With some business leaders in the UK demanding a People’s Vote or a second Referendum for leaving the EU, small businesses find themselves arguably operating within the toughest economic circumstances for decades.
The effect Brexit will have on small businesses, or indeed any businesses, is still unknown. This is despite the fact that the 2018 Budget has been released and the Government is in the final stages of the negotiating process. Whatever happens with Brexit, starting a small business is a challenge. It’s also a key moment in any business person’s life, and an opportunity to turn a passion into a living.
High fail rate
Figures from the Office of National Statistics show that the number of UK businesses that started between 2015 and 2016 went up from 383,000 to 414,000. The figures also show that the number of these businesses that failed rose from 283,000 to 328,000.
So, while a high percentage of people are ready to start a small business, the number of those that fail shows a need to get the basics right. What are the challenges small business owners can expect to face and how can they avoid failure?
Creating a solid business plan
Every business, no matter their size or longevity, must have a comprehensive, workable business plan. It should cover market research, realistic and viable financial forecasts, marketing details and the benchmarks needed to measure progress.
A business plan must be a document that is constantly revised and updated. It is not a static outline that is only looked at to secure funding, for example. It should be a workable document, that accompanies the small business owner through the rest of the challenges they will face in the first years of their new company.
Understanding the legalities of starting a small business
Many entrepreneurs are all about the excitement of starting their new business. And while, the legal nitty gritty isn’t necessarily the most interesting part of the process, nevertheless it’s vital.
For those operating as a sole trader, it can be as simple as ensuring they are registered with HMRC. However, many will choose to form a limited company and need to understand payroll and corporation tax.
Forgetting about the competition
Ignoring competition is a big mistake. Business owners must be in the loop in terms of their competitors. Proper market research and competitor analysis should form part of the ongoing updates to the business plan.
It’s important to understand that this isn’t a one-off job, and needs time and resources allocated to it. By keeping fully informed about competitor activity, small business owners can get ahead. Find out what they’re doing well, what and how they’re selling and any media presence they have secured. This helps to ascertain niche markets or complementary services that can be offered by the start-up.
Forming a brand identity
Branding is vital for every small business. As the digital world expands every year, branding becomes even more important. A brand comprises different elements. It shouldn’t be thought of as simply a logo and name, but more the style and tone of all visible communications, the experience a customer can expect and how the business is run.
Building a solid, recognisable brand that lights up for customers is essential for new start-ups that want to make it in a crowded sector.
Pricing services and products correctly
How to price goods and services often forms a stumbling block for start-ups. The temptation is always there to lower costs in order to gain new business. Depending on the sector, this could be a big mistake.
Most customers, and particularly those in the B2B sector, are seeking a service that provides value, as well as competitive prices. To price correctly, a small business should consider how they are adding value for customers, and price accordingly.
James Turner, Managing Director of Turner Little Limited says: “This information shows that there are steps that all start-ups should take when they decide to form a business. It’s unfortunately not enough to have the vision and ideas. Legalities, financing, business planning, marketing and much more must also factor in.
“It can be tempting for start-ups to dive in, without doing the right kind of research. And this could add them to the long list of start-ups that fail within their first year. The good news is that there are many ways to counteract the risks of starting a small or medium sized business. By taking care to create an effective and flexible business plan, taking advice on the legal side of starting a business, and carrying out thorough and relevant marketing research, a small business can ensure that some of the more common challenges don’t ruin their long-term success.”
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider and business consultancy. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.