Experienced business leader Matthew Podger is a seasoned entrepreneur with extensive experience of the hospitality industry. This article will provide an overview of some of the main considerations in launching a business, from business structure to financial planning.
Every business is spawned from a simple idea, with the entrepreneur taking this concept and turning it into something specific and measurable. At the outset, founders need to consider whether they want to offer a product or service and whether they intend to sell direct to customers or other businesses. Will they focus on the business full-time or launch it as a side gig? Does the idea fit the entrepreneur’s particular skillset, and what industry do they intend to sell to?
Market research is an invaluable tool, enabling the founder to build up a complete dataset of their target customer, including gender, age and socioeconomic status. Typically, market research consists of physical or online surveys, helping the entrepreneur to identify who their target customer is and where they are based; what services or products they already use that the business will need to compete with; how much the target customer is willing to pay; and what makes the product worth the money.
Once the founder has conducted market research, they must carry out broader market analysis, helping them to identify current market challenges and opportunities. Relying on a combination of desk research and field analysis, market analysis may consist of feedback from market testing, such as customer questionnaires. In addition, the founder will need to review competitor websites, market reports and news articles.
Market competitiveness is a major consideration in launching any new business, as a market that is already saturated could prove extremely challenging to break into. In assessing the competition, founders will need to look at factors such as the location of rival businesses; the size of the enterprise; their product or service offerings; pricing; sales channels; and crucially, their strengths and weaknesses.
Decide on a Business Structure
Choosing a business structure is one of the most important considerations for founders, as it will impact their accounting responsibilities, tax liabilities, ownership of equity and how they fund the company. The simplest and most common type of business is a sole proprietorship. Meanwhile, partnerships consist of two or more partners in business together, while a limited company is a legally recognisable entity with reporting and management responsibilities. With a limited company, the business’s assets and liabilities are separate from the business owner’s.
Create a Business Plan
A business plan is a critical tool in terms of attracting investment. It should incorporate financial analysis, dealing with aspects such as start-up costs, operational costs and pricing strategies. It should also identify the break-even point, i.e. when the business will start generating a profit.