MoneyMagpie

May 17

Top 20 tips for running your own business

Running your own business can be all of the following: exciting, draining, liberating, stressful and rewarding. Still, it doesn’t matter whether you’re aiming to start up a shop or become the next Richard Branson – if you follow the 20 tips below, you’ll find your life – and business – will be made much easier!

 

1. Running your own business – Start small and keep overheads low

Don’t spend any more than you have to on your start-up. Loads of big businesses start small: Laura Ashley began on her kitchen table, M&S started with a market stall and Tesco was just a couple of local grocer’s shops at the beginning.

So before you fork out unnecessarily, consider:

  • Your office can be a laptop computer at your kitchen table.
  • Don’t forget insurance, as your household insurance may no longer be valid if you’re working from home. This is something you’ll need to check with your current broker, as you may need to upgrade your insurance. If so, get a quote from Direct Line- they’ve set up a dedicated home insurance policy and could save you money. Business Link provide a handy tool which works out what kinds of insurance you need.
  • Set up a separate bank account for your business. (If you mix up your personal account with your business account you’re asking for trouble – it’s confusing, extra hassle and no benefit to you at all when it comes to planning your business and life in general.) It doesn’t need to be an expensive ‘business’ account, it can be an ordinary current account – either with your current bank or with a different provider.
  • If you need to send any parcels then try Parcel Checker – a fab website that could save you a fortune on package delivery. Its special comparison tool means you can find the cheapest shipping company for your needs.

2.Cashflow

Don’t assume that people will pay on time as they normally don’t. Instead:

  • Cut down your waiting time by getting them to agree payment terms at the start.
  • Be clear in your invoices that you will charge 8% over base rate for any invoices that aren’t paid within 30 days.
  • Don’t spend money now assuming that you’ll receive payment from your clients – plan your business expenditure so that you are not creating debt and are not dependent upon anyone paying on time.
  • Have more than one income stream – even if that means doing a part-time job or taking in ironing.
  • If you’re having consistent problems with unpaid bills then consider joining the Federation of Small Businesses (around £200 a year) so that you can use their legal assistance to chase your debtors.

Starting up a new business can always be hard and any help financially can really make the difference. If you’re a new start up, look into invoice factoring options at Hitachi capital today.

3. Make a plan

As the saying goes: ‘If you fail to plan, you plan to fail’, therefore:

Even if you’re just setting up as a freelancer you need to give yourself a clear idea of your monthly costs and how much profit (or other income) you must generate to keep it together.

Work out what your monthly sales need to be. Make yourself a chart for the next 12 months showing the growth in sales you can realistically generate and be clear on how you’ll generate those new customers.

It’s a tough thing to guess but just the action of thinking it through will provide you with earnings goals and points to consider as you run your business. Business Link have a comprehensive guide to creating a sales plan.

FREE class from two internet business masterminds

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Greg and Fiona have kindly offered to give Magpie readers a FREE ‘webinar’ (webinar = fancy phrase for online seminar!).

If you’ve ever even thought of setting up an online business (perhaps in your spare time) then you won’t want to miss out on this.

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It takes place on Monday 25 June 2012 at 8.00pm GMT.

Reserve your place now. Close

 

4. Network

The more you’re ‘out there’ touting for work the more likely you are to get the work. With the internet it’s possible to meet people without leaving your desk.

Join online networking groups and forums and start giving useful advice on areas directly relevant to your business. This raises your profile in a positive way. But don’t spend too much time on it – allocate a certain amount of time a week and stick to that.

Get business cards printed for free online with Vistaprint, get out to networking events in your area and make sure you take your business cards wherever you go – you can meet interesting and potentially useful people anywhere.

Have something useful that you can offer people when you meet them – make reference to it on your business card or on the website that your business card refers them to.

Don’t go out and try to ‘sell’ your business or your service. Networking is usually a two-stage affair in which you create support by being useful to people who then go elsewhere and talk about you. Don’t thrust your business card at other people – ask them for theirs and don’t give them yours until it’s asked for. Once you’ve met someone send them an email within 48 hours providing something useful, or the place where they can find that useful thing (e.g. on your website). They now have your contact details and a positive association with you.

 

5. Sales, sales, sales

Don’t shy away from the sales and marketing aspect of business. Learn how to do it. Study it and practice it. You will probably find it nerve wracking at first, but get through it! Question everything you do in the business, asking ‘how is this going to make money?’ If it won’t lead to profit ultimately then don’t waste your time doing it.

 

6. Avoid borrowing if possible

Lots of government pamphlets for new businesses devote pages to different forms of borrowing. Ideally though, here’s what you should do:

  • Try to grow organically. Use your own savings, or earnings from another business or income stream to fund it.
  • Barter services rather than paying for them – offer up your skills in one area in exchange for someone else’s.
  • If you want to go big time straight away and feel you need external funding to do it then put together a professional business plan and discuss it with your suppliers, customers, prospective customers and other ‘known’ potential investors before stepping into the shark-infested waters where venture capitalists and ‘angel’ investors roam.

7. Set up passive income streams where possible

That is, money that comes in when you’re not working.

  • Consider incorporating Google Adsense on your website (these are adverts generated by Google that are relevant to the content on your website).
  • Think about writing an eBook on different elements of your business subject and selling it on your website, eBay and elsewhere on the net.
  • Automate as much of the selling process as possible by installing PayPal payment on your site and having non-physical products that don’t require any human fulfilment (delivery, packaging etc).

 

8. Get online

If you haven’t already, get online. Check out Getting British Business Online – they offer a free website (complete with your own personalised business email address) and free technical support. It’s a great scheme and well worth a look.

Once your website’s up and running then here’s how you can keep visitors returning to your site:

  • Create a community of people by providing a genuinely useful, free newsletter that’s sent out every week or month.
  • Provide genuinely useful content on your site that gives your potential clients the first couple of steps in addressing a problem that they might have.
  • Include audio and video on your site and use that content on YouTube and similar sites to promote your site.
  • Provide an easy response mechanism (e.g. blog comments or email address) so you can find out what your community thinks and wants.

 

9. Don’t buy advertising just because you’re offered a deal

If you need to advertise (and it’s better to promote yourself for free to start with) make sure your advertising is targeted, specific and within an advertising budget.

  • Work out who your customers are, where they are, where they live, what they read, what worries them and what excites them.
  • Work out what the message is that you want to communicate so the right people will take action right away.
  • Decide what is the best medium to use to communicate this message to your market.
  • Take no notice of calls from advertising salespeople from publications you don’t know, even if they’re offering serious discounts and start telling you about all your competitors who are advertising with them.

 

10. Have an exit strategy

Serious business people set up with an exit strategy in mind from the start as this allows them to plan the business and know why they’re doing it – only then can they effectively plan how they’re going to achieve what they want.

Acknowledge why you’re in business – what’s the lifestyle that you want to achieve? Is this business going to help you achieve this? And at what point will you know that this has been achieved?

What kind of profit level do you need to reach to command a decent fee, and what will you have to do to create that profit? At what point will you want to sell the business or hand it over to your kids to run?

 

11. Give people what they want

Don’t make the mistake of being blinkered about what you want to produce/sell. You have to be very aware of what your potential and existing customers want – not just what you think they want.

Do speak to potential customers – both before you start up the business and as an ongoing habit. Take them to lunch, pick their brains, ask them what they want and need, what they hate and what they’d pay extra for. Do keep a realistic perspective of what’s selling as your business develops. Is there a sideline product or service that’s very popular and takes less effort than the main offering? If so, focus more effort on it. Do be honest with yourself about what works, what doesn’t and why you’re in business. If you have to make enough to pay the rent then you need to be brutally honest about the success or failure of products pretty quickly.

 

12. Keep your finances in order

It’s a drag, everyone hates it – but it must be done.

Make sure you:

  • Put money aside for your forthcoming tax bill.
  • If you can, speak up front to an accountant (recommended to you by someone you know) about how much you should put aside for tax and other similar issues.
  • However if you’re just starting up, you probably won’t have to pay VAT as you’re allowed a £77,000 turnover before you have to pay it. If you’re planning on going over that then you’ll have to contact HMRC to register for VAT.
  • Keep good records of your incoming and outgoing revenues, your receipts and other related information. Again if you speak to an accountant they will give you guidance on what files to keep, how to organize them and what to do to keep your accountancy bills down.
  • Accountants too expensive? Though a good accountant is invaluable, you don’t necessarily need one when you’re first starting out. Plenty of people do their own accounts on paper or using an Excel spreadsheet.
  • Our small business columnist, Kate Bendix, likes the accountancy software called Kashflow because it’s easy to use (not full of tedious accounting jargon), sorts out your invoices, cashflow management (very important) and even sends you reminders of unpaid invoices. It’s an online service and has an annual or monthly subscription.

 

13. Outsource where possible

Now that we have entered the virtual world it’s getting cheaper and more efficient to outsource large chunks of business to Asian-based business services as well as UK ones.

An overseas Virtual Assistant can do everything from responding to calls and emails through to bookkeeping, serious business research and web development for around £7 an hour. Search the internet for Virtual Assistants (VAs) and test three at the same time with small, but very similar tasks. Rate them in terms of value for money, accuracy, responsiveness and common sense (this is very important).

 

14. Use targeted marketing

This is an extension of point 9 (don’t buy advertising).

Work out a detailed profile of your target market: where they live, what they read/watch/listen to, if they have children, if they drive a car or own a home, whether they’re professionals in a particular business sector or part of the country. Work out an interesting and relevant letter to send to these people offering them something genuinely useful up front. Put a time limit on the special offer so that they have to take action.

 

15. Get into a niche

As the American industrialist Andrew Carnegie said: “The men who have succeeded are the men who have chosen one line and stuck to it.”

Don’t try to enter a competitive market that requires a great deal of capital and experience. If you’re reading this then you probably don’t have the capital and experience combination that’ll be required! Stick to something that you either know a lot about already or something that really interests you so that you’ll want to find out a great deal about it. If you carve out a niche and personalise it (e.g. be friendly and talkative on your website or in your correspondence), this will differentiate you from everyone else in your market. Combine this ‘difference’ with your market knowledge and the fact that you’re in a relative small market and your chances of success will be increased.

 

16. Get mentors

You become like the people you associate with so associate with people who are like minded. Join appropriate industry associations – these will also give you the lowdown on relevant industry threats, opportunities legislation and the like. Meet or converse with other entrepreneurs who have nothing to do with your market sector. They’ll be happy to share solutions and encouragement with you in a way that your current friends cannot because they don’t really understand what you are going through or why.

 

17. Take time off

Setting up a new business can be a 24/7 activity and it’s very tempting to spend all your waking hours in the office. But to make sure you’re not overstretching yourself, make sure you re-charge your batteries every so often.

Book time off for yourself in your diary (including evenings off to do sport or socialise). Set hours that match with your most productive times and allow you to spend time with your loved ones – they’ll need to know when you’re not going to be working! Revisit your tasks and see what you can outsource cheaply (see point 11). Prioritise tasks and see what you could ditch – temporarily or permanently. Be brutal and honest about this – don’t do certain tasks because you enjoy them, do what brings in a profit.

 

18. Be selective about who you spend your time with

So you’ve got your mentors. Don’t undo that good work by spending time with people who are dismissive of what you’re trying to achieve. Don’t spend too much time with people who make you question your goals and ambitions. People will always criticise what they don’t understand; find someone who you can teach and help. That’s when you really learn stuff yourself AND it’s one of the most rewarding elements of being in business.

 

19. Get what you can for free

Make a habit of looking for a free (or at least cheaper) way of doing what you need to do. Contact colleges and universities to find people who want to build their CV or portfolio and will do free or cheap work on websites, photo shoots, design etc. Put an advert out to schools and colleges for work placements and interns if you feel there are jobs that can be learnt fairly quickly and that will benefit the person doing them even if only through the experience of the real world.

Keep talking to other entrepreneur friends, government agencies and business organisations like Business Link to find out about free things you could get your hands on. See if you can get hold of office equipment through Freecycle, Snaffleup.co.uk or the free section on Gumtree.

 

20. Have fun!

Running a business should be creative, satisfying and enjoyable. It’s a chance to express yourself, meet interesting and creative people, potentially make a lot of money and create a whole new life for yourself.

So do everything you can to enjoy the process of being in business. And make the most of the good times – when you get a big contract or when you complete a difficult task – because the challenging times will come around soon enough.

If you liked this article we think you’ll also like: Making extra money – do I have to pay more tax?

If you’ve got experience of running your own business or have any questions, leave a comment below!

Experian Free Credit Score – MPU

WHAT DO YOU THINK?

6 thoughts on Top 20 tips for running your own business

  1. Great article and fantastic tips for anyone looking to start or run their own business. I think sometimes all the details are overlooked when the business ideas are running through you’re head. Not long ago I thought about starting my own business and I read a great book that I think would go very well with this article. It’s called “The Barefoot Executive” by Carrie Wilkerson. You can get it right off of the author’s website, barefootexecutivebook.com. I highly recommend this read for anyone working from home, starting their at home business, or who may not even know where to start. Thanks for the article!

    Reply
  2. hi is anyone interested in setting up their own business with me in the london area on a market stall kindly drop me a line I can get the merchandise very cheap must be hard working and motivated and committed.
    [email protected]

    Reply
  3. I think outsourcing is good as I myself works as a Virtual Bookkeeper but I do find that some clients don’t like sending receipts and other financial documents in the post due to the lack of trust in the postal service. Most prefer my collection service as they know that all documents have been handed to the Bookkeeper by hand.

    Reply
  4. Hi, this is probably dense of me, but could you please explain how things like book-keeping etc could be outsourced to an overseas V.A. ? By the time I had scanned in the receipts & emailed them to the person, or emailed a list of outgoing & incoming finance, I might as well have written it up into the accounts book myself! Seriously, please, how does it work??? I just can’t picture it. Thanks

    Reply
    1. People I know who use VAs (either in the UK or abroad) send their receipts etc by post once a month or once a fortnight. So long as you send them by recorded or registered post you’re covered. It’s more expensive to send abroad of course but quite often the hourly rate is so low that it’s worth it (not always though so you need to weigh up the different costs).

      Reply

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