Over the past twelve months, half a million new businesses were established in the UK alone. If you’re thinking of setting up a limited company, the following list of dos and don’ts will help you avoid the common mistakes that many startups make.
Find your niche
It’s important to find a market niche for your business. Since a new company will have limited experience, avoid competing with established companies that provide the same product or service. Carve out a niche for yourself by doing plenty of market research and finding a gap in the market that only you can fill.
Investigate potential business partners
Gary Dushnitsky, management professor at the Wharton School, believes in taking partnerships slowly by first getting to know the person before making any formal commitments.
“When I talk to early-stage entrepreneurs and my students, they often ask if they should have a legal contract for their partnership. I say, you will have a chance to pay legal fees — that will come. But before that, I say, do what I call the latte strategy: go to a café and buy a large cup of coffee and have a conversation before you begin to formally write it down.”
Network, network, network
While you’re writing your business plan and getting your business off the ground, start to form relationships and strategic networks with all the right people. By engaging with those who have been through it before, you can gain invaluable knowledge and support, come up with mutually-beneficial collaborations and tap into others’ established networks.
Leave your job until you have a solid business plan
The biggest mistake fledgling businesspeople make is to pack in the full-time job without preparing properly. A solid business plan will map out your steps and ensure that the transition is as smooth as possible. Before you resign, make sure you have funding already secured, contracts already in place, and at least three months’ salary as back-up.
If you’re just starting out, try to make do with the resources you already have, rather than forking out money for things you can really do without in the beginning (like that new Macbook Air you’ve been eyeing out). Establish yourself first and use your excess profits to upgrade your equipment, buy a new lapto, or rent office space.
Give up when the going gets tough
Make no mistake – starting a business is not easy. There will be uncertain times, but rather than give up the first moment things get tricky, work hard, be determined, and stay positive.
If you need any advice or assistance setting up a limited company, visit 1st Contact Accounting.