Starting a Business

Starting your own business is an exciting, challenging and rewarding experience. To give yourself the best chance of survival and growth it is essential that you do all you can to be properly prepared.

There are many issues to consider before taking the leap from employment to self- employment. Before you start making any concrete plans for a new venture, take some time to consider if you are up for the challenge.

Here are 10 steps that will help get you started:

1. Self Assessment

It is important to know yourself and to question whether you truly have what it takes to become an entrepreneur. When you have assessed yourself and your abilities honestly, you can properly assess the potential of your business idea.

Successful entrepreneurs possess many of the following attributes:

  • Self-confidence & self-belief
  • Willingness to take a risk
  • Self-motivation
  • Good communication skills
  • Strong managerial experience
  • Comfortable with taking on extra responsibilities
  • Patience – it generally takes about 3 years for a new business to become profitable
  • A strong belief that the positives outweigh the negatives of being your own boss

 2. Research your Market

From the outset, market research is essential in helping you to identify your target market and customers and to assess the demand for a new product or service. It will also help you to identify who your competitors are and how to compete effectively. Good research will also tell you who your suppliers are likely to be, where they are located and some possible costs involved.

Market research should help you to identify:

  • What is the extent of the market for your product/service?
  • Will there be a long-term demand for those products?
  • Who are your target customers?
  • Who are your competitors?
  • Have any similar businesses closed recently?
  • Can you check with any local agencies if anyone else is planning to open a similar business in the future?

 3. Examine your Business Requirements

Consider the best location for the business

Find premises that is adequate for your production and administration requirements. When deciding on location, you should take planning permission, building control and access into account. If you depend on passing trade for business, check the location thoroughly for car parking, considering the number and types of customers.

Identify your basic equipment requirements and costs

If purchasing machinery, think about the cost, sources, warranty and maintenance aspects involved.

Establish if you will need to employ staff

Will employees require additional training prior to commencing work?

Check out www.basis.ie for information regarding employment issues and employee rights.

Identify your insurance requirements

 
4. Work out your total costs

Take into account both fixed and variable costs when working out your total business costs. Breakeven point, ie the level of sales required to cover all of your costs, should be calculated at this stage. Fixed costs or overheads are those costs that occur even if no sales are made, such as rent, rates light and heat. Variable or direct costs relate directly to the production of your goods or service, such as raw materials and direct wages.

5. Calculate investment requirements

  • Identify all start-up costs associated with the business.
  • Identify ways of financing your business venture.
  • Seek financial support by contacting your local Local Enterprise Office.
  • Find out about loan options from your bank or credit union.
  • Check your own resources and family support. Remember that any loan or grant will not cover all the costs of setting up, you will be required to match any grants.

 6. Estimate your selling price and plan how you will achieve sales

  • Where is your target market - local / national?
  • How will you promote your business?
  • What channels of distribution will be used?
  • Determine ‘breakeven’ point.

All costs should be taken into account when calculating your selling price. Other considerations should include competitor's prices, the price the market will bear and what your customers are prepared to pay.

If you can't sell it, don’t make it!

In order to sell your product people need to know what and where you are selling, and why they should buy from you rather than a competitor. It is important to create the right image or brand for your company and product. This takes professional marketing. Remember the best form of marketing is word of mouth and a satisfied customer. Other forms of marketing include advertising, press releases, flyers, websites, social media and brochures. The most expensive form is not always the best.

7. Decide on an appropriate legal structure for your business

You should decide on which legal form your business should adopt before commencing. You can be a sole trader, a partnership or a limited company. The decision you take will affect taxation and the records you need to keep. It is best to consult a solicitor before making your decision.

The three potential business structures that you can choose to adopt are:

Sole trader:

  • As a sole trader, you are the owner of the business.
  • You are legally liable for the business and do not have any protection if the business fails.
  • If the business is not successful, all of your assets (business & personal) can be used to pay off your creditors.

Private limited company:

  • You create a legal entity, separate from its shareholders.
  • If the business fails the shareholders are only liable for any amount outstanding on the share capital they subscribe.

Partnership:

  • This is an agreement between two or more people to go into business together.
  • If the business fails, each partner is liable for all losses.
  • A ‘Deed of Partnership’ is usually drawn up outlining the obligations of each partner.

Please note: it is highly recommended that you consult an accountant or solicitor before choosing an ownership structure for your business.

8. Check out legislation that might affect you

Ensure you make yourself aware of any other legal obligations you need to comply with as a self-employed person. Any business that buys or sells goods is affected by trading laws and you are required by law to keep records in support of tax and VAT payments. You will need to register your business name with the Companies Registration Office (CRO). This can be done online at www.cro.ie

Before committing to a property you should consider planning permission, building control and environmental health regulations. If you are renting, look closely at any lease agreement.

Revenue requires you to register as self-employed with your local tax office and make yourself aware of your tax obligations. Further information is available at www.revenue.ie

Look into other regulations such as trading licences, planning permission, insurance, health and safety, patents, trademarks, copyright etc.

9. Decide upon a marketing strategy

Promoting your enterprise is a fundamental aspect of starting up so it is crucial to research the most cost effective methods of marketing your business.

Marketing has been described as "Finding out what people want and selling it at a price they are prepared to pay and at a profit to yourself”. Through your market research you should have a good idea of your customers, who they are, their location and their spending habits. You should also have clearly identified your competition. Once you are aware of these two factors, you can start to create your marketing plan.

10. Prepare a Business Plan

A business plan is a document that outlines your business idea, your objectives and how you plan to achieve them. It acts as a road map for your business.

Your business plan also communicates the advantages of your business to others such as bank managers, investors and funding agencies. Therefore, it is essential for securing finance. It also organises your plans for the business and provides a set of goals against which progress can be measured.

Useful Tips

  • Prepare the plan yourself:

You know your business idea better than anyone else. Therefore, you are the best person to explain it in your business plan. Writing your own business plan gives you the chance to anticipate problems that may arise and consider how you will deal with them. If you have a partner in the business you should work on the plan together.

    • Be clear and stick to the point:

Keep the document as brief as possible. The overall length will depend on the complexity of the project. Clearly state your goals and ensure that they are realistic and achievable. You obviously know your idea inside out – but don’t presume that your reader does. Explain your ideas clearly and logically so that they can be easily understood by others.

    • Be realistic:

Don’t promise what you can’t deliver! This is particularly important when it comes to your financial projections. Being over optimistic will put your investment at risk.

 

 

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