your clients. 

What can you do?  Ask for help.  If you do not ask you do not get!  Learn from your mistakes.  Keep your ego in check and let the business be about the customers and clients.  Keep your word.  Don’t promise something you know you cannot deliver.  Be honest and modest

I have been self-employed for many years and have started a few new businesses.  Being self-employed is invigorating and an Adrenalin rush when things are growing.  When things are going wrong it is all on your shoulders to fix.  Statistically, only around 10% of the working population have an inclination to starting a new business so it is not for everyone.  If you are in that 10% then welcome but do your full diligence before you invest time, money and energy into starting a new business venture.

FundingFunding Master works with clients to develop, write and submit funding applications.  The opinions set out here belong to the author(s), they constitute opinion and nothing is intended to constitute advice.  The blog is authored by Funding Master’s founder and CEO, Dr. Ken Germaine.  Please view his profile and please connect with him at his LInkedin profile here.  Please contact us directly here if you have any questions on our work or this article.  More information on our website here.