Top tips for running a small business
It’s a good time to be a small business. Reports reveal that more than two-fifths of British consumers favour independent, local companies over multinational conglomerates. These respondents claimed they were loyal to at least three small businesses in a survey by Everline, in which 33 per cent said they would like to see more start-up stores on the high street.
It would seem there are plenty of budding entrepreneurs out there who are willing to make the change from employee to owner; EU-funded research claims that 1.8 million Britons want to open their own business in the next five years. It’s not an easy jump to make, by any means, but if you’re one of them, here are some top tips for running a small business:
Use those skills:
The EU research claims that of those who intend to open a small business before 2020, 26 per cent will ‘change career direction’ at the same time. However, to give your endeavour the best chances of success, it’s advisable to choose something in which you are already skilled. Most skills are transferable, therefore the industry itself doesn’t matter. What’s more, if you are buying a franchise, you’ll receive lots of training and support from the franchisor, thus it’s much more important to find that skills match. For instance, if you’ve managed people in a previous role, you shouldn’t have a problem managing again, even if the sector itself is entirely different. Using your existing skills, rather than starting entirely from scratch, is crucial for success.
Consider a franchise:
Did you know that the franchise industry contributes £13.7 billion to the British economy? Or that 92 per cent of franchised businesses report profits? Probably not, unless you have been considering a franchise yourself. Based on an existing, proven business model and with support from the franchise owners, it’s little wonder that fewer franchises fail than brand new start-ups. According to Paul Stafford from the British Franchise Association (bfa), in 2013, just 2.3 per cent of franchises folded within their first year, compared with ten per cent of independents. For over two decades, the “commercial failure rate of franchises has been under four per cent annually”, which is a convincing statistic and probably one of the reasons why the franchise sector has grown seven per cent in five years to employ 561,000 people. It’s certainly a route worth exploring.
Involve your nearest and dearest:
Going it alone is a big, big, life-changing decision. By involving your family and friends, you can foster an encouraging and supportive atmosphere at home plus provide access to sensible sounding boards who truly have your best interests at heart. This enterprise will consume your life – and probably theirs – so it’s beneficial if they can be involved. Consult with them, try ideas out, get feedback and use the people you trust to help you make decisions. You may also find that amongst them are willing financiers or business partners.
A business plan, at the most basic level, sets out what you want to do, how you are going to do it and why your business will be successful. It will help you budget, manage issues and stay on track. It is also the document that financiers will want to see. Unsurprisingly, writing a thorough business plan may seem daunting, but is essential. You should include information on your market and competitors, explain why you’ve chosen your sector, detail your skills, estimate on-going costs and list your short-term goals, amongst other elements. Template plans are available online. When formulating a plan, experts advise new business owners to start small and try to keep overheads low in the early stages. Remember, Tesco originated from a single East End market stall and look where it is now.
Bank loans remain the most popular method for raising finance and since the economy has started to recover, it’s said that banks are ‘demonstrating increasing confidence in small businesses’, especially those with a ‘proven track record’, i.e. franchises. You don’t have to stick with your usual bank, either; you may approach any institution that has a dedicated small business/franchise section. Those that don’t want to approach traditional lenders might establish a consortium of friends, family, peers and other individuals, paying interest back over time. Alternative channels include overdrafts, credit cards or invoice discounting – where cash is released against the balance of a bill before it has been paid.
In a world where consumers are bombarded with advertisements in one form or another, finding effective ways to publicise a new business can be tricky. Naturally, they depend on the sector and target market, so you should consider which channels would most easily reach your market. For example, someone launching a new playgroup might put posters up at doctor’s surgeries, in supermarkets and on school noticeboards, while a new recruitment business might target social media sites like LinkedIn.
Ultimately, research is vital but there are several methods that would apply across the board. The effectiveness of networking can never be underestimated; getting word out there via your contacts is invaluable and you can’t ignore the internet – there are many free content management systems through which you can build a website, with easy promotion through Facebook, Google+ and Twitter. Franchisees will receive guidance on marketing, but they usually still have the freedom to try other means.
Attracting and retaining customers:
In addition to the above, the Everline study revealed some tips that consumers said would prompt them to frequent small businesses more often. They included promotions, competitive pricing, introducing a wider range of products or services and excellent customer service from well-trained staff. The last point is one of the most important in terms of retaining customers, as the majority of buying experiences are based on how the consumer feels they are being treated – so treat them well.
Swot up on employment law:
You might be a one-man-band in the short term, but as and when your venture grows and prospers, you’ll probably need to hire additional resource. In which case, it’ll be necessary for you to become familiar with the rules and regulations surrounding employment – starting with recruitment. Sites like smallbusiness.co.uk, the Federation of Small Businesses and the CIPD are great starting points, each helping steer you on the path to becoming a good and fair boss.
Extra guidance on this subject is typically provided to franchisees by good franchisors; they should have access to a wealth of support where hiring staff is concerned.
Expect long hours:
The average small business owner works an average 52 hours per week, according to The Guardian and although owners will need to put in this effort in order to establish their business, a proportion of these extra hours are attributed to inefficient working practices. To minimise these long hours, it’s important to find ways in which to work smarter not harder. Simply writing a ‘to-do’ list is one technique; outsourcing tiresome tasks is another. Yes, you will have to work long hours, but adopting some clever, time-saving methods could mean your days aren’t quite so long.
Be prepared for setbacks:
Ask any business owner, there will be setbacks and challenges that make you doubt whether this is the right path. However, it’s the way you handle these challenges that determines whether you’ll succeed and make a go of things. Learn from setbacks, don’t view them as personal failures and keep strong; you’ll be far wiser as a result.
Persistence and patience:
As with any new venture, it will probably take time before you experience any huge results, so you will need to be patient and realistic. It’s important to keep monitoring the situation: if you’re in a franchise ask the franchisor for guidance, review customer feedback and seek improvements. It’s possible that during the early stages, your business plan will evolve, but providing you are flexible, keep trying and meet expectations, you still have every chance of success. It can take a while for a new business venture to turn a profit, so you’ll need to hang on in there.
Yes, it will be hard work and there will be times when you put in long hours, but it’s important that you don’t lose sight of what you’re doing and why. Running your own business shouldn’t be a burden; it should, as Money Magpie writes, be creative and satisfying. Therefore, you should take steps to ensure you derive happiness from your new career: celebrate even the tiniest milestones and enjoy yourself.