Setting up a new business

Graham Richardson's picture

Starting a new business is an interesting process and can be daunting if not approached correctly. One of the secrets to setting up a new business is to take it one step at a time; otherwise it may appear to be an obstacle too great to climb.

So you’ve come up with the idea for a business….what next? A good place to start is to look at the concept of the business and conduct market research around the idea – this will give you a good insight into the market that you intend to play in and where the market is situated (local or abroad). This research will help you understand the size of the market, your competitors and their products, and an understanding of other products that occupy the same space as yours.

Planning, planning and planning are words that we often here today in start-up organisations. The setting up of a new business requires planning and effort to ensure that you deliver what is required. During the planning process you should put together a business plan, coupled with a budget and cash flow which will give you a good idea of whether the concept and the business are viable and what the cash flow impact will be throughout the set-up and go-live stages of the business cycle. Later on in the start-up process the business plan and budget will be needed to attract investors and will aid securing finance as and where this is required.

Finance and the raising of finance is a wide and crucial area for any start-up business. Financing the business coupled with the cost of this financing can make or break a business if not approached diligently and carefully. Financing is available from a number of different sources including banks, private investors, family and friends, crowd funding and other third parties.

Branding of your company and choosing a name for it which is easy to remember, practical and conveys a sense of the business and underlying product cannot be stressed enough. You need to ensure that the name and branding that you choose for your business do not cause confusion for competitors or the market that you are looking to trade in, as this could detrimentally effect your product, its sales and the inroads that you are looking to make into that market.

Other important areas to consider (however this is not an exhaustive list) when setting up your business include, compliance with industry specific rules and regulations, intellectual property and the protection of this through trademark or patents, insurance to be taken out to protect the business and directors, the staffing structure of the organisation and how the product or service is going to be delivered to the market.
The actual setting up of the business ranges from deciding the operational structure that you are going to use (e.g. sole trader, joint venture, partnership, limited company or some other more complicated structure), putting in place the back office processes, arranging and coordinating the supply chain, the marketing of the service or product and the delivery mechanism employed to deliver your product or service to your customers, followed by an efficient cash collection process.

An exit strategy – There are a number of reasons for setting up or buying a business, however you should always bear in mind your exit strategy. This may be five years or ten years from now, however the set-up of the company originally may be dependent on your own plan to exit the business partially or completely, or whether you intend to amalgamate your business with another business.