Attitude and Personality• Are you a self starter?• Do you enjoy taking responsibility?• Are you organised?• Can you sell, and accept the inevitable rejection selling involves?• Does the idea of managing change excite you?• Can you make decisions quickly?
Reasons to start your own business• Ditch the rat race and make your own way in the world• Work to the hours & deadlines you set for yourself• Experiment with ideas you’ve always had• You are the boss• You earn the money• Take holidays when you want to• Decide who you do business with and what values you represent Source: WHSmith Becoming your own boss
RealityThere is a quantifiable gap in the market that can sustain your business!
Market Research• Observation• Experimentation• Asking Questions• Make informed business decisions
Market Research• Customer Profile• Customer attitudes and requirements• Competition• Market size (volume and value)• Market structure• Environmental forces• Specific considerations
Customer Profile• Who are the buyers of your product or services likely to be?• How many will actually buy?• How can you define or describe them?• Where are they?• How can they be located?
Example• Offer bespoke computer software to large businesses• Provide toys and games for children under 12 years old• Provide an environmentally friendly range of packaging materials for use in the food industry
Customer Attitudes and Requirements• Why will they buy?• What motivates them to buy?• What particular benefits are they looking for?• How do they judge value for money?• How do they want to able to buy?• How do they go about making buying decisions• Who or what plays a part in making buying decisions or can influence the decisions?
Example• Swiss watches - well made and precision mechanical time pieces• Electronics industry in Japan offered time accuracy at a low price (major benefit to customer)• Today Swatch promote watches as fashion accessories
Competition• What is being offered at the moment and by whom?• What actually sells at the moment?• How are these products being sold?• Where and from whom do customers buy?• What do customers think of their existing suppliers and products and services?• What would encourage them to switch?
Market Size (Volume and Value)• How many existing and prospective buyers are there?• How often are they likely to buy?• How much of each product is being sold?• At what prices?• Are prices very similar or widely different?• Why?• What price will buyers be willing to pay?• How price sensitive is the market?
Market Structure• What is a typical supply chain like – materials suppliers; manufacturers; distribution channels; customers; end users?• Who buys what from whom?• How many operators are there and who are the key players – at each stage in the supply chain?• At what stage of development is the market – new, growing, well established, declining?
Environmental Forces• What factors have a influence on market development – political activity; economic trends; social issues; technological development; balance of supply and demand; market entry barriers; resources issues?• How are these factors effecting the market growth rates, trends, structure stability, customer preferences, profitability, etc?
Specific Considerations• Are there any special regulations or standards to meet?• With what legislation must you comply?
Information sourcesGovernment reportsStatisticsMarket research reportsTrade magazines/web sitesBusiness directoriesPress articlesLocal ward profilesElectoral registerThe British Library/Business Link
Your Own Market Research• Published information cannot answer all the questions.• Small businesses are specialised• Collect your own relevant data: Questionnaires Interviews Focus groups Social media
Test Marketing• Trial runs• Order a small number of the products to test sales• Build a prototype to show clients• Provide a new service on a small scale
SWOT Analysis How well do you compare to your competitor (internal structure)? What is the customer perception of your products/services• Strengths• Weaknesses Market Research• Opportunities• Threats http://www.businessballs.com/swotanalysisfreetemplate.htm
Whats your product or service? Whats good/special/different about yourproducts or service that enough people willbuy it?Is this something that you have a real passionfor?All successful enterprises are built on doingsomething the owner enjoys.
What does it cost to make/buyin/provide the product or service?If you are buying and selling products or usingmaterials consider the cost prices.If the main resource is your own time thenattach a cost to your labour that reflects youravailable time for the work and the wage youneed to draw.Divide your required annual wage by thenumber of work hours available to you, andthis is your notional hourly labour cost.
What price will the product/service sell for?• Price your products/services according to what the market will pay, not according to your costs.• Take into account your competitors and what they charge and their relative quality.
Who will buy the product/service? Do you know your customers and market. Test your assumptions: this is a critical part of the proposition and generally benefits from more thought and research to confirm that a big enough market exists for your idea Consider your competition - what are people buying currently and why will they buy from you instead?
How much/many do you need to sell in a year? And how many customers do you need? Does the gross profit (the difference between costs of bought in products/labour and sales revenues) covers your/their financial needs including a living wage and other fixed costs of running the enterprise. Remember the affect of VAT on your selling prices if applicable
How will people know about the service/product?You need to understand whatadvertising/marketing/enquiry-generation isnecessary.There is usually a cost for generating newcustomers, especially in the early stages of anew enterprise.
Video Clip Tim Berry Expert Business Planner• http://www.bplans.co.uk/
Resources Business Planning and Research• http://www.shell-livewire.org/• http://www.bl.uk/bipc/busplann/index.html Grants/Loans• http://www.bl.uk/eresources/business/cd- busin.html#advice
Tax/VAT• Personal allowance £7,475• Capital Allowance Scheme (hot desking/licenced office ) http://www.legalcentre.co.uk/property/guide/short-term-lets-of- commercial-premises-lease-licence-or-tenancy-at-will/ http://www.rentadesk.co.uk/• Research & Development• Working Tax Credit• Child Tax Credit• VAT is paid for revenue over £68,000http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1086692188
Intellectual PropertyPatents For inventions, protecting new products and processesTrade marks For brands, protecting distinctive reputations vested in names and logosDesigns For appearance of articles, protecting shape and patternCopyright Creative and Artistic works eg. paintings, books, film musicOne product can be protected with many forms of IP
Non-disclosure• Non Disclosure (or Confidentiality) agreements are useful when disclosing information that you do not want to be discussed with any other party or your competitors. This might be if you are pitching for work or if you are explaining the special methods you use to create a product.• They are legally binding documents which can be tailored to your specification.• Always ask the organisation you will be disclosing the information to, to read and sign the document before the initial meeting takes place.
Intellectual Property• Intellectual Property www.ipo.gov.uk• British Copyright Council britishcopyright.org• Own It own-it.org• ACID – Anti Copyright in Design acid.uk.com
Business Structure• Self Employed To be self-employed, an individual is normally highly skilled in a trade or has a niche product or service to offer.• Free Lance A person who sells services to employers without a long term commitment.• Partnership A partnership is a type of business entity in which partners (owners) share with each other the profits or losses of the business.
Business Structure• Collaborations Collaboration is a practice whereby individuals work together to a common purpose to achieve a business benefit. This is common practice within the creative industry.• Limited Liability Company Limited companies exist in their own right. This means the companies finances are separate from the personal finances of the owner• Franchises Buying a franchise is a way of taking advantage of the success of an established business. A license is bought to use the name, products, services and management support systems of the franchiser company.