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How To Star A Business As A Successful Entrepreneur
How Does It Happen?
What would you do if you happen to have a random million dollar shower thought idea? Either if its for a way to make someone’s life easier or to benefit the community as a whole. Do you think you have what it takes to make it possible? Are you aware of the dangers and troubles a startup can have? Meet and greet case studies from all around the UK - gather knowledge and read the tips to succeed.
First Off What Is A Startup?
The general idea is that a startup is a new company that recently begun its operations in the real world. This is not quite true due to the fact that the majority of entrepreneurs create an idea, set it in motion and go look for investors - either single bigger company or crowd sourcing - this is their Minimum Viable Product. The point of interest here is that a startup is rarely with little to no investment because everything around them is so expensive and you basically have two options - either share the business with your partner or pay a small fortune just to have something to show to the people and start generating hype. A startup can be anything, from an entertainment Spades site or something bigger - like Uber
Based on this, a startup is more along the line of “setting in motion the process of putting an investment to good use”.
A Startup Without An Investment Is Far From Impossible!
Many case studies have shown that you need nothing more than a handful of things to start your career as a successful entrepreneur. Some of the problems you need to worry about in the UK are based around presentation and utility. The legal costs can be bypassed due to some of the programs we (UK) have for starting up a small business.
An endless stream of frequently asked questions flows in the internet and the startup communities, lets get them out of the way before the next part:
How did you acquire your logo?
Should I Trademark Everything I Create, Like Name And Logo?
Depends on your business. In the UK, trademarks can be expensive and time consuming - therefore setting you back by a landslide. Think about your niche - would anyone want to pretend to be you? Would someone want to go through all the trouble to steal your logo? If yes - go for it, its worth it. On the other hand, if the answers are no and you can actually benefit from someone pretending to be you, leave the trademarks for a later stage.
Should I Set Up A Limited Company? Do We Go For Partnership? Is It Wise For Me To Be A Sole Trader?
As a sole trader you will be responsible for every single asset the future company will have with your own property, partnership is the same but you share the liability. If you are guaranteed to succeed - you’ll have nothing to worry about, but if you fail and you just happen to have taken a loan from the bank, they might in turn take your house. In any case a limited company is the best choice as it gives you all the benefit from being a sole trader, but also limits the amount of liability you are obliged to in case the business goes bananas. The only difference is that you and your partner(s) will be called “directors”.
Should I Hire A Lawyer/Bookkeeper When I Begin?
Not necessarily, for a small company you will not need a lawyer or a bookkeeper, in most cases they will be a bigger hole in the budget than not having them. That however, does not mean to neglect those entities and their guidelines - it is even advisable to book a few hours to talk to them, ask questions and listen to feedback. Most importantly, keep the receipts of everything relating to your business - from the pen you take notes with to the shiny new design you bought for the MVP.
If My Business Is Online Only, Would I Differ From Regular UK Startups?
Yes in a few ways, generally in terms of how you pay your taxes. In case of you pass the VAT threshold - you have to register VAT, also you have to charge VAT on sales to people abroad on two rules - you are VAT registered and they are not in their country. If either one is missing, you are obliged to charge them their country VAT that ranges significantly and in turn becomes a pain to file a return for it. If you are selling online services only with no physical component, a new law for electronic services applies from 01.2015 for all EU citizens - the mini One-Stop Shop (MOSS). MOSS allows you to register with one EU tax authority and file one VAT return per quarter to that authority, which in turn allocates the relevant VAT to the EU countries where your customers are located. The best thing you can do is to hire a tax advisor to clear the business model for you to avoid future problems.
Who do you plan to work with?
With All That Out Being Cleared What Else Should You Take Care Of?
When you register you business (I will assume you chose limited liability), sit down with your partner(s) and decide on the percentages of shares you will own. Never go 50/50! This may be a surprise for you but this is the worst deal imaginable. Equality means no tipping point when it comes to decision making, no control over the specific path the business will take. The best case scenario for two partners to be equal is 51/49 with you having the majority of shares. Another common way is 49/49 and 2% neutral for decision making. -Ok, I understand, but why is 50/50 so bad? - Well friend, imagine the business blooming, you have the cleaning company of your dreams and you and your partner want to expand and improve it - he things you should hire more cleaners to cover more bookings, but you think you should buy a van for your existing cleaners to get faster to the appointments. You both agree that the two options are a must in terms of business growth but who is first? If your partner is stubborn and pushy a 50/50 will rule your opinion out “for later”, but a 51/49 gives you the ability to structure progress and keep the business real.
Next Stop Is To Decide How To Tackle Expenses.
“In the beginning God created light and accounting software” - true story! FreeAgent and KashFlow are just two of the numerous available online tools to track your profits and expenses. Either you’re on your own or with a bunch of partners, an accountant will be too expensive and not that useful apart from business tips and tricks of the trade if you are inexperienced. Keep the data for company uses only and share it only with the eventual accountant you will hire. It will be valuable if you decide to include forecasting and in-depth analysis to your startup in later stages, also if you at some point decide to sell the business you will have additional proof of concept and precious data to sell as well.
Understand How Big Of An Apple You Are Trying To Bite.
When it comes to great ideas and their execution, be prepared to service a reasonable amount of people. Do your research in both online and offline markets - create an AdWords account and run a few keywords in their planner. Export the market volumes and get an estimate for the near future based solely on ads being clicked in google. The information might be misleading at times but if you know your niche well enough you will understand the data perfectly and maybe get some more ideas for improvement.
Imagination time - if you launch an app that lets you track your “pizza delivery” in London and you see around 3,600 hits in the keyword planner, it is natural to assume that maybe in the course of one or two months you will get 3,600 tracking requests so you have to prepare for that capacity at the end of the first month, right? Nope - if you are the only servicer or you plan to improve the service that is already present, have the 4,000 capacity at launch and increase it exponentially to meet the real data - do not let success destroy you!
Create The MVP!
In the past, investors were afraid to give out money to everyone with an idea, today things are different in the UK. There are numerous programs and venture capital companies that will gladly help you. The requirement of self sustainability in the first periods of the startup are generally non-existent. That said, there is no perfect customer retention formula that will allow you to blissfully lay back and bathe in gold. Hard work is rewarded and you should prove your worth to the entity investing in you, therefore try to build the perfect MVP! If you are the idea maker - hire a programmer to do the coding for you, either pay by the hour or if you plan to use his services regularly give him a % of the shares. On the other hand, if you are a programmer - actively look for new ideas and talk to people about them, do they want to create them, are they willing to pay you to make their business reality?
This logic applies to every startup for instance, lets return to the cleaning company from earlier - all you need to start off is a cleaner to work for you and a way to market yourself! Rune Sovndahl took the approach of an experienced entrepreneur - all he needed was an owner of a cleaning company he can trust - and this is all the effort Fantastic Services had to put into creating the MVP.
Decide The Direction You Want To Take With The Startup.
Do you plan to keep your newly found business and work towards its progress or when the time is right sell it off to a bigger company? Based on the initial plan of operation you should decide what future your startup will have - if you are self-funded, selling the majority of shares you own is sometimes not the best idea. Based on previous cases, self-fund companies are worth less because all the hard work and restless night go by unnoticed and under appreciated. If you are crowd funded however, selling the business can be catastrophic in the eyes of your backers because you basically sold the trust they put in your idea and you. On the other hand, small businesses that began their life with governmental grants or private funding are less prone to public backlash and under appreciation due to the sole fact that you have notable documents that prove the worth of every penny and hour put into your startup.
Do you enjoy reading success stories?
Do Not Compete With Success Stories!
What successful entrepreneurs share if a proof of concept - if they did it, you can do it too! Measure your success on your own terms and in your own niche. If you one day read the story of a simple Czech man that wanted to sell diamonds and now owns the biggest diamond selling company in the world, yielding billions of dollars to him each year, try not to expect the same outcome if you started selling your own flea killing powder… At the very least he wrote a book about it. Learn from the mistakes of others, amend your choices and know your enemy.
An idea is not enough, build a plan and stick to it until the very end - do not fear a negative outcome and work your way to insure success. It is not easy, you will be on your own and a big portion of what you will face are the customers themselves. Prepare to deal with people and problems on regular basis! Apart from that, your startup will be great and an amazing experience as a whole - you gaining a ton of experience is the worst outcome, and I will take it every day of the week over the small office and grumpy boss! All in all a brilliant idea to be successful requires true leadership and motivation, which in turn inspires and influences the employers to work as a whole and drive the business forward.