Setting Up a Business - Introduction

From Entrepedia: The Entrepreneurship Wiki

There are three conventional ways of starting up in business: a pure business start up with an idea of your own; by buying an established business; or by becoming a franchisee of an established business model.

If you intend buying an established business, you are avoiding a lot of the uncertainty involved in becoming self-employed. However, you need to be sure of what you are buying and should look to your accountant to provide advice, complete any due diligence required, and assess whether the purchase price is realistic, before proceeding with any purchase.

If a business is successful and profitable, you will be paying an element based upon the profitability of the past owners and you should carefully consider whether you will be able to, at worst, maintain that. There are many questions you must ask yourself when researching a business idea, and your accountant should be able to assist you in making sure you ask yourself the correct questions.

Sometimes the economic situation may seem to forbid any possibility of entrepreneurial success; during an economic downturn, starting up a venture might seem like the riskiest career option that you could make. However, many entrepreneurs see otherwise, and believe that ventures which are launched during a recession in fact have a higher rate of overall success if they survive than those launched during a economic peak.

1 Business Startups
2 Chronological Order
3 Business Strategy Basics
4 Further Reading

Business Startups

Some say that running a company is a form of madness – and an addictive one. Once someone has tasted the freedom and satisfaction of making their own way in the world, and the fulfilment to be gained from building a business, they rarely surrender and re-enter the workforce. Despite all the hurdles and pitfalls (of which unfortunately but inescapably there are many), the desire to control one’s own destiny is a powerful urge among certain determined individuals. Are you one of them?

If you are, you must be aware from the outset that self-employment and entrepreneurship are hard and often risky – but the rewards, both financial and in terms of lifestyle, can be great. It is never too early to take good professional advice from an accountant.

In his millions-selling small business book, The E Myth Revisited, Michael Gerber identifies that everyone who goes into business is actually (or is trying to be) three people in one: the Entrepreneur, the Manager, and the Technician.

With this knowledge, you must assess at the outset whether running your own business is suited to you. Gerber concludes that we all have an Entrepreneur, Manager, and Technician inside us, and if we manage the trick of have them equally balanced within our personality then we will be ideally suited to running our own business. Research shows that the closer to being equalised these traits are, the greater the opportunity for real success with your business, however typically small business owners are 10% Entrepreneur, 20% Manager and 70% Technician.

In starting up a new business, determining how your venture will be structured is very important to understanding how it will develop and in which directions it might grow. The structure of any business will have an effect on the dynamics of the team, the management of daily operations and the overall business model, so give a fair degree of research and careful consideration to structure.

Once your venture has been established for some time you will need to set up an annual review process; however, while your business is still in its startup phase, is important to take more frequent stock of your progress and review processes and approaches that have been successful and unsuccessful. You will need to make a lot of changes to your initial strategies and concepts, which you should be prepared for.

Chronological Order

The chronological order in which the development of necessary documents should take place is as follows:

Business Strategy Basics

As an entrepreneur faced with no end of written and spoken advice on "Strategy", it is pretty easy to end up not seeing the forest for the trees. It is also dangerous for the health of your venture to spend too much time planning, rather than doing. Conversely, it is suicide not to plan. So, what is the "middle ground"?

When approaching your business strategy, remember that any strategy is, first and foremost, an action plan. Planning and action cannot be mutually exclusive if your venture is to be a success

Ally Crockford, Entrepedia Editor

You should consider strategy as one of three essential inter-connected "Planning" activities - all of which you must get right.

Strategy - What will we do? Without a strategic plan, how will you know if you have got there?

Operations - How will we do it? Without an operational plan, how will you know if you can deliver?

Finance - How much will it cost? Without a financial plan, how will you know if you have enough cash?

Breaking your business growth planning into these three distinct - but interrelated - areas will help you focus on what is important and avoid getting bogged down in too much the detail. An important part of deciding on your objectives and the appropriate strategies that you should select to achieve them will be a complete strategic review, in which you and your team focus entirely on planning out the many different strategies that will be an integral part of your venture.

Introducing these disciplines into your venture from the start will go a long way to convincing investors (e.g. Banks, Scottish Enterprise, Angel's, VC's etc) that you are "A-Grade people"

This will all require constant care and iteration - to quote Eisenhower: "The plan is nothing; the planning is everything"

Setting Up a Business - Introduction

From Entrepedia: The Entrepreneurship Wiki

Contents

Business Startups

Chronological Order

Business Strategy Basics

Further Reading

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