MoneyMagpie

Nov 21

Tips for starting a business

Victoria Atherstone is Founder & CEO of Love2scoot Ltd. She’s still developing her business but she has learned a LOT in the process! Here are her top tips for you if you’re thinking of running a business.

Tip One: Don’t run before you can walk

Sometimes it really does feel like I’ve been in the start-up phase for a lifetime – well to be exact it’s been four exciting, stressful, skint, confidence gaining and many other describing word years. However better to start when you’re really ready rather than launch too soon and fail. So what is / was my idea… well my light bulb moment happened in China back in 2006 while I was on vacation visiting my father; I was amazed to see for the first time in my life electric (Vespa like) scooters zipping around everywhere – a quick Google search when I got back to the apartment confirmed that no I hadn’t been walking around with my eyes closed, we really didn’t have any back here in Blighty. I should also mention that on the plane journey out I watched Al Gore’s documentary “An Inconvenient Truth”- I was sucked in! So there you have it – a consumer need and a product to service it – happy days.  That’s Tip One.

However even though I was completely sold on this idea unfortunately I wasn’t in a position to start straight away…

Tip Two: Ensure you have some savings to fund your start-up, not many (if any) investors will put money where your mouth is – if you haven’t first.

I was very fortunate enough to be a property owner at the age of 26 when the idea came to light, however I still had one year left on a three year mortgage tie-in. I knew that I had no experience in the electric scooter market (nor did anyone else in the UK for that matter) so I was going to have to carry out a lot of research, and put a big chunk of my time aside in order to achieve it. So one year later I sold my flat for a handsome profit, left my job in London and moved back home to the sticks.

I spent five months pretty much in isolation putting the nuts and bolts together that would form the basis of my business model.  To date I have invested over £20,000 of my own money that I can accrue for in receipts, and I know that investors have taken me far more seriously because of that. The good news is that when I do actually launch and make a profit this money will be paid back to me as a Directors Loan – yey! In my eyes coming off the property ladder wasn’t a risk, it enabled me to educate myself in a specific area and to follow my dream.

Tip Three: Carry out your research!

All investors are going to want to see a business plan, detailed research that will support your idea. My biggest concern was the quality and cost of the product – could I import this product and actually make a profit. Would it be feasible to purchase and import the stock, pay the duty and VAT, store and distribute weekly to a head office location, pay for a retail unit (by the way – realised a year later a retail unit was a VERY stupid idea for a start-up business), employ staff, market the business, find consumers (aka early adopters), etc etc and still have money left in the pot to make it a viable model. Well the answer to that was actually yes. But how did I get there…

Tip Four: Don’t overestimate your financials – be as REALISTIC as you can.

All investors / banks / grant applications will want to see your profit and loss forecast. Draw a line through the middle of an A4 page, (that’s if you don’t know how to use Excel) above the line list all incomings, below the line all outgoings – work your financials out on a monthly basis and then over a three year period.  If your model is similar to mine your list of outgoings will be far longer than your incomings. Originally I was working with two products in the range with extra income from “on the road” costs and commission from insurance companies.

My outgoings consisted of items such as, value of stock and associated freight, marketing communications,  telephone calls, staff salaries, stationery and post, heating & electricity, solicitor and accountancy fees, corporate branding and photography, travel and accommodation, corporation tax and on and on. Once you’re happy with your P&L make sure you can really deliver on your sales. Don’t be too hard on yourself, as its far better to over achieve then under achieve.

A good exercise is to turn your P&L forecast into three different scenarios; low sales, mid sales and fast growth sales. Be realistic with each one. Then you can ascertain that if it all goes Pete Tong (low sales scenario) will you go under? And if you make killer sales in the first three years how quickly you can buy that yacht or indeed pay back your investors!

Tip Five: Mentors rock – make sure you have one.

Now if you’re really savvy you’ll attend lots of free business events, introduce yourself to many high calibre speakers and secure yourself a celebrity mentor. No on a serious note, just because someone might run their own business it doesn’t necessarily mean they’ll be a good mentor for you. It’s also a good idea to secure a handful of different mentors – I was lucky enough to introduce myself to former BBC2 Dragon Doug Richard at one of his School for Startups events in Edinburgh. I didn’t ask him for money, I just explained my business model in a sentence and asked if he could offer me some business advice – you see I didn’t appear needy or desperate and because he liked my idea I was lucky enough to secure a first meeting.

But remember to be resilient; it took about five emails and numerous phone calls before I actually got that first meeting in the diary. I also wanted advice from a women being a female entrepreneur so after attending various start-up networking drinks and dinners I was fortunate enough to be introduced to a young successful business lady called Susanna Simpson, Founder of Limelight PR. It was great to get advice from Susanna on more personal matters. Mentors will keep you strong when the going gets tough and remember they have all been there once before too.

Closing statement; don’t lose faith, if you’re passionate about your business idea, the idea has real legs and you have the tenacity and will to make it happen – keep it up!

Follow Victoria on Twitter @MissAtherstone

WHAT DO YOU THINK?

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Emily
Emily

Really enjoyed this article I must say, some sound advice, I do think you should be realistic, but at the same time many start-ups aim well below where they could be… dont be afraid to think big! Wanted to mention also that if young start-ups are reading this article they may also be interested in business competitions because they really can offer great insight into your companies potential. As well, you can win some really great prizes along with advice. Marketest just launched their competition and you could win £1,000 market research for your start-up. This research can really add… Read more »

Phil Edwards Weald EVT
Phil Edwards Weald EVT

Hey Victoria, that’s good, an easy read but all good, sensible, advice. If anyone’s thinking of starting up then read this, take note, and look out for the next instalment. An excellent article.

Phil Edwards
Phil Edwards

Hey Victoria, that’s good, an easy read but all good, sensible, advice. If anyone’s thinking of starting up then read this, take note, and look out for the next instalment. A good piece of writing, thanks.

Victoria Atherstone
Victoria Atherstone

Glad you like the article Michael – and great link re. “where do business ideas come from”!

Michael Fox
Michael Fox

A very insightful overview of the path taken by innovative entrepreneurs. Congrats in formulating the original idea by putting the pieces together. This is highly recommended for those who are seeking inspiration:

sethgodin.typepad.com/seths_blog/2010/11/where-do-ideas-come-from.

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