Starting a Business For Dummies - UK

Colin Barrow

• Publisher: For Dummies
• Year: 2021
• Print ISBN: 9781119832249
• eBook ISBN: 9781119832263
• Edition: 5
• Topic: Betriebswirtschaft
• Subtopic: Unternehmensentwicklung

Launch your new business with confidenceand skill using the latest guidance fromthe UK's most trusted small business guru

Starting a business is one of thosecourageous and audacious decisionsthatmany of us dream about.If you're ready to take the leapand turn your great idea into action, or you already have, you'll need to arm yourself with the best strategiesyou can find. In Starting a BusinessForDummies: UK Edition, business growth expert Colin Barrow, MBA, providesthese strategies as hewalks you through everycriticalstepin launching your company.

From writing your first business plan to surviving and thriving in your first year, and everything in between, you'lllearn how to go fromconceptto revenue, handle the post-Brexit United Kingdom regulatoryand taxenvironmentandutilise public grants and incentives to help get you off the ground.You'll also:

• Understand how the UK business landscape has been impacted by Brexit and COVID-19and the practical steps you can take to adapt
• Finance your new venture withgrants from the UK government and enjoy brand-new tax incentivesaimed at R&D and innovation
• Find your inspiration with motivating case studies of real-world successes who conquered every challenge the market threw at them

You've spent your lifebuilding the skills you'll need for this moment. Let Starting a BusinessForDummies: UK Edition show you how to apply themfor maximum effect as you grow your company froman idea into an unstoppable juggernaut.

Part 1

Getting Started with Your New Business

IN THIS PART …

Use your knowledge of business cycles to get your business off to the best possible start, and appreciate the effect that the state of the wider economy will have on your business.

Lay the groundwork for opening your doors for business either at home or in dedicated premises.

Check out your skills and aptitudes and see how they compare to the business idea you have in mind.

Investigate your idea and its market in detail.

Chapter 1

Preparing for Business

IN THIS CHAPTER

Getting to grips with the basics of business strategy

Working up to opening up

Measuring your business’s viability

Growing for success

Since the last edition of this book, a host of well-established companies with decades of experience behind them have been rocked to their foundations. Burton, Debenhams, Dorothy Perkins, Jaeger, Le Pain Quotidien, Oddbins, Pizza Express and Victoria’s Secret are just a few of the companies that have hit the buffers in the UK. Big-name catastrophes in the US include companies that have been around for over a century like Hertz, JCPenney and Brooks Brothers (which still hopes for life in some form after filing for bankruptcy).

According to figures from the Office for National Statistics (ONS), the number of failed UK businesses has averaged more than 330,000 annually over the past three years. This tough landscape is on top of conditions the past few decades that have seen unemployment pass 11 per cent, inflation hit 16 per cent, interest rates of 17 per cent and profits reduced by 35 per cent. ‘Normal’ in the business world is bumpy in the best of conditions.

However tough it is out there, plenty of great businesses always seem to get underway even in the roughest of conditions. Microsoft started in 1975 when unemployment and inflation were heading up and the economy heading down. In 2000 as the internet bubble burst, Justine Roberts set up Mumsnet, the successful website and internet community that now has over 15 million monthly users. In the same year, Baroness Martha Lane Fox and Brent Hoberman CBE launched Lastminute.com, one of a handful of survivors of the dot-com bubble. As the financial crisis of 2008–2010 set in, Holly Tucker and Sophie Cornish got serious funding for Not On The Highstreet. Also in 2008, Alex Chesterman and Simon Kain launched Zoopla, the property search website.

Your business start-up idea may be good and it may even be great, but ideas are often two a penny. The patent office is stuffed full of great ideas for inventions that have never returned tuppence to the inventors, regardless of how much time and money they spend inventing them. When starting a business, good ideas aren’t enough. It’s how you plan, how you prepare and how you implement your ideas that makes all the difference between success and failure. This chapter sets the scene to help you feel well-prepared for the journey ahead.

Understanding the Enduring Rules of Business Strategy

When you’re engulfed by enthusiasm for an idea for a new business or engaged in the challenge of getting it off the ground, you can easily miss out on the knowledge you can gain by lifting your eyes up and taking the big picture on board too. You won’t gain much from taking aim at the wrong target from the outset!

Credit for devising the most succinct and usable way to get a handle on the big picture has to be given to Michael E. Porter, who trained as an economist at Princeton and took his MBA at Harvard Business School. Porter’s research led him to conclude that two factors above all influence a business’s chances of making superior profits – surely an absolute must if you’re going to all the pain of working for yourself:

• The attractiveness or otherwise of the industry in which it primarily operates. That’s down to your research, a subject I cover in Chapters 2 and 4.
• How the business positions itself within the industry in terms of an organisation’s sphere of influence. In that respect, a business can only have a cost advantage if it can make products or deliver services for less than others. Alternatively, the business may be different in a way that matters to consumers, so that its offers are unique, or at least relatively so.

Porter added a further twist to his prescription. Businesses can follow a cost advantage path or a differentiation path industry wide, or they can take a third path – they can concentrate on a narrow specific segment with cost advantage or differentiation. This path he termed focus strategy, which I discuss in the following sections.

Focusing on focus – and a bit more besides

Whoa up a minute. Before you can get a handle on focus, you need to understand exactly what the good professor means by cost leadership and differentiation, because the combination of those provides the most fruitful arena for a new business to compete.

Cost leadership

Don’t confuse low cost with low price. A business with low costs may or may not pass those savings on to customers. Alternatively, the business can use low costs alongside tight cost controls and low margins to create an effective barrier to others considering entering or extending their penetration of that market.

Businesses are most likely to achieve low-cost strategies in large markets, requiring large-scale capital investment, where production or service volumes are high and businesses can achieve economies of scale from long runs. If you’ve deep pockets, or can put together a proposition that convinces the money men to stump up the cash, this avenue may be one to pursue. (I cover everything you need to put together a great business plan in Chapter 6.)

Ryanair is a classic example of company that analysed every component of its business, letting it cut costs by using less popular airports, ditching meals and free baggage while leaving the essential proposition – we fly you from point A to point B – intact. This plan proved enough of a strategy to give bigger, more established rivals such as British Airways a few sleepless nights.

Differentiation

The key to differentiation (ensuring that your product or service has a unique element that makes it stand out from the rest) is a deep understanding of what customers really want and need and, more importantly, what they’re prepared to pay more for. Apple’s opening strategy was based around a ‘fun’ operating system based on icons, rather than the dull MS-DOS. This belief was based on Apple’s understanding that computer users were mostly young and wanted an intuitive command system and the ‘graphical user interface’ delivered just that. Sony and BMW are also examples of differentiators. Both have distinctive and desirable differences in their products. Neither they nor Apple offer the lowest price in their respective industries; customers are willing to pay extra for the idiosyncratic and prized differences embedded in their products.

Consumers can be a pretty fickle bunch. Dangle something faster, brighter or just plain newer and you can usually grab their attention. Your difference doesn’t have to be profound or even high-tech to capture a slice of the market. Book buyers rushed in droves to Waterstones for no more profound a reason than that its doors remained open in the evenings and on Sundays, when most other established bookshops were firmly closed.

Focus

Your patience is about to be rewarded. Now I can get to the strategy that Porter reckoned was the most fruitful for new business starters to plunge into.

Focused strategy involves concentrating on serving a particular market or a defined geographic region. The world’s largest furniture retailer, IKEA, for example, targets young, white-collar workers as its prime customer segment. Ingvar Kamprad, an entrepreneur from the Småland province in southern Sweden, who founded the business in the late 1940s, offers home furnishing products of good function and design a...

Table of contents

• Cover
• Title Page
• Table of Contents
• Introduction
• Part 1: Getting Started with Your New Business
• Part 2: Making and Funding Your Plan
• Part 3: Staying in Business
• Part 4: Making the Business Grow
• Part 5: The Part of Tens
• Index
• About the Author
• Connect with Dummies
• End User License Agreement