Top 10 Considerations when setting up a business

December 1, 2017

 

There are so many mumpreneurs (and dadpreneurs!)  nowadays as parents want to work around their children and technology makes this much more possible.  Yet how are you going to do this - where do you start?  And how do you ensure you don't end up one of the 6% who fail and go bust in their first year?  

 

It's all about being informed, and designing your business correctly.  

Knowledge of UK business in general as well as your market sector is vital before you take the plunge.

 

Here are some guidelines for those thinking about going solo.

 

1) TIME VS FINANCIAL BENEFIT

Is your business a product or service?  If a product, are you manufacturing singular items or able to produce in bulk?  If a service, how much time does it take before you make a real impact to your customers?  

 

Thinking about the tasks you'll have to do, and the time it takes to do them will define your charges.  For example; if you're having to work with painstaking detail on a drawing or product which takes several days or weeks - the item would be expensive for it to make financial sense.  Is there a market for this?  Is it really sellable?   Likewise there are only so many hours in the day - could you generate the required income with the time you have available?

Some people go into a business simply because they LOVE it. They love drawing portraits for example, and want to set up as a portrait artist.  However could you fit in the number of clients it requires to pay the bills?  

Could you charge the required amount in a competitive market in order to cover your costs?  This is the part that a lot of business underestimate - they believe the passion alone will carry them.  But rushing several portraits a week does not provide the same enjoyment as it did as a hobby.

 

2) KNOW YOUR CUSTOMER

Ok so you know your customers for your dog walking business are dog owners, but WHICH dog owners?  You need to be specific.  Dog Owners with time on their hands can walk their own dogs.  So you're specifically looking for busy ones - namely ones who work long hours, earn enough to pay for someone else to walk their dogs, AND care very much about their pet's welfare.  Responsible dog owners also tend to have their pets fully insured and registered with a vet (see the part on LINK STATEGY below).  It can be sometimes helpful to name your customer. For example: Frank, is 32 and single and lives with his dog but works long hours in the city.  When you communicate via media and advertising, think about the Frank you're speaking to.

 

3) VAT OR NOT?

When charging your customers, it's important to NOT charge VAT on goods or services unless you're registered with VAT.  I know a couple who did charge this as they had seen it on their receipts and thought that's just what businesses do. Unfortunately they didn't understand it and had a huge bill from the tax man which made them go bust.

Registering for VAT means that you not only charge your customers, but you can claim any VAT charged to you, if it exceeds the amount you charged.  

 

For example; You have several bills from self

VAT registered companies totalling £35k a year.  20% of this is £7k.

 

 

That's a LOT of VAT.  But your products are only low value at £20 a piece..each item would need to have £4 added if you were to charge VAT (and selling at £24 instead).  For sales totalling £24k a year, this means £4k of this is VAT.  So you had £4k in, but £7k out, leaving a £3k NET which you could claim back.  The work involved in VAT returns is not insubstantial..so it needs to also be worth your time.  If you're NET position looks to be a few hundred pounds..think about whether it's worth having to charge your customers more for a product (and potentially affect sales) or to take the hit on the VAT yourself.  You only have to register for VAT by law when your income hits £85k a year.

 

4) LIMITED COMPANY OR SOLE TRADER?

There are some financial incentives to registering with Companies House as a limited company.  Should you go bust, the companies finances are not your sole responsibility, but that of the separate legal entity which is the company. You can effectively walk away and start over if there is no more money in the pot (to simplifying things).

However, you need to submit annual accounts showing your profits, losses and liabilities (money you owe).  This can be a tedious process.  It also makes your financial position visible to anyone, since this information becomes public access.

You may be able to get better deals with insurance companies as a limited company but you need to weigh up the benefits.  For Sole Traders the only registration you need to do is with the HMRC for Tax and National Insurance purposes.  The business is effectively 'you'...regardless of the trading name which is not a legal entity.  To protect a trading name you need to register it as a trademark.

 

5) BUSINESS MODEL

A business model is the approach you take to production, supply and fulfilment, and so on.  For example, are you producing yourself but outsourcing fulfilment (the packaging up and shipping of orders)?  Where will you be based?  From home?  If elsewhere would you need to access the premises out of hours?  How do your customers contact you, can they visit you?  When would you be open?  Knowing how you are going to be able to operate, and the costs associated to this will help you to identify the profitability of the business. Sometimes it's these little things that are forgotten and create such ripples they take businesses down.

 

6) TARGETING AND REACHING YOUR CUSTOMER

So you know your market (the product and it's place in the market e.g. expensive or cheap), and you know your customer who could potentially buy from you.  How do you attract them?  Know that they are looking for you ALREADY!  You just need to make sure that they find you...and when they do..that they know you'll be the right company to fulfil their needs.

 

 

7) BRANDING

Firstly you need to look the part.   Do you want to look cheap an accessible/affordable to all?  Bright, neon colours in blocks or Reds typically connote affordability but also seem highly 'manufactured'- think TESCO, Coca Cola, KFC, Barbie, McDonalds, Argos etc.  Muted colours often show a high end, more expensive, hand made or natural product.  This is mirrored in nature, where a natural palette is often browns, greens, with a dash of colour.

 

 

 

 

 

 

8) HASHTAGS, (LONGTAIL/SPECIFIC) KEYWORDS

Your customers will be using a particular language.  They don't google "Dog walkers for busy people"  they are looking for something they don't have already or are not already..they won't name themselves.  They look for "Slimming clubs" not.."Advice for larger women".  So think as your customer thinks.  What are you offering that they need?  Also be specific!  So many diet clubs out there - the industry is saturated.

Be confident and you will get your piece of the pie!

Instead of fighting 100,000 companies for the front page of google (And some have HUGE marketing budgets), make yourself found on the first page by being the ONLY ONE offering a service that a few hundred people are searching for.   60% of a few hundred is much more viable than 0% of millions.   

 

 

9) UPDATE YOUR CONTENT

Simply creating a website and depending on it is not enough these days.  Google gives points to those sites which are up to date, and every month adding new entries with your long tail key words would provide you with these essential google points!

The trick is to create (or more to the point FIND) a following AND a community where you are at the centre of a niche market.  Offering a club supporting those chasing to a vegan diet for example would be a current gap in the market.  

Using the words "support for becoming vegan" or "tips for moving to a Plant-based diet" would reflect a google search. Adding these to a blog entry as well as your main pages would be of huge benefit.  

 

 

10) LINK STRATEGY

Google also awards points for websites associated with big names.  This means your website named on another website where your customers are ALREADY visiting.   Those responsible dog owners I mentioned earlier?  They are using Pet Insurance and Vets.  If you can find a local, well regarded Vet to sponsor you (for example offer free or discounted products and services to their customers) not only does this mean that their following could then follow you - but their website may have more authority in google's eyes and provide you with a much needed boost.

 

 

SEO really is about keeping on top of your specific market. If you need any further support contact me at

contact@projectperfect.co.uk 

 

Please reload

Recent Posts

Please reload

Archive

Please reload

Tags

Please reload

PROJECT PERFECT - ALISON WHITE

Address

Rowfant Cottage, Wallage Lane RH10 4NG

©2017 by Project Perfect