The Internet has battered down many of the traditional barriers to starting a successful small business. And the advent of crowdfunding has made getting your idea off the ground easier than ever.
According to the Federation of Small Businesses (FSB), micro-industries accounted for 99.3% of all private-sector businesses in 2017. Indeed, 99.9% were small or medium-sized (SMEs) operations.
The FSB also reports that SMEs employed 16.1 million people last year, which accounted for 60% of all private-sector employment in the UK. The combined annual turnover of SMEs was £1.9 trillion. That’s 51% of all the country’s private-sector income.
So, if you’re tempted to strike out on your own, what qualities will you need to create a successful small business?
We could discuss drive, leadership and vision until the cows come home. They’re all vital qualities for a small-business success story. But this is 2018. In the second decade of the 21st century, almost nothing is more important than a willingness to harness new technology.
You’ve got a lovely, shiny website. But are you checking and analysing traffic trends? No? You need Google Analytics. Integrated with your website, Analytics will tell you the journey your prospects take through your website and how long they read each piece of content. Best of all, it’s free.
What about email? G-Suite not only provides professional business email but also access to Google Docs, Slides, Drive and other productivity-boosting apps.
Then there’s MailChimp. These days, regular communication with customers and prospects through an email list is the way to go. Like water dripping on a stone, persistence pays off. MailChimp can help you build personalised marketing campaigns.
Need some automated project management? You need Trello. Accounting software that integrates with thousands of other platforms? It’s Quickbooks. An app that automatically tracks and records your mileage in the background as you drive your car for business? That’ll be MileIQ.
It’s vital that your business follows a plan. That means doing a strategic audit and writing a business plan should be your starting point.
A business plan is a brief description of your business that outlines your objectives, strategies, sales, marketing and financial forecasts. If you’re approaching a bank for a business loan, you’ll need one that sets out your long and short-term goals and measures your progress against them.
Business plans don’t have to be complex and shouldn’t be packed with jargon. They’re just a useful summary of your business that sells your idea to potential customers and investors. Planning like this will help you think strategically and develop ever-bigger goals.
A collection of education and marketing material, produced in Cardiff by the Health Promotion Authority for Wales (HPA), primarily for the Heartbeat Wales Project, 1987-1993.
You won’t get far without a marketing plan. Without marketing, you won’t find new customers, and without new customers, your business will starve. As might you.
These days, the marketing waters have been muddied by the need to be savvy online and to master inbound promotion: digital marketing is a new ball game requiring new skills. The need to stay on top of social media and the emergence of fresh disciplines such as email marketing and digital sales funnels have created a new breed of marketer.
Whatever the media, one constant is that marketing-led businesses tend to buck the trend and drive more revenue than businesses with less focus on marketing. Cut your marketing teeth on one of the many excellent books on the subject, or by investigating training courses run by the Institute of Marketing.
Hand in hand with marketing is sales. Face-to-face selling is quite an art form, one that requires subtle negotiation skills. From initial contact to wrapping up a transaction, the selling journey is a six-step process:
You can get more information on techniques with a simple Google search, and there’s no shortage of sales training videos to be found on YouTube. Always remember to ‘ask for the order’: accomplished sales professionals generally leave a meeting with an order or, at very least, the promise of further negotiations.
If you can’t manage your cashflow effectively, you run the risk of losing disgruntled employees or not being able to pay suppliers.
Nobody’s suggesting that you should take a degree in accountancy, but knowing the financial basics about your business is a minimum requirement. That means being aware of the selling price and cost price of each product, and therefore the margin.
A crash course in financial terminology will also serve you well: terms such as gross profit margin, net profit, fixed assets, profit and loss, and balance sheet should roll off your tongue. Knowing the figures attached to these phrases might also be helpful – especially if you plan on making an appearance in front of Peter Jones and friends.
Small-business owners tend to have a high-risk tolerance. Setting up a business means moving away from the safe, predictable world of the pay cheque to live or die by your own decisions, with very little security involved. You’ll need to learn how to minimise and manage risk with every decision.
But what about personality? What kind of person do you need to be to run a highly profitable small business?
A large study by the Guardian Life Small Business Research Institute looked at over 1,100 companies employing between two and 99 staff. The institute asked bosses what mattered most when starting a business. Six key personality traits stood out.
If you’ve got fewer than 100 employees, knowing how to work together with your colleagues turned out to be the single most important trait. Delegation, forging strong relationships and creating motivational opportunities were all vital.
You should be open to learning about how other businesses are run. Actively seek best practice in management, innovation and finding the best employees.
Successful small-business owners are big on personal fulfilment. They relish being their own boss and the respect that comes with it. They enjoy having control over their income and net worth. ‘Creating something of value’ was also a popular response.
Planning for the short- and long-term also characterises successful small business owners. They focus on cash flow and have a carefully considered plan to run the business for many years.
Successful small-business startups tend to be run by people with more than a trace of geek in their blood. They value the company website and are more likely to ‘rely a great deal on technology to help make our business more effective and more efficient’.
Successful small-business owners are proactive in building their businesses. They want to have something to sell when they retire and don’t worry about the overall state of the economy.
So, you have the drive, the vision and the skills to make it on your own. But do you have the Big Idea?
What’s big in 2018? Here are five areas that are bang on trend. But be aware that plugging into fashionable sectors might be a business plan that needs to adapt when fashions change.
According to this year’s Waitrose Food and Drink Report, the ‘fourth meal’ is gaining popularity. This is a response to busy Brits eating around their lifestyles.
Eating at a non-traditional meal time might involve a mid-afternoon snack if you’re hitting the gym after work or grabbing a light bite before bedtime if dinner has been unusually early.
How can you respond to this? How about opening a late-night deli or café? Maybe tapping into the growing demand for street food? Or perhaps a health-food business?
If you’re interested in grabbing a slice of a large market, you could do worse than the cleaning sector. In the UK, the market’s worth around £5.6 billion. You could clean up in mobile car washing or valeting, windows or carpets.
Nostalgia is big this year (although not what it used to be). Consider fashion. Nineties tartan is back at Burberry, and Miu Miu has a grunge obsession. Stella McCartney, meanwhile, is big on acid-washed, bad-taste denim.
The X Files is back on the telly, Friends is running wall-to-wall on Netflix, and vinyl and cassette tapes are having a resurgence.
With this in mind, a vintage fashion shop, gaming bar or retro sweet shop could thrive.
More and more people are working from home. That means that they’re better able to look after pets, dogs in particular. That’s reflected in figures for the financial year to 2017 that show average weekly spending on pets and pet food rose by £0.80 to £5.40.
Business ideas here include dog walking, pet grooming or a pet shop.
So, all it takes is drive and determination allied to a great, niche idea. What are you waiting for?