Amongst popular new year’s resolutions in dieting and getting to the gym more, one in five people will be planning to start a business in 2023.
In fact, according to Companies House, 2019 was a record year for new company registrations. Nearly 700,000 new companies were recorded which continues the trend of rising businesses being formed since 2012.
At FJP Investment, they decided to raise the question in why are we now seeing a rise in new businesses being formed, especially considering the relative instability the UK is currently facing surrounding the political situation and our future in the EU?
The obvious answer is the ease in which a company can now be made. A growing number of workers are eyeing up an opportunity to earn extra income, with many creating businesses on the side.
Forging our own paths is growing in popularity then, but there are some inherent risks that come with creating your own business. Below we share some key methods to improve your chances of success, and also the realities that come with running your own business.
Is there demand for your idea?
First off, and before forming your own company, you need to honestly assess whether there is demand in the market for your product or service. Often people jump the gun without doing market research making the assumption that, because they feel a product serves a need that others will believe this too.
Do your research and see if there is demand for your product. It places your advertised product on your customers’ radar – regardless of whether you’re an LLC in Florida or Wyoming – which increases their interest in it and will likely trigger their purchase decision. Not just this but scope out any potential competition you may face should you launch this business. You could also test your product in some circumstances (think confectionary, tools) and get consumer feedback before launching officially. Services can acquire feedback through a simple online survey.
Even if there is competition in the market, you may find that if you are passionate enough about what you are doing and you have learnt what your prospective customers want, you can still be successful.
Understand the requirements
You really need to do your research before starting up your own business. To start here, you need to create an attractive business plan. You can find a whole host of resources online that will help you create and refine this, just ensure that what you are creating effectively encompasses the entire company in a document.
Additionally, you need to ensure that you are using modern resources efficiently. From free digital tools such as Dropbox to the latest cloud accounting software, there are many ways to streamline the work needed to run a successful business.
Taking advantage of social media and building an attractive website are also essential things to do when running a company in this decade.
Focus on your strengths
You cannot do everything well. The most important thing here is to focus on your strengths and hire/outsource what you are not strong at.
An exception made here is some level of marketing and selling. Connecting and building relationships on LinkedIn and promoting your work on Instagram are two very easy ways to build some sales with very little selling experience. Naturally, if you are a strong salesman or marketer you can build on this.
Many areas of your business will need additional hands to help it grow. You may need a workforce of experts to grow your company, or outsourcing copywriting and additional marketing. Either way as the company grows you need a plan of growth, as you cannot do everything yourself.
Reasons for caution
Whilst there are many benefits to starting your own business if you are successful, there is some reason to be cautious. There are many misconceptions about starting a business about the immediate benefits it provides, but the likelihood is that, during a company’s start-up phase and beyond, there are going to be many hurdles.
Firstly, your stress levels are actually likely to increase. Of course, this is largely due to the stress levels you are currently facing, but when comparing peoples expected stress reduction to actual stress reduction, almost half did not feel any less stressed than they did in their past role.
Building a company from the ground up is always going to involve many risks and associated stresses. Most successful business owners claim they are almost always on the clock, consuming more of your personal life than you could have predicted. You will probably find you are doing the work of multiple people at your previous organisation.
Financial risk is a real risk
The biggest stress common with most business owners is the financial stresses, however. Most people are put off of starting a business because their otherwise reliable source of income is no longer obtainable.
After five years of running a business, just over half (55%) found they were earning more money than their job in conventional employment, not taking into account the many companies that fail. The chances are that you will be in a worse financial position having started your own company in the start-up phase, with a chance of this extending further.
You have to think very carefully about the potential income your new business will earn and have a contingency in case of underperformance or failure.
Lifestyle changes aren’t all positive
Touching on an earlier point, having the ability to manage most of your business remotely with a smartphone gives a false sense that you can work from wherever you want.
Only one quarter of business owners had the ability to improve work life balance and travel more, with just over half saying they had better health since going self-employed. Ultimately to make a company successful, a huge amount of your time will be committed to the growth and health of your company.
Ultimately, the success of your company will be largely reflected in the time you put into its success. Make sure to do your research before committing to the business and do not be disillusioned into assuming it will have many immediate benefits.
There are many successful cases of businesses providing people with a better standard of life, if you are committed, there is a great chance you can make it work.