How to Start Your Own Business: The Facts Visually Explained

With more and more people starting their own businesses each year and with technological advances offering unprecedented access to information, talent, materials, and products, there has never been a better time to start your own business. At the same time, there has also never been more competition.

Being your own boss can be as challenging as it is rewarding, so equip yourself with as much knowledge as possible on the issues you may face and the options available before you start. How to Start Your Own Business aims to provide you with a tool kit to help you build a successful enterprise.

Chapter 1 covers everything you need to know before you start, from coming up with your business idea and finding a gap in the market to choosing a business structure, model, and strategy. Chapter 2 looks at the steps you need to take to start your business, including how to choose a name and develop your brand and how to sell online, take payments, and fulfill orders. Chapter 3 shows you what you need to do to get going, including planning and building a website, sourcing and recruiting staff, and generating interest in your business. Chapter 4 tells you everything you need to know about how to run your business, including how to encourage customer loyalty and build strategic alliances, how to analyze performance and finance growth, how to manage a supply chain, and how to retain talent and look after your employees in the workplace. Finally, Chapter 5 shows you how to grow your business, how to manage change, how to retain customers and license products, and how to sell your business when it is time to move on.

BEFORE YOU

START

Making the Big Leap

If you are thinking about starting your own business, developing your

idea in your spare time is a good way to start. Then weigh the pros and

cons to understand your motivation for starting something new.

Working for yourself or others? As a business owner, you have more responsibilities

It is crucial not to underestimate the hard work and need to invest more in your future. You will take

involved in running a business. Instead of more risks and feel more pressure running your own

having one role, business owners often take business, but the potential for success is often greater

on multiple responsibilities—from producing a than working for an existing company. Running

product or performing a service to carrying out your own business will mean you have more all the administrative tasks as well as going out and control and flexibility. selling the idea. Although you may no longer have Be clear about your a boss to answer to, your working hours may motivations for be much longer, especially at the start. starting up a

Considering your options

Remember that paid employment brings many benefits, whereas being your own boss can be stressful and financially risky. Weigh your options carefully before you reach a balanced decision.

Pros Cons ❯ Financial security comes from ❯ Earnings are limited depending

a regular weekly or monthly THEIR COMPANY on the company’s pay policy.

paycheck. ❯ Your hard work helps achieve

❯ Sickness and vacation pay bring another person’s dreams rather

more consistent income. than your own.

❯ Sense of belonging comes from ❯ Office politics can be frustrating.

working with others toward a ❯ Time and money is spent on common cause. commuting to a workplace

❯ Investment in your development chosen by the company.

and training is paid for by employers. ❯ Lack of flexibility in work

❯ Opportunities to build hours and conditions can

experience and develop be problematic. new skills are available.

BEFORE YOU START 12 13 Making the Big Leap

business. Perhaps you want to run SIDE HUSTLES “I knew that if I a business from home doing what

you love. Maybe you are driven by Rather than give up your paid failed I wouldn’t

wanting to make a positive impact employment right away, you regret that, but on society. Think about how you may want to start your new

see your business in the future. You business venture in your spare I knew the one might want to grow your company time. A start-up that begins in this and employ staff, building a family way is known as a “side hustle.”

firm for future generations. Or You keep the benefits of being thing I might employed, while testing the

perhaps you want to make enough viability of a new business. It is a regret was not money to sell and move on. Maybe compromise, but it can also be

you want to generate wealth to a springboard, allowing you to trying. ” buy your dream home or travel. develop your business idea with

Or you may simply want enough less personal and financial risk. Jeff Bezos, founder and CEO of Amazon income to replace what you

earned as an employee.

MY COMPANY

Pros Cons ❯ Potential for higher earnings, ❯ Greater financial risk with less

without the limits put in place by security as a business owner.

an employer. ❯ Sense of isolation from

❯ Greater control, independence, working independently with

and flexibility to work around less human interaction.

family/personal commitments. ❯ Responsiblity for mistakes and

❯ Ability to choose your hours failures, as well as successes, rests

and work at your own pace. with you.

❯ Potential for greater job ❯ Potential strain on family/social

satisfaction—all your efforts go THE BOSS life from working long hours. toward achieving your goals. ❯ No income if sick or on vacation.

❯ Opportunity to pursue ❯ Inability to switch off at the

your dream. end of the working day.

Why You? Why Now?

When contemplating starting your own business, it is wise to do some

self-assessment first. Take time to weigh your strengths and weaknesses

and consider whether you are ready to be your own boss.

Why you?

Starting your own business is

an exciting opportunity, but it is

essential to be practical from the Your strengths beginning. Before making any Think about all the personal

decisions, ask yourself some key strengths you can bring to the

questions. First and foremost, do business, including:

you have a realistic business idea, ❯ Professional skills, such as

and do you have the drive and managing people, creating

budgets, negotiating, and

do you have the necessary skills ❯ Academic abilities may energy to bring it to fruition? Also, dealing with clients. to develop your idea, and if not, include numeracy, language

could you acquire them? If the skills, and artistic abilities.

answer to these questions is no, ❯ Personal characteristics, that does not mean you will never such as energy, determination,

start your own business, just not curiosity, and creativity.

the one you are thinking of now.

Assessing yourself

Being your own boss requires

a wide range of abilities, many

of which you will need at the

outset. Take time to identify the

transferable skills you know you

have—plus other talents you could

develop—that would be useful for

the business. Also consider the

skills friends and family may be

able to offer you. Conversely,

scrutinize yourself, looking for

areas of weakness, and think of

ways you can overcome them.

Running a business is a long-

term commitment, so working in a

field that interests you is important.

However, you need to be confident

that your interest is strong enough

to last the duration of the business.

BEFORE YOU START 14 15 Why You? Why Now?

“The Why now? only way to do great work Timing is essential in business,

is to love what you do. ” and offering the right product at the right time can set you on the

Steve Jobs, cofounder Apple Inc., 2005 path to success. As such, spend

time researching your potential

market (see pp.20–21), look at

Your weaknesses Your interests professional advice. The timing what rivals are doing, and seek Identify aspects about yourself Think about what interests also has to be right for you, of

❯ Inexperience , in areas such time and money and also involves ❯ as setting up IT systems, hiring What do you enjoy doing in pressure and risk, which you need staff, and managing accounts. your spare time? to be prepared for. Unless you are ❯ Lack of knowledge in areas ❯ What sort of people do you fully confident, look for ways to These might include: incorporate this into Starting a business requires your business. that could hinder the business. you and how you might course, but are you ready?

such as using social media and like spending time with, other

❯ demand. If you are currently ❯ Personal traits can include a Have you gained particular employed, consider starting the lack of confidence, software packages. start selling slowly and gauge than your family?

skills and knowledge through

disorganization, and business in your spare time as a your interests and hobbies?

impulsiveness. side hustle (see p.13), perhaps ❯ What issues are you most

❯ reducing your employed hours Personal circumstances , passionate about?

such as the need to care for as the business grows. children or living in a remote

location.

NEED TO KNOW

❯ Hard skills are formally acquired

indicators of ability, such as a

qualification or certificate.

❯ Soft skills are personal abilities

that have developed naturally,

such as creative thinking and

problem-solving.

❯ Transferable skills are the

capabilities and areas of expertise

that can be easily transferred from

one role to another. Examples

include time management,

communication, and leadership.

Coming Up

with Your Idea

Every business begins with an idea, whether to solve a problem

or improve an existing product or service. It is an exciting first

step, although you must also ensure that your idea is viable.

Finding a good idea problems. Ask questions and

A business idea does not have seek opinions, and discuss your CASE STUDY to be new, but it must satisfy a idea with the people who may need in order to succeed. Start become your customers one day. Honest Tea

by thinking about problems you Another source of useful Seth Goldman first had the idea have encountered yourself, such information are online trade for a low-calorie beverage while as not being able to buy a certain journals, which most industries working on a case study of the

This may be a gap in the market were sugary drinks and bottled developments, trends, and how water on the market, but nothing in (see pp.20–21) that you could product or access a useful service. drinks industry at Yale, noting there publish. Here, you can learn about

well potential rivals are performing between. After a run in New York’s

fill. Alternatively, where products and gain essential knowledge that Central Park, he could not find a and services are available—but can help shape your ideas. suitable drink to buy. Goldman are unsatisfactory—this could be saw a problem and came up with

an opportunity for you to improve a solution: in 1998 he co-founded Will your idea work?

consider what existing businesses When looking for a good idea, not-too-sweet, bottled teas, needs to be achievable and viable. which became a market leader. them and offer something better. Honest Tea, making organic, In order for your idea to succeed, it Scrutinize it from all angles and

currently offer and what they question every aspect of it, as well do not—which could pose an as your ability to make it happen. opportunity. Also look out for Consider how it might be affected

niche or specialty markets, where by market changes. Identify its Using a checklist you could meet the demands of a strengths and how you could build A “good idea checklist” is a widely small but dedicated group of on them, while also resolving any used tool to help assess the merits

customers (see pp.38–39). of a new business idea. Good ideas weaknesses. Also, try to predict

any threats and how you might usually meet most of these criteria

Researching markets (see right). Once you have your idea, overcome them, while making the be sure to keep it safe (see pp.96–97). Markets are made up of people most of any new opportunities.

with common demands, so

learning what interests and

concerns them is valuable

information. Pay close attention to

the media, especially online, and

look out for growing trends that

you could tap into. Depending on

the market that interests you,

joining relevant internet forums

can give you a useful insight into

members’ needs, desires, and

BEFORE YOU START 16 17

Coming Up with Your Idea

The produ 5. Meets ones by b The new p 4. Stand challenge The idea o 3. Challe that is bet ates available. ring a pro hould solvduct ter than exi e a proble sting avai m or mee nges exis lable alter t a need in ffers a new ting alte natives. a way s existing ap rnatives , better w proaches. ay of doin s out g things a roduct or nd eing clearl service w y better o ill stand o The idea s 2. Innov or service ap in the IST lls an untap market that is no ped mark t currently et by offe The idea fi 1. Fills a g CHECKL THE GO OD IDEA

£ $ € ¥ of quality custom r different ut from exi er expec ct or servic in some wsting £ tations expected e offered w $ ay. 6. Offers by the cu ill be prov The produ good va stomer. way and c lue ided at a lev ct or servic el reate a se e will ben 7. Has a p nse of m efit the cu The idea w urpose oney well stomer in of having h ill give cu spent. some stomers a elped an im 8. Harne sense of p portant ca The idea b sses you use. leasure or knowledg r streng uilds on y ths e, and/or c our skills, ex 9. Is in a g ontacts in perience, m The idea s rowing m an industr arket potential erves an ex arket y. demand f “Always think panding m 10. Can b or a sustai arket, with The produ e scaled ned perio outside the scale with up d. sufficient ct or servic out costs g e can be d box and rowing at t elivered a he same r embrace t an increa ate. sing opportunities

that appear.”

Lakshmi Mittal, CEO ArcelorMittal

Offering Products

or Services

Most businesses typically sell either products or services to their

customers. When starting up your business, deciding what you

will offer is essential, and there are many factors to consider.

Considering the options any profit is made, which may also typically expect to be invoiced for An important consideration when take time. When the goods are sold, certain services, which can mean deciding between creating a however, they are usually paid for waiting several weeks to be paid. product- or service-based business immediately by the customer. Some businesses offer products is the time and costs involved—and In contrast, services can be and services. A motor mechanic, for how soon it will generate income. offered immediately and with example, might repair and sell cars, With a product-based business, it minimal setup costs, if it is you enjoying the benefits of both types takes time to source or create then providing them yourself. However, of businesses. However, when test the goods being sold. The if you require training or need starting out for the first time, it is goods then need to sell in sufficient specific equipment, this will take advisable to concentrate on one numbers to cover their cost before time and money. Also, customers type first before trying the other.

Selling products and services

Selling products In addition to the differing amounts of time and money

required to set up a business selling products or services,

❯ Customers can see what you should also consider longer term factors.

they are buying, helping

them decide to make a

purchase or not.

❯ Stock needs to be

replenished, which is an

ongoing cost. It may also

be perishable so will mean

a direct loss to the business LD

if it is not sold. SO

❯ Products need to be stored,

which means having access to BOB’S AUTO suitable storage facilities, CENTER which may be costly.

QUALITY USED

CARS FOR SALE

SERVICING

BEFORE YOU START 18 19

Offering Products or Services

SCOPE FOR GROWTH BE AWARE

Scalability refers to the ability ❯ Avoid running out of stock, “Quality in

of the business to increase sales which will frustrate customers a service or without costs rising in proportion. and might encourage them to It is an area where product- and shop with your competitors.

service-based businesses differ. ❯ Do not expect a good product or product is not

❯ Certain products can be highly service to sell itself. The business what you put scalable. For example, once must be set up to distribute and

software, can be sold in unlimited ❯ Regularly compare your numbers with little further cost. created, online courses, apps, or sell the product effectively. into it. It is what

prices, products, and the quality the customer

❯ All services take time to deliver, of your services against those of

especially if more people need ❯ Make sure the products and to be recruited to deliver them, gets out which makes them less scalable, your competitors. of it.”

raising costs. However, extra services you offer are fully Peter Drucker, US management consultant compliant with all regulations. services can be added to the Check regularly. offering, giving scope for growth.

Offering a service

❯ Services are intangible,

so the customer must trust

that the provider will deliver

a good service (see pp.70–71).

❯ Few services are unique, so

competition can be fierce, which

means it is vital to maintain a

good reputation with customers.

❯ A dissatisfied customer may

refuse to pay after the service

has been given.

❯ Depending on the

service, you may need to undertake regular

training or acquire

certification.

Finding a Gap

in the Market

For your business to succeed there must be a market—or potential to create

one—for what you plan to offer. This means either selling something entirely

new that people will want or providing a better alternative to what is available.

Identifying gaps Finally, while the town’s residents may feel content

A gap in the market is simply a need that is not with the existing restaurants, they may still eagerly

currently met. This is either because the product or adopt a completely new alternative approach that

service to meet that need does not yet exist, because meets a need they did not know they had. For instance,

existing businesses fail to meet it adequately, or a food delivery service that allows them to order because the need has not yet been identified. For any cuisine, at any time, to enjoy at home. example, while a town may have several restaurants, it In order to find a gap, research the market you may lack one serving Mexican cuisine, which is a need are planning to enter, and think about your own you could address. Alternatively, the town may have a experiences (see pp.16–17). Look for products and

French restaurant that fails to meet customer needs by services that are not currently available, which you

not catering for children, which is also a potential gap. could offer. Also look at those that are available to

HIGH PRICE, HIGH QUALITY

❯ Stylish product crafted from quality leather Filling the gap ❯ A look older, wealthy customers will pay for

❯ A gap in the market is a chance to reach an untapped Well made and durable

group of customers. A portion of an existing market may

be underserved or a new opportunity may appear within

an existing industry. By studying trends and what

competitors offer, you can assess whether your product

could fulfil customer needs that are not currently met.

YOUR NEW OFFERING

❯ Catchy new look

❯ Medium price

❯ High-quality, durable product

❯ Stylish, all-age appeal; value for

money; does not disappoint

BEFORE YOU START 20 21

Finding a Gap in the Market

see if you could provide something better—that NEED TO KNOW customers would value more highly. If you are

planning to open a local business, speak to people ❯ Competitive markets are those in which there is a about what is available nearby, and what is not. Also large number of buyers and sellers, meaning no one try out existing products and services yourself to learn can control the market price.

what you could improve upon. Think laterally and look ❯ Demand refers to the amount of a product or service for needs that others have not yet identified. that customers and clients will buy at a given price.

❯ Market disrupters create new products, services,

Assessing your options or approaches that transform existing markets, and

When considering potential gaps, research why they often become a new market leader in the process. might exist. While it may be that no one has thought

of a suitable product or service yet, it could also be

because there is insufficient demand to justify filling

it (see pp.42–43). For example, the town without a “High expectations are Mexican restaurant may once have had one that

closed through lack of demand. the key to everything. ” Be flexible when looking for your potential market,

and willing to adapt your ideas. Research your options Sam Walton, founder of Wal-Mart Stores Inc. thoroughly before committing yourself.

LOW PRICE, LOW QUALITY MEDIUM PRICE, LOW QUALITY

❯ Attractive but clearly affordable ❯ Selling point is its catchy, new look

❯ Targets young with fast-changing wardrobes ❯ Stylish and appeals to all ages

❯ No claim to be a durable product ❯ Disappointing quality; soon wears out

Standing Out

from the Crowd

In a crowded marketplace, your business needs to stand out amongst

rivals in order to attract customers and clients. This involves building

and maintaining a unique competitive advantage.

Creating advantage benefits at a competitive price

When starting a business, you need (a cost advantage) are possibilities, What sets you apart to quickly identify what will make but beware of making price your your product or service stand out, USP. Low prices can be interpreted Promoting what makes your business giving you a competitive advantage. as low quality, and since you can better than the competition tells

Gaining and sustaining this potential customers why they should be undercut by rivals, you will not

or better benefits than competitors your target market. This uniqueness Identifying your customers should form part of your “value is especially crucial when you first advantage by offering greater value choose you, and will help to attract attract a loyal customer base.

and understanding their needs proposition”—the promise you make

enter a crowded market. (see pp.40–41) is central to building to customers about the qualities and

You can create this greater value a competitive advantage. However, benefits they can expect from you in several ways. You can offer a to retain their custom, you will and your business. product or service that is unique or need to pay attention to what is new, one of higher quality or with happening in the marketplace, and superior customer service, or give constantly monitor what existing guarantees. These are your unique and new competitors are offering. selling points (USPs). Whichever The value your business offers to you choose, it is important to make its customers must be commercially sure that customers perceive their viable. There would be no point in value, as these are what gives you increasing business costs in order a competitive advantage. to attract customers if your profits

Providing better benefits than become minimal. It is crucial to

the competition (a differentiation strike the right balance between advantage) or offering the same the value offered and profit.

“You should learn from your

competitor, but never copy.

Copy and you die. ”

Jack Ma, co-founder of Alibaba.com, 2007

BEFORE YOU START 22 23

Standing Out from the Crowd

MAKING IT WORK

❯ Constantly learn about your

customers to ensure you meet

their needs, which can change

Go above over time.

and beyond ❯ Review your USPs regularly to

In order to attract and ensure they are unique and are

business must offer value ❯ Regularly assess your rival’s USPs and benefits they cannot retain customers, your valued by your customers.

get elsewhere. These are surpass theirs. and find ways to ensure that yours

your unique selling ❯ Monitor the costs and benefits points (USPs). of your USPs to the business to

ensure profit margins are healthy.

❯ Keep watching for new market

entrants and what they offer.

CREATING USPs

How to differentiate your product or

service will depend on what you are

offering, the market, and your competition.

❯ Offer products that provide something

different from those of rivals, for example,

better quality, safer, or unique designs.

❯ Provide services that customers cannot

find anywhere else or that are distinctive

and more appealing.

❯ Attractive prices can set a business apart

from competitors, but quality cannot be

ignored. Customers assess both when

deciding if something is value for money.

Defining Your Goals

One of the first steps in starting a business is to define what you want to

do and why you want to do it. This will help you focus your ideas more

clearly and allow you to start making specific plans.

Defining your purpose because you want to offer exciting purpose embody your business, When starting a business, first trips, to serve a particular market, which you can use when deciding decide what you want to achieve. or because you simply see it as a your strategies and planning your Known as your business “vision,” way to make money. This is the working procedures and practices. this is a long-term view of what “purpose” behind your business Share them with other people your business will become. To vision. Use this to inform your involved in your business from then help make that vision become decisions and to focus your plans. the start, including investors, a reality, identify why you want to For instance, an agency offering customers, clients, and staff by start this business and not another. unique vacations would be planned encapsulating them in a “mission For example, you may want to open differently from one aimed at only statement” (see right) that sums a travel agency, but why? It may be making money. Your vision and up you and your business.

Setting out your values

While deciding the vision and purpose of your business,

also consider the values you want to uphold, such as

honesty, integrity, value for money, and passion. These

provide a map and compass to guide your decision-making

and should be reflected in how the business operates.

Incorporate these values throughout the business, and

communicate them with others so that everyone dealing

with you knows what you stand for. For example, a

travel agency catering to older travelers may choose

“commitment, quality, adventure, and luxury” as

its business values.

“People don’t buy what you do;

they buy why you did it. ” Simon Sinek, author and motivational speaker, 2009

BEFORE YOU START 24 25 Defining Your Goals

Creating a mission statement

A mission statement is a written declaration that clarifies the purpose of your business—what it does, who it does it for, and how it does it. It should be concise and give clear answers to three key questions:

What? Define the products or services that your business provides. Who for? Say who your products or services are designed for. How? Explain how your customers’ aspirations will be met.

To support your mission statement, you can also write a vision statement, outlining where the business aspires to be in the future, having achieved its mission. You can also write a values statement, explaining the values your business will maintain in pursuit of its mission. Together, the three statements form a pledge between your business and those who deal with it.

CASE STUDY MOTIVATING OTHERS

Microsoft Your mission statement (see above) not only provides

Microsoft. Its initial vision was simple but ambitious: them a clear set of values to follow and a keen sense “to put a computer on every desk and in every home.” of what the business does and why. It can also be an The company aligned its strategy, communications, important marketing tool, projecting a precise image In 1975, Bill Gates founded the software company It can be used to help attract and motivate staff, giving focus for you, but it also serves as inspiration for others.

and culture to make that vision a reality. Since then, of your business’s unique identity—its brand—to the computers have become commonplace, and so the outside world, helping attract customers and clients. company has a new vision: “to empower every person However, it is essential to demonstrate the values you and every organization on the planet to achieve more.” portray, as failure to do so can undermine the message.

Choosing a Structure

You may be starting out on your own, with family, or with a business partner.

There are other options, too. The structure can change as the business grows,

but begin with a form that is a good fit for where you are now.

Considering your options Most people start out as a sole proprietor or in an

The business structure you choose depends on the informal partnership and are responsible for all nature of your business (its complexity and growth business debts. As the business grows, it may potential) and the level of risk you are willing to take. eventually become necessary to register it legally

Your choice will be influenced by whether you (see pp.212–215) as a limited liability company. This

are starting out alone, or with one or more business protects your personal assets from any business debts

partners, and by the purpose of your venture—whether and also enables you, and your business partner, to ethical or charitable as opposed to financial. more easily secure loans and other finance.

Sole proprietor Contractor

Run by the owner under a business name; larger Tends to work for one client at a time for the duration of

businesses may need to register as limited companies. a contract; can operate as a limited company.

Pros Cons Pros Cons

❯ Setup is simple ❯ Debt liability unlimited: ❯ Security of income from ❯ Contracts can end

❯ no distinction between long-term contracts without warning, Profits can be

❯ private assets contracts to accept and ❯ Working hours may Capital required ❯ retained after tax your business and depending on terms ❯ Control over which

❯ additional capital is low ❯ from home Pay is typically at a No annual business ❯ is minimal Capacity to raise when to take a break be long and away

accounts to file, only Decision-making rests lucrative “day rate” ❯ Time required to a personal income on your shoulders establish credibility tax return

Freelancer Partnership

Self-employed sole proprietor who typically works on Enterprise where two or more people share the

multiple projects for more than one client. ownership, control, and profits of the business.

Pros Cons Pros Cons

❯ Start up costs are ❯ Work can be sporadic, ❯ Partners bring their ❯ Issues can arise if one

minimal, with the ability causing cash flow issues expertise, knowledge, partner leaves or feels

to work anywhere— ❯ and contacts to the they are doing more than Sense of isolation if

❯ their capital and share of the workload Workload and schedule ❯ Financial management is other resources chosen by you including from home business, along with their pre-agreed fair you work alone

❯ your responsibility alone ❯ Partners expected to ❯ No need to file any pay tax on their own Flexibility around your ❯ Work–life balance may annual accounts portion of profit working hours be difficult to achieve

BEFORE YOU START 26 27 Choosing a Structure

BUYING A BUSINESS 50 % If you have the funds, buying an existing business that

is already operating may be a tempting option, since it of all small businesses removes the need to start from scratch. However, there

are many reasons businesses are sold, including poor are operated from home performance, so research the business thoroughly to find

out why it is on the market. Seek professional advice,

review the financial records, check online reviews, and Smallbizgenius.net, 2019

ask around locally. Be aware that buying a business

involves up-front investment, which will be at risk until

the venture proves successful.

Family business Limited liability company (LLC)

Commercial entity owned and run by members of the Legally registered business, whose assets and debts

same family, often across multiple generations. belong to the company itself, not the owners.

Pros Cons Pros Cons

❯ Stability and continuity ❯ Nepotism—a preference ❯ Risk is lower because ❯ Owners invest their own

in the long term for hiring family the owner(s) are not money and assume legal

❯ members, even if they person ally liable for responsibility Trust, loyalty, and

understanding lack skills or experience business debts ❯ Company distributes part

❯ ❯ Potential for conflict, ❯ Ability to go public to of profit to shareholders Commitment and

❯ may be more difficult if rapid, high growth tax return must be filed Profits remain within to resolve is anticipated and paid annually values shared and conflicts that arise attract inward investment ❯ Corporation tax and

the wider family

Franchise Nonprofit

Independent branch of another business; franchisee Cooperative, social enterprise, or charity that is

pays a fee for the right to represent the parent business. committed to a cause rather than to making a profit.

Pros Cons Pros Cons

❯ No need to develop an ❯ The business must still ❯ Profits can be reinvested ❯ Profits cannot be

original business idea answer to the franchisor into beneficial causes dispersed—personal

❯ Franchisor gives training, ❯ Creative control lacking ❯ financial reward may Eligibility for grants

support, and knowledge be lower in brand, training, and tax exemptions

❯ or culture ❯ Risk is low, as business ❯ Competition for funding, Opportunity to

model is already proven making finance uncertain ❯ Franchisor could go bust “make a difference”

❯ ❯ Amount of capital ❯ Payments to the ❯ Reliance on the public’s Organization is

required is minimal generosity and empathy franchisor are ongoing self-governing

for donations

Starting a

Family Business

Creating a family business is an opportunity to work with those you

most trust and care about. It can be very successful as long as it is

set up and run correctly—as a professional business.

Working together

Creating a family business can be highly rewarding,

and it offers many advantages, such as a shared desire FREDA’S

to succeed and the benefit of mutual support. However,

there are also disadvantages. Where most roles are

performed by family members, the business can lack

the breadth of skills and experience found in more

diverse companies. Also, family relationships are not

the same as working ones, which can result in conflicts

that could harm the business (see pp.54–55).

To help ensure the business succeeds, it is essential

to make some early decisions, such as who owns it,

how it will be financed, and how profits and liabilities

will be shared. You also need to decide the roles of

everyone involved, when and how they work, and how

they will be rewarded. To do this, draw up a written

family charter together (see right) so that everyone

knows what to expect from the business.

Is it right for you? PROS Setting up a family business is not ❯ Familiarity Knowing each always straightforward. Before you other well, you communicate take the plunge, you—and everyone easily and effectively. involved—need to weigh the pros and ❯ Strong commitment You cons to decide objectively whether this all share common goals. is the right choice. A new business ❯ Speed You can launch your requires full commitment and a mutual business quickly and cheaply, determination to make things succeed. with minimal need to recruit. Families working together can be a

potent force. However, if there are any ❯ Support As you understand areas of conflict, these will need to be each other’s personal and settled at an early stage to prevent financial issues, you can them from jeopardizing future success. accommodate different needs.

BEFORE YOU START 28 29

Starting a Family Business

“About 90% of American FAMILY CHARTERS

businesses are family owned Establishing clear roles and

or controlled. ” responsibilities is particularly important in family-run businesses. Conflict can lead to long-term www.inc.com/encyclopedia/family-owned-businesses.html divisions. To avoid this, create an

informal agreement or charter.

All family members involved will

need to decide what the charter

should cover. Such documents

FAMILY FRUIT STALL typically outline how the company

will be run, its short- and long-term

objectives, areas of accountability

and authority, and, sometimes,

how it might be passed on to the

next generation. You may need

to consult a lawyer or business

mentor to help you agree on tricky

issues, such as sharing control

and potential wealth.

A business charter is not legally

binding. Once you have started

selling, it will need to be reviewed

regularly to ensure it remains

relevant to the business.

CONS

❯ Familiarity Knowing

each other well can lead to

unprofessional attitudes.

❯ Narrow thinking A family

workforce may not be open to

helpful, external ideas.

❯ Personal resentments These

can affect the business and

damage family relationships.

❯ Assumptions If there is no

charter, senior family members

may assume they are in charge.

Setting Up

a Franchise

If you want to start off with a ready-made business model and a

recognizable brand, you might consider taking on a franchise. Careful

research, thorough planning, and available funds are all essential.

Understanding franchises the right to establish independent

A franchise is an agreement that outlets under the franchisor’s brand. Becoming a

authorizes you to start a business New outlets will have the same franchisee selling the products or services of design, menu, and operating

an established brand. You become systems as all other franchised Before deciding whether to take on a the franchisee; the established outlets across a particular region. franchise, ask yourself how involved company is the franchisor. Not you want to be in the day-to-day

all arrangements are the same, Weighing the costs running of the business. If you want but they always involve the There are some clear advantages the franchise to provide you with an

franchisee paying an initial fee income but you want to limit the to this type of business. You can

a royalty) in return for the right to in the business, then it is important to customer base, a market-tested find a franchisor that will permit this. sell a branded product or service. and a percentage on sales (called hours you work or your involvement benefit from a brand with a loyal

product or service, and established Franchisors will have their own

Fast-food chains—for example, logistics. In return for this, you will expectations, so you need to assess

McDonald’s—are examples of the be expected to make a substantial these and make sure you are willing most common type of franchise, initial investment and accept that and able to meet them. Careful a “business format franchise.” In you will be tied to the brand’s research, negotiation, planning, and these cases, franchisees pay for offerings and infrastructure. developing good relations with your

franchisor are all key to success.

TYPES OF FRANCHISES BE AWARE

There are three main types of franchises, each with a different level of rights ❯ Start-up costs can be high, and varying business models. All involve a firm financial commitment. often significantly higher than if

Business format you were launching an Product Manufacturing independent business. As a franchisee, you The franchisor grants In return for a fee, ❯ Your reputation will depend on get not only the right you the right to sell or you acquire the right that of the franchisor, so research to sell an established distribute a branded to manufacture a your franchisor thoroughly. Note brand but also a full product, such as a product and to use that you will be bound by the business system to computer or car, using associated brand franchisor’s rules and regulations. follow and a support the manufacturer’s names and trademarks. ❯ Consider your motivations. network. This type of trade names, but you The product could, If your driving force is to create franchise is used in do not benefit from the for example, be a a business in your image and mass-consumer areas, franchisor’s business soft drink, with the achieve personal goals, then a such as hair salons and systems. The products drink flavoring franchise may not be the answer. in car repair, plumbing, you can distribute or ingredients provided

and cleaning services. sell will be restricted. by the franchisor.

BEFORE YOU START 30 31 Setting Up a Franchise

1 Research possible Look for a Match your skills 2 3 franchisors proven formula Consider how

Search for information online, Assess the tried-and-true compatible you are with but if possible, also attend business models of brands potential franchisors. What franchise seminars and trade that are already established can you offer them, and what shows, where you can meet in the marketplace. Look for will you get in return in terms potential franchisors and ask examples of thriving franchise of business know-how and questions. Compare types of networks, and analyze the talent development? franchise formats and fees. reasons for their success.

6 Prepare the Check financing Negotiate 5 4 business and legal issues Choose a location,

Pay any initial fees due to the and discuss the potential for Prepare a business plan and

franchisor, according to the being the only franchisee in cash flow projection. Find the

contract. Find a site for your the locality. Talk about what most cost-effective financing

business, and set up the you will get and what is options, possibly through the appropriate accounting and expected of you. Agree on franchisor itself. Seek legal

software operating systems product pricing and the advice, and read the fine agreed with the franchisor. percentage royalty on print before signing anything. Make sure you take full revenue you will pay. advantage of any other

resources or services that the

franchisor offers as part of

the deal, including marketing,

quality control regimes, staff

recruitment and training

facilities payroll systems,

and assistance and advice 7 running customer service support, Get up and

regarding relevant health You will usually need to and safety measures. report to the franchisor and

pay royalties on a monthly

basis. Do this in a timely

fashion to secure the

ongoing support of the

franchisor. Be prepared for

$ quality control inspections.

Alternative Types

of Businesses

Your new business can be more than simply a money-making venture.

By adopting a less conventional structure, your start-up can gather support

to help those in need or fund causes and projects that you care about.

Looking at your options nonprofit organizations, but this is not be your focus. Rather, the If you are starting your business a little misleading, since many do business will be run for the benefit in order to pursue specific social, attempt to make money. The key of its members, a community, social, charitable, or other objectives, a difference is that instead of giving or environmental cause, or to fund conventional commercial business out profits to shareholders or charitable activities type might not suit your needs. withdrawing them yourself, you put Nonprofit organizations are Other business types include the money back into the business self-governing entities. If you set cooperatives, social enterprises, or to keep it running and to fund any one up, you will be a founder charities (see below). Enterprises charitable or social cause that it rather than an owner (although like this are often grouped together supports. If you follow this route, cooperatives, by definition, will under the catch-all description of earning profit for profit’s sake will have multiple founders). Being a

Find the right fit for your business

A cooperative belongs to its members and is controlled and run by and Cooperatives for them. Since it is not owned by shareholders, all monies stay within Cooperatives can

the cooperative, to be used as members decide. Clearly, if you wish to take many forms,

set one up, you will need to find like-minded individuals and including farm, be happy with democratic decision-making. retail, or housing, and can also

A social enterprise might appeal if you seek more control but want be banking providers (such as

to combine commercial activity with “doing good.” Social enterprises credit unions) and workshops. buy and sell on the open market but aim to create employment and The business would be reinvest profits in the business and local or wider community. jointly and equally owned

If supporting a cause close to your heart is your prime business by you and the rest of the objective, a charity may be the best option, but strict laws govern how members, with business charities operate; these vary between countries and sometimes states. decisions made collectively.

9.2 ❯ Goal You must have a clear % economic, social, or cultural objective that the business’s revenue helps fund. ❯ Membership This will tend to be open and voluntary, of all wages and salaries paid with each member having one vote on business decisions. in the US come from the ❯ Profits Surplus profits can be given to members who have a nonprofit sector financial stake in the business. Krisztina Tury, learningtogive.org, 2013

BEFORE YOU START 32 33

Alternative Types of Businesses

founder means that you cannot records. You will also need to NEED TO KNOW profit directly from the net earnings develop excellent PR (public of the business, although you will relations) to help sustain funding.

be entitled to a salary for your work. ❯ Governance is how a governing

While the business’s income can Different… but similar body oversees and manages the

you may also be able to fund-raise come from selling goods or services, Although its focus is different, a ❯ Mission statement refers to way an organization functions.

nonprofit organization will often the formal expression of the

via donations, sponsorships, and use similar business strategies and aims and values of a business.

grants. Some nonprofit enterprises, management techniques as those ❯ Nonprofit or not-for-profit are

especially charities, may also be found in “for-profit” businesses. terms denoting enterprises not

able to apply for tax benefits. Even those that rely heavily on primarily focused on profit. The

Businesses that profess to have volunteers will usually need to hire two are often synonymous but in

ethical dimensions are likely to face the US are distinct in terms of tax, some paid staff and employ similar

scrutiny from both the public and governance, and functions. promotional techniques to those

a clear mission statement (see who set up businesses in order Like them, the aim of your business to help solve social problems official bodies, so you will need ❯ Social entrepreneurs are people used by commercial enterprises.

pp.24–25). You must be transparent is still to make money, but your or bring about social change. and accountable, exercise good objective is to channel it into your governance, and keep accurate chosen charitable or social cause.

Social enterprises Charities

If you set up a social enterprise, your main aim will be to To be granted promote social change. This could involve tackling social charity status to

problems, improving people’s life chances, providing raise funds for your

training and employment opportunities, supporting communities, and chosen cause, your business will

helping protect the environment. Your business will do this using the have to meet strict criteria. It can

profits earned by trading. be set up as a trust, corporation,

Examples of social enterprises could include a magazine whose profits or association, but all resources

go to help the homeless, a café that provides work opportunities for must be geared toward its the long-term unemployed, a business promoting recycling, or a charitable goals. gardening service that improves green spaces in the neighborhood.

Although the exact definition differs between countries, here are ❯ Your cause You will typically

some key aspects likely to mark your business as a social enterprise: be required by law to devote a

specific percentage of income

❯ to your charitable cause. Mission Whether social or ❯ Operation Your business is

environmental, your mission run entirely in the interests ❯ Remaining funds Anything must be clearly set out in your of your social mission. left over can be used to pay

governing documents. for administrative costs. ❯ Profits You reinvest or give

❯ Independence Your business is away the majority of your ❯ Associated ventures Any

independently owned. profits or surpluses to support thrift shops and other business

❯ your mission. activities that support your Income Your business earns

the majority of its income charity may have to be part of ❯ Transparency You are

through trading—or is clearly a separate trading business, open about how the business

working toward this aim. such as a social enterprise. operates and the impact it has.

Choosing a Model

One of the first decisions to make when planning a business is how

it will operate and make money—its business model. Examining

the choices available will help you decide what will work best.

Understanding the options brands to those readers. Alternatively, the publisher

To be successful, all start-ups need a sound way of might give away the magazine for free to increase its

operating that generates profit. This may involve audience, then charge more for advertising. adopting a single business model, such as retail, As you shape your business model, seek the opinions

or a combination of models. For example, a magazine of potential customers, take expert advice, then trial

publisher could use a subscription model, charging its the model in a pilot—adapting it as necessary (see

readers a regular fee, and an advertising model to earn pp.132–133). The following are common examples

money from companies who want to promote their of business models, but there are many more.

Offline retail Online/e-commerce retail

Customers buy goods directly from a Individual businesses may sell online

shop or outlet. The retailer makes or from their own websites or on “third-

buys the products from a wholesaler or distributor party” sites that act as virtual marketplaces and charge

then adds to (or “marks up”) the price to make a profit a fee. Leading third-party websites include Shopify

and sells directly to customers, face-to-face. and Etsy (see pp.68–69).

“Bricks and clicks” Manufacturing

Businesses with a traditional offline Manufacturers, such as furniture

store and an online presence use this. makers, use raw materials to make

Customers can order online and/or collect and buy products, which they sell to a wholesaler (such as a

from physical stores. Helps retailers offer a larger dealer or outlet), who sells them on at a marked-up

range of products than a physical store can hold. price to the customer.

Wholesale Direct sales

Wholesalers generally buy products Individuals sell products directly to

from manufacturers and producers, then customers—either via product parties or

resell to retailers, who sell to customers. Wholesalers one-to-one sales. Some companies, such as Mary Kay,

may sell direct to customers, or first to a specific sell products to individual agents, who take a share of

distributor, who sells on to a general wholesaler. the profits on each item they sell.

BEFORE YOU START 34 35 Choosing a Model

“Familiarity with different [business] models is key. ”

Abdo Riani, www.forbes.com, 2019

Franchise Licensing

Big successful companies (franchisors) This model allows companies

allow private individuals (franchisees) to (licensors) to commercialize their

buy the right to trade under their brand, using their intellectual property by licensing their designs,

systems, and sell their products or services. It is a way products, or services to others (licensees) in return

of buying into an established business (see pp.30–31). for a fee, while retaining ownership (see pp.206-207).

“Freemium” Subscription

Some companies attract customers by Customers pay a regular fee

offering a free product or service and (membership fee) to access content,

the option of a paid-for superior version. LinkedIn, for products, or services. Many gyms, dating agencies,

instance, offers a free networking platform or a online classes, and software and media companies,

paid-for version with advanced features. such as Netflix and Sky TV, use this model.

“Bait and hook” Advertisement

Also known as the razor blade model, To sell advertising space, a company

this works by selling a basic durable creates entertaining copy, music, video,

product, such as a printer, at a low price to encourage or other content, to attract a large targeted audience

ongoing sales of essential components, such as ink to a publication or platform, where other businesses

cartridges, sold at premium prices. will then pay to advertise their products.

Agency/brokerage Affiliate

Agencies connect buyers with sellers Most website owners use this model

and earn a transaction fee from one or to make money. They invite retailers to

the other, or both. Users of this model include estate promote their products on the website and receive a

agents and financial advisors, who earn a commission commission from the retailer when a customer buys

based on the value of the transaction. a promoted product.

Creating a

Strategy

The process of creating a business strategy will help COMPETING ON you identify what is possible and what is not. It is a PERCEIVED VALUE

map setting out your goals and how to reach them. What is worth more?

Defining your business As a small business, we cannot

how it will operate and compete. compete on price, but can we offer

Every new company needs a For example, offering a community greater value to our customers? business strategy that is well service requires a totally different For example:

thought out, communicates its strategy from selling luxury goods. ❯ Stay local, which is more long-term goals to everyone Once you fully understand the convenient for customers and involved, and sets out broadly aims and nature of your business means the business can offer a how these aims will be achieved. more personal service. in more detail, encapsulate this Creating a strategy takes research in a simple statement that tells ❯ Provide a personalized service,

input of others with an interest in meets customers’ needs better business exists—its mission and makes them feel special. and thought and should include the where competitors do not, that everyone involved why the

your business. When complete, you statement (see pp.24–25). can then use it as a guide to help ❯ Offer convenient business hours,

decide courses of action. such as remaining open after Fighting your corner

office hours.

Start by clarifying the purpose A vital aspect of your strategy is

of your business, what it stands to take into account the business’s for, and what you want it to achieve. strengths and weaknesses, as well Also consider the nature of your as the opportunities and threats it business—its target audience and may face. Conduct a SWOT analysis

(see p.155) in order to make full use

of your strengths (S), such as expert

MAKING IT WORK knowledge, while also addressing weaknesses (W), like having

❯ A strategy must be kept limited funds. Include ways to Evaluating under constant review, since seek and benefit from new your options the environment in which the opportunities (O) as well as how business operates will change. to deal with threats (T). When developing a strategy, every if there ❯ Check in particular Your strategy must include how aspect must align so that what you are impending changes in the want your business to achieve is you plan to compete, which for a external environment that will something that it realistically can. new business is essential. While have a negative (or positive) Similarly, the customers you want to you may not be able to compete impact on the business. reach must be those that best meet on price against established rivals, ❯ New legislation , new technology, the needs of the business. Take time there are other approaches, such or even changing economic to carefully compare and contrast forecasts can have a significant as value, uniqueness, quality, and each idea against the overall aims effect. Keep abreast of current customer service. Deciding the best of your strategy. For example, when affairs and all new developments way to compete is central to the considering how to compete, assess in your field of operation. success of your business. a range of options before deciding.

BEFORE YOU START 36 37 Creating a Strategy

COMPETING WITH A COMPETING ON UNIQUE OFFERING CUSTOMER SERVICE

What is not readily available? What do customers really want?

Can we create a product or service that is hard Can we give customers a level of service to find and that competitors cannot easily copy? better than our rivals so they stay loyal? For example: For example:

❯ ❯ Provide a personal service Create unique products and that cannot be

found elsewhere, such as custom goods. know our customers by name.

❯ ❯ Make buying an enjoyable experience Build a website devoted to entirely local

needs based on local knowledge. for our customers so they come again.

❯ ❯ Develop a follow-up service to Find a niche that is too small for bigger

companies to be interested in. encourage repeat purchases once a

❯ first purchase has been made. Select additional services that will

appeal to our customers. ❯ Offer flexible terms, such as allowing

customers to pay by installments or

offering an extended returns policy.

Only of employees 7 %

today fully understand

their company’s business

strategy and what’s

expected of them

Robert S. Kaplan, American accounting academic

Knowing Your Market

When planning a business, you must decide whether to offer products

and services with broad appeal or to target a niche. You also need to choose

your market – to sell directly to consumers, to other businesses, or both.

Mass or niche markets Once you achieve a high sales Deciding the best market for your volume, however, your product product or service – your target or service becomes cheaper to market – is critical to the success produce, due to economies of scale. of any business, and should form A niche market may have a low part of your business strategy sales volume but can generate a (see pp.36–37). In broad terms, high profit, if goods or services you have two options – mass are tailored to a particular market or niche – though you may group willing to pay a be able to combine the two. Mass- premium price. There is market offerings require a broad more risk in a niche market,

appeal to attract the widest but it is easier and cheaper BUSINESS TO possible customer base, whereas to target a smaller, defined CONSUMER niche products should appeal group of customers. In this model, the business sells products directly and specifically to a small Some businesses can and services directly to consumers, who but dedicated customer base. successfully combine both are the end users. Selling to the mass market can approaches by initially ❯ Examples include retail shops, online produce a high sales volume but launching a specialist outlets, market stalls, and service provider, a relatively low profit. While there product or service to a such as plumbers, and child minders. is greater security in the wider niche market, before ❯ B2C sales are governed by customer market, it is harder and more eventually expanding emotions. May be impulsive, often involves expensive to reach customers their offering to cater brand recognition and loyalty. Amount per in that large, disparate group. for the mass market. sale generally lower than B2B transactions.

Understanding However, the line between

business models B2C and B2B can be blurred, as some businesses sell to There are three main ways in which other businesses, as well businesses trade according to the as to consumers. Examples markets they serve. Business-to- of this include DIY suppliers consumer (B2C) sales are conducted and food wholesalers. Some product or service provider, even directly between a business and service providers may also cater though they do not buy directly consumers. Examples include to both markets as an offshoot from them. The food industry is an traditional retail shops and service of their main business. example: products are marketed to providers, such as hairdressers and The final way in which businesses consumers, but are sold by food plumbers. Business-to-business (B2B) commonly trade is business-to- manufacturers (B) to wholesalers and is where one business sells directly business-to-consumer (B2B2C), retailers (B), who sell to consumers (C). to another. B2B examples include where companies sell consumer Similarly, in financial services, one manufacturers selling to wholesalers, goods or services to businesses, company may create a product, then and wholesalers supplying goods and who then distribute them. Consumers partner with major banks or others, equipment to service providers. recognize the initial business as the to sell their product to consumers.

BEFORE YOU START 38 39 Knowing Your Market

MASS MARKET 60 %

❯ Large, disparate group , so the product or service of US businesses

should have a broad appeal. are B2B

❯ High marketing spend to make an impact when

❯ profit margins. Be Allocated to Maximize Success?, Tomasz Tunguz, 2020 High sales volume targeting a wide, general audience, resulting in lower B2B vs B2C: How Should Your Sales Team giving economy-of-scale benefits;

can produce/sell high quantities at a low cost.

Here, one business sells products BUSINESS TO BUSINESS TO BUSINESS BUSINESS TO CONSUMER In this model, a business sells its products or services directly to another business, which is the end user. and services to another business, ❯ Examples include companies in a supply which sells them on to consumers. chain network, where one sells materials Examples include ❯ manufacturers to another or provides a service, such as and suppliers who sell products to equipment maintenance or IT support. a retail outlet. ❯ B2B sales are typically planned and well ❯ B2B2C sales are promoted to researched, with customers likely to shop the consumer by both the initial around before buying. Purchases driven by supplier/manufacturer and the logic. Transactions usually larger than those retail outlet. in B2C sales.

NICHE MARKET

❯ A small and select group with specific wants and needs,

which the product or service must accurately address.

❯ Lower marketing spend for a targeted campaign when

there are relatively few competitors.

❯ Higher profit potential if target customers will pay a

premium price for a specialized product or service.

❯ Low, steady sales volume reduces potential to produce

benefits of economies of scale.

Identifying Your

Customers

Understanding who your potential customers are enables you to develop

products and services to meet their needs. It also allows you to promote

your business using the most effective means in order to attract sales.

Targeting customers messages, techniques, and channels that will appeal

Different people have different needs, interests, and to them. Alternatively, you can also use your own desires, which is reflected in the products and services knowledge and experience of a particular segment,

they buy. As only certain people will be interested in and plan your business accordingly. what your business offers, these are the ones to target. One of the most widely used tools to help identify

Identifying this group, or segment, allows you to your customers is market segmentation. This involves

develop your products and services to specifically meet breaking the whole market down into four groups with

their needs and expectations. It will also enable you to shared characteristics, then to pinpoint potential promote your business in a targeted way, using customers within those groups (see below).

Segmenting the market

There are several ways to group your customers based on who they are and how they behave. One way is to use four broad segments—demographic, geographic, psychographic, and behavioral—which relate to how and where people live, what they think, and how they behave. These segments can be further divided into narrower subgroups.

DEMOGRAPHIC FACTORS GEOGRAPHIC FACTORS

These are the fundamental factors that define a Products and services can be targeted based on

customer profile, including age, gender, marital status, where a customer lives—from continent and country

ethnicity, income, and occupation. Some age groups down to neighborhood and street. Factors

are identified by specific names, such as millennials considered might be as broad as climate and

(those born between the early 1980s and population density or as local as types of

mid-1990s) or Generation X (those born in housing, seasonal foods, and community

the 1960s and 1970s). groups and clubs.

BEFORE YOU START 40 41

Identifying Your Customers

Targeting or BRINGING CUSTOMERS TO LIFE

segmenting To understand potential customers, ❯ Identify key influencers who

customers it helps to picture them as characters have a connection to your product or “avatars”. Some simple research or service area, and note the views

can increase techniques can be used to compile of those who follow them. detailed customer habits and interests. ❯ Make a template for your avatars,

revenues by ❯ Study competitors’ social media giving them an identity and filling pages for insights into customer in personal details based on the four

760 as much as opinions and behaviors. Compile main areas (see below). any customer contact details. ❯ Consider the characters who are %

❯ Read trade or industry blogs and unlikely to be your customers. That

articles and note customer-related way, you avoid wasting time on

comments and insights. marketing to the wrong people.

Data & Marketing Association, 2014

PSYCHOGRAPHIC FACTORS BEHAVIORAL FACTORS

This area of segmentation targets customers’ Customers can be further segmented based on their

interests, values, opinions, personality traits, shopping and purchasing behavior. For example,

attitudes, and preferences. Psychographic factors some may prefer direct contact with certain stores

might include customers’ preferred mode of and services, while others may buy everything

contact, whether they buy mainly organic online. Customers may prefer to pay more for

produce, how often they give to charity, particular brands or shop around for special

and which kinds of social media offers and discounts.

they use.

Assessing Demand

for Your Business

Being enthusiastic about your business is essential, but it is a mistake to

assume that everyone else shares that enthusiasm. Be objective and carry out

research to establish what kind of demand there is for your product or service.

Understanding demand your product (your competitors), product, they will need to be able In order to sell your product or since oversupplying a market can to access it. How will you make service, there must be a demand for force down prices, which would this happen? Similarly, if people it. In other words, there must be then reduce your potential profits. want your product only at certain enough people willing to buy from In addition to the size of the times of the year, or in response you at a price that will generate a market, also consider where and to a current trend, your idea may profit. You must also consider the when demand exists. For example, not be viable in its current form. number of existing suppliers of although people may want your If you are unable to answer

Developing

To identify and assess the demand ? To assess the viability of your product or service, find out how much demand there is for it. To do this, begin by for your business idea, carry out your idea Clarify your idea

some careful research. This is not asking yourself the following questions: expensive but will take time. Start ❯ Who are your customers? Are ❯ Who are your competitors? with a full understanding of your they local, national, or global? What do they offer, and what

current idea, who it is for, and why Are there enough of them, and do they charge? Are they a people want it. Research potential can you reach them? threat to your business? markets, seek advice, and try out

your ideas. Take time to review each ❯ What are customers looking for? ❯ How are potential competitors

stage and be willing to adapt your Would they buy your product? performing? Are they growing,

idea. Be prepared to walk away What else could you offer instead? stagnating, or failing? from ideas that will not work, but

do not give up. Even if you find

little demand for one idea, you

may uncover a much better

alternative during the process. Conduct desk Refine your idea

research Take time to refine your Look online to see idea based on what you have

what rivals offer learned. Consider rethinking

and read customer reviews. your product or service if

Search for statistical data, the market for it is small or

customer profiles, market already well catered to. research reports, and industry

journals, much of which is

available at little or no cost.

BEFORE YOU START 42 43

Assessing Demand for Your Business

these questions about demand, you However, it is worth keeping notes 42 % will need to modify your ideas, if on all of your ideas and continue not rethink your business entirely. monitoring the market even after you have estimated the demand

Assessing demand for your business. This is because

There are many ways of assessing markets can change quickly, and of businesses

the demand for your business, you will need to respond swiftly fail due to poor ranging from doing research into to fluctuations in demand, or to

your competitors to speaking to changes to the ways in which demand for people in your chosen industry (see you are expected to deliver your

below). All of this should be done product or service. The more ideas their services at the business planning stage, you have, the better placed you

giving you plenty of time to refine will be for facing the future—but or products your ideas if necessary. Only then remember not to be blinded by should you think of committing your enthusiasm and to listen Georgia McIntyre, resources to your business. to what your research tells you. www.fundera.com, 2020

Know the level of demand Refine your idea

You should now know what kind of demand there is for your Use the feedback from testing

product or service. To establish whether it is sufficient to your product or service to support your business, think of the following questions: refine it, or even to rethink

❯ your idea if it was poorly Will you have enough ❯ Will you have too many customers? received. Do not commit Will you be able to competitors? What can you resources to your business develop a stable customer base? do to keep your customers loyal?

until you are sure it is viable.

❯ How much are customers ❯ What does your competitors’

willing to pay? How much can performance mean for you? you charge to make a profit? What can you learn from them?

Test your idea

Approach people Refine your idea

Speak to people in Use the information you have your product If possible, test the industry, visit learned from other people to or service on

join internet forums. Create Does your product or service for free. For example, if you simple online questionnaires meet the demands of the are offering coaching services, trade shows, and refine your idea if necessary. potential customers or clients and surveys using tools, such as people you have spoken to? offer short sessions to gauge Google Forms or SurveyMonkey, their response. or try a Twitter poll. Seek the

opinions of friends and family.

Where to Base

Your Business

Selecting the right kind of workspace for your business is an

important decision. There are a number of options to choose

from, with pros and cons to each.

Setting up a workspace to establish a clearly defined work environment, such

Deciding where you will work from is a key step in the as an office, studio, or workshop. Having a dedicated

start-up process. Most businesses start life in some workspace offers many advantages: it helps free you

part of the home—including a garage or shed—and from outside distractions and interruptions; it can be

may stay there, especially since COVID-19 has changed tailored to your type of work, with sufficient space for

the business landscape, encouraging more flexible equipment; and it can provide, if necessary, a suitable

working. As things get busier, however, you may want environment for meeting customers or clients. It also

WORKING FROM HOME SHARED SPACES

Basing yourself at home is an attractive and cost-saving A shared space can be an affordable choice, but working

option, but you will need to find a dedicated workspace. alongside others can be a help or a hindrance.

PROS CONS PROS CONS

❯ No commute saves you ❯ Switching off from work ❯ Shared resources, ❯ The commute to the

the time, stress, and cost can be more difficult rented on a flexible basis, office may take time, of traveling. when you can take your offer you affordable cause stress, and cost

❯ laptop into any room office space that you you gas or fares. Flexible working hours

enable you to start work and your office space is do not need to equip. ❯ Lack of privacy in an early and to work during so easily accessible. ❯ Working alongside open office space may the evenings if necessary, ❯ Working in isolation other businesspeople not be appropriate for helping you navigate can be stressful and provides the opportunity some businesses. your other commitments. lonely, and other to network. ❯ Working in close

❯ household members Lower costs are possible ❯ Some coworking spaces proximity to others can

as you have no rental may be distracting. provide breakout areas prove a distraction.

or parking fees or other ❯ A home address may and communal kitchens, ❯ Higher costs than transportation costs to seem less professional to which can give sole home-working, due pay and refreshments clients than a separate proprietors a valuable to rental fees and are prepared at home. business address. sense of community. transportation costs.

BEFORE YOU START 44 45

Where to Base Your Business

provides a formal setting for your business, giving it a Storing and warehousing physical base from which to operate. Such spaces come Some businesses will need storage space on their

at a cost, but there are options. premises to keep stock safe, dry, and secure and may

need to rent additional storage space or warehousing.

Using shared spaces Self-storage is one option, but if products have to be

Shared workspaces, where basic equipment and shipped out to customers, you will have to find services (such as internet access) are part of the premises with sufficient room to accommodate rental package, are now widely available. These inventory or rent warehouse storage space. provide professional settings, where you rent space— Warehousing can offer both storage and logistics

sometimes a single desk and computer—for as long as (the inbound and outbound flow of goods, plus required. They offer many of the benefits of a private transportation and inventory control), but the costs

office, without the maintenance and setup costs. may be high. Some distribution and fulfillment

For some businesses, creating the impression of companies now provide flexible, cost-effective storage

having a dedicated workspace is more important than options, depending on how much you trade each

having an actual physical space (see box, below right). season, where you pay only for the storage you use.

PRIVATE WORKSPACES VIRTUAL WORKSPACES

The cost of business premises can be one of the largest

overheads for a small business, and start-ups may find

renting office space unaffordable. One possible solution

is a virtual office—a service that can offer start-ups

credibility and many of the benefits of a physical office

for a fraction of the cost. Entrepreneurs can work from

home but use a telephone-answering service to manage

calls, as well as reception services, and the option to

book real meeting rooms when required. A virtual office

can also offer a business address and mail-handling

A private office outside your home puts you in control services to give a home-based company greater prestige.

and gives you prestige, but it comes at a cost.

PROS CONS

❯ Private office space , ❯ The cost of overheads 66 % whether furnished and when renting a private fully equipped or office space are much unfurnished, can be higher than for a virtual tailored to your needs. office or a home-based

❯ workspace. You have privacy and of companies begin in can control the work ❯ The commute may

environment with fewer again take time out of a spare bedroom, garage, distractions than if you your day and may add to

were home-based or your stress and costs. or other part of the home worked in a shared space. ❯ Networking is not as

❯ An office address can easy as when you

offer more professional Entrepreneur Europe, 2020 operate from an open, credibility and a place to community-based,

meet clients. coworking space.

Choosing Where to

Locate Your Start-Up

Finding a good location for your business can be vital. It will affect

your costs and may influence the number and type of customers or

clients you attract. Making the best choice relies on careful analysis.

Assessing what you need may need to consider costs, such Researching the area Your line of business will determine as rent, storage, and transportation, First, decide on your key criteria the sort of location you need and and what working environment will such as “on a main shopping street” how important a role location plays. make you feel comfortable. for a retail outlet or “near a station” If planning to open a restaurant or Unless you work from home, you if your business relies on client store, for example, you need to be will need safe, secure premises in visits. Research information about where you can maximize trade, but a neighborhood that you and any an area and its available business location is less critical if you work employees and clients can travel to premises, and visit commercial largely online, manufacture goods, easily. Parking spaces and easy property agents. Try to single out or sell to trade buyers. Even so, you access may also be essential. areas where special deals, such as

Questions to Do I really need Who are my physical premises? customers or clients? ask yourself Many businesses can ? If customers or clients simply be run from Before starting your search for will be visiting your home, such as those selling online. business premises, work through premises, you will need to consider If you need to make alterations to facilities for them, such as parking this list of questions. Be as honest your home in order to sell, make spaces and possibly toilets. If your as you can about the answers, as sure you follow local planning rules. business provides a service to the commitments can be difficult to If you intend to prepare or sell food public, you will also need to ensure undo once you make a decision. from your own kitchen, adhere that your location is fully accessible Also, think about your future needs. to health and safety regulations and complies with ADA rules and Working from home may initially (see pp.212–215). code. save costs, but it could leave you

without the space to expand your

business. Once your business is up What type of What sort of building

setting out a plan for finding the Think about the type lease their premises. Think about the of space you need to accommodate right location for expansion when space you will require. How much employees, customers, or clients. it reaches a certain size. storage is necessary? Do you need Consider the feel of the surrounding an area for preparing food? Can the neighborhood, the look of the existing premises be adapted to forecast, and monitor its growth suit my business? Most people setting up and development, it may be worth a business will rent or and running and you can assess, premises? and area will best

premises from the outside, and

create more space and facilities? whether its internal layout and

design match your business’s needs.

BEFORE YOU START 46 47

Choosing Where to Locate Your Start-Up

cash grants or reductions in local Does it suit your business? taxes, are offered to new Make sure the area you choose is NEED TO KNOW

by visiting potential locations. If ❯ Lease term is the minimum example, siting an upmarket beauty businesses. Get a feel for an area right for your style of business. For

period covered by the lease.

owners and ask them about the ❯ Lessee is the person taking out to work. Try to view the location possible, chat with local business salon in a rundown area is unlikely

a lease on a premises from the

dis cover why, as the reasons may failed there in the past, try to in your target market. ❯ Renewal options define when area. If enterprises like yours have from the perspective of customers lessor, the property owner.

Assess the level of competition and under what terms the lessee

be linked to the location. you will face in a particular area can extend the lease.

Check whether there are any and whether this will impede the ❯ Security deposit is the amount

restrictive local regulations that selling of your goods or services. paid by the lessee at the beginning might affect your business or any Having competitors nearby is not of the agreement. This sum is planned developments that could always a bad thing. If you run an returned by the lessor at the have a detrimental impact on the end of the lease. antiques shop, for example, your area. Also consider your space and potential customers are likely to be service needs and any permissions browsers, so a similar shop nearby or licenses you may require. may actually increase your traffic.

Can I rely on people Is my business What can I afford?

booking my service seasonal? This is a critical in advance? Most rental or lease question because If you offer a service such agreements can last the cost of premises is

as hairdressing or beauty treatments, at least one year, or longer. If your fixed, whether you are trading well

you can choose whether people need business is seasonal or dependent or not. Make sure you are aware

to book ahead or can just show up. on changing tastes and trends, you of all the costs involved and figure

If you think you can rely entirely on may want to explore a short-term out what you can afford over the

appointments, then a tucked-away lease or consider alternatives, such term of your rental or lease, based

location for your salon, such as a quiet as setting up a “pop-up” facility. on realistic trading estimates.

side street, should not be a problem.

Do I need passing What is available? Are there any

trade to make my other options? You will be lucky to TO LET business work? find ideal premises in Instead of having

Attractive premises on the perfect location premises on a main

a popular street is important for a at the right price, so you will street, could you sell from a mobile

business that relies on drawing in probably have to compromise van or bus? Perhaps you could rent

passersby. However, this usually on at least some features. Make space from another small business?

comes at a cost. If you are starting a list of “must-haves” and a list of Locating a small craft store within a

a bookkeeping or accounting “nice-to-haves” and be prepared café could be an advantage for

business, for example, an accessible to make sacrifices. both businesses.

office in a professional-looking

building may be enough.

Sourcing Products

and Supplies

Consider how and where to find the supplies you need to produce

your product. Look for stock that is both safe and ethically produced,

and weigh up whether to source it locally or internationally.

Choosing suppliers A distributor (a firm that distributes needs of your business. If buying There are various factors to goods on behalf of manufacturers) from abroad, be aware of language consider when deciding on a will probably sell smaller amounts, barriers: communicate simply or supplier, including price, safety, though most likely at a higher price. consider using a translator. quality, and durability of your Small producers offer a personal product, along with the (proven) service, but they may not be able

reliability of your supplier. Ask who to guarantee continuity of supply, Make, reuse, or buy?

a manufacturer or factory, but it It is cheaper to buy direct from make the product yourself rather than Research suppliers by visiting buy it in. But always consider if this trade shows and networking time would be better spent enhancing might not be possible to buy your industry-standard documentation. In some cases, it might be better to ethical and safety standards. else they supply and if they have fast turnaround, or all relevant

with people in your industry via or running other aspects of the

supplies in small enough quantities, LinkedIn or similar websites. Visit business. Sourcing recycled, reused, and you may be asked to put down possible suppliers to see how they or repurposed items and materials a deposit on initial orders. operate and ensure they grasp the could be a cheap and ethical option.

Reused or repurposed Small, local suppliers

Reused or vintage items have Buying from producers nearby supports

environmental benefits and may be the local community and reduces delivery

cheaper, but maintaining consistent quality, miles. However, local producers often

quantity, and safety may be a problem. carry a limited range of goods and

can be more expensive.

BEFORE YOU START 48 49

Sourcing Products and Supplies

IMPORTING GOODS

Importing (see pp.212–215) may offer the widest choice

of suppliers and products, but expect some issues with

speed and reliability of supply: some countries, such as

China, can change import/export terms at very short

notice. It can also be harder to build a relationship

with a supplier who is far away.

❯ Check whether any special licences are needed: for

example, some countries prohibit the export or import

of antiques without a licence.

❯ Assess how much tax or import duty is to be paid,

and agree trading terms with your supplier.

❯ Set a delivery date with the supplier and agree the

means of delivery.

❯ Discuss potential problems in advance; agree what

will happen, if, for example, goods do not arrive on time.

❯ Work out how potentially longer shipping times might

affect your business processes or impact on customers.

❯ Investigate ethical standards : are factory conditions

acceptable? Is the supplier environmentally friendly?

❯ Make sure you understand every link of your supply

chain (see pp.180–181).

Major national suppliers Sourced internationally

Items that you need to order regularly and Items produced overseas may be cheaper.

in bulk may be easier to source from major However, you will have to factor in a longer

national suppliers. While cheaper, your lead-time and may need to outsource

competitors may be able to buy the checking of your items before they

same stock. are shipped.

Outsourcing Marketing

Tasks If your business needs specialist marketing expertise, a particular

Finding professionals to help with specific operational form of marketing, such as social

tasks costs money, but can save you time and may media, or you want to launch a

bigger campaign than you can

increase your chances of commercial success. handle in-house, you will need

to go to professional marketers.

Identifying your needs ❯ Creating content Getting your business up and ❯ Managing social media civic organizations. You could also available from government or running can seem overwhelming, ❯ Running email marketing consider paying a professional for with many aspects to coordinate, their services. This could be a such as dealing with customers, one-off commission, such as a web handling your accounts, and other designer creating a website, or it legal requirements, plus providing may be an ongoing arrangement,

your goods or services. However, such as using a logistics company Website design this can be made simpler by to store and ship your products. and maintenance looking at each function and These decisions will depend on Regular website deciding whether making use of the type of business you are setting maintenance is crucial external help is a good option. up: a home-based, graphic design for an e-commerce business

specific skills is one possibility, specialist, who may also offer for end-of-year accounting, whereas website design. Occasional while another is to seek out small Utilizing friends and family with and can be outsourced to an IT studio might need outside help only

a restaurateur may need a wider maintenance will suffice for less

business services that may be range of services. website-dependent businesses.

❯ Managing updates

NEED TO KNOW ❯ Hosting website Using third parties ❯ Search engine optimization

❯ Inventory describes the goods Although keeping outgoings to a

produced, or in production, minimum is crucial for any new that will be sold by a business. business, paying for outsourced

❯ Logistics manages how things services from a specialist can save

are moved between the point of money in the long run. There are a IT production to the consumer, wide variety of services you may need. For occasional or including packaging, distribution, An independent professional can longer term IT needs, and transportation. provide a fresh perspective, pointing freelance or agency

❯ out problems or suggesting solutions. experts can improve computer SLA (service level agreement) is

a contract that lists the type and However, before enlisting external networks and operating systems,

value of outsourced services, services, it is important to be clear as well as maximize the along with any conditions, such performance of your website. about the specific needs of your

as annual maintenance. business and have an idea of budget. ❯ Developing apps

❯ Ask for quotes before making a Warehousing is the storage ❯ Implementing new technology and management of goods decision and research the outsourcers ❯ Troubleshooting waiting to be sent out to thoroughly. If there are no reviews

distributors and consumers. online, ask for examples of their work

and references from previous clients,

and never pay for anything upfront.

BEFORE YOU START 50 51

Outsourcing Tasks

Customer care Logistics Manufacturing A customer relationship Outsourcing logistics Unless your product specialist can respond, means that when orders is unique, few small on your behalf, to your come in, someone else businesses will invest

customer calls or emails in a timely handles their fulfillment and in building a manufacturing manner, as well as provide after- distribution, along with warehousing, plant; the most viable alternative sales follow-up, if required, and product inventory, and insurance. is to use an existing manufacturer.

❯ or samples of your product. Handling sales ❯ Managing inventory ❯ data management. They can also produce prototypes ❯ Warehousing

❯ Designing products for Dealing with complaints ❯ Packing and shipping manufacture ❯ Customer service training ❯ Producing components

❯ Assembling products

Payroll

A payroll provider

charges a monthly fee

in return for handling

the payment of staff wages,

automatically deducting amounts

owing for tax and insurance.

Using a bookkeeper is another,

cheaper way to run payroll and

monthly sales data.

❯ Managing payroll

❯ Data entry and processing

❯ Distributing paychecks

Recruitment

Finding just the right

Accounting person for a position Legal and HR

Accountants can help can be a struggle. A solicitor can help you

with the initial business A recruitment agency may draft business contracts setup, submit annual help, producing a short list of and legal agreements,

tax returns, or provide monthly or candidates and charging a as well as guide you on the latest quarterly services. Fees are tax- one-off fee or a percentage regulations. An HR advisor can assist

deductible, and it is one of the most of the new recruit’s salary. you with staffing issues and contracts.

commonly outsourced services. ❯ Headhunting for senior roles ❯ Drafting licensing contracts

❯ Preparing tax returns ❯ Providing contract staff ❯ Drawing up business partner ❯ Running monthly sales data and rental agreements ❯ Workforce planning

❯ Ensuring payment of sales tax ❯ Preparing employee contracts

Striking a Balance

Running your own business can be exciting, challenging, and

highly rewarding, but it is important not to ignore other aspects

of your life. Striking a healthy work-life balance is essential.

Setting boundaries If you have employees, consider how Starting your new business is both you can help maintain their work-life exciting and highly demanding. balance, too. This may mean a flexible You have to put in time and effort, approach that focuses more on their but long hours can take their toll, productivity than on being present for affecting your relationships and a set number of hours per day. This your health. Try to draw clear approach also helps build a happy, boundaries between work and dynamic team. leisure. To create a good work-life

balance, aim for routine working

hours, starting and finishing at the

same times each day, and make Work-life balance sure you take a lunch break. If you

are based at home, try to mark the While your business may suffer if transition from work to leisure with you are distracted by personal an end-of-work ritual, such as going worries, your partner or family for a swim, walk, or jog. may also feel neglected if you

Set boundaries around physical are always working. It is

possible to get the balance

spaces to separate work and home right. Agreed routines and areas. You might want to establish good communication a dedicated workspace at home, can ensure that your ideally a separate room or another work life and home area reserved solely for work. If you life complement have sufficient resources, you could each other rather consider building a shed to work in than clash

or renting an office, studio, or head-on.

business space elsewhere.

MANAGING STRESS

❯ WORK LIFE

Take regular breaks throughout the day.

❯ ❯ Plan out each day; carefully time–manage meetings

❯ Exercise to clear your head, relieve stress, and and set specific times for tasks like checking emails. open your mind to new ideas. ❯ Try different ways to improve productivity. Do not neglect your diet. Junk food causes sugar ❯ Delegate when it makes sense spikes, which can leave you feeling hungry and tired. to do so.

❯ Practice meditation or mindfulness, together with

deep-breathing exercises to relax your body and mind.

❯ Stick to a sleep routine, based on your natural

sleep-wake cycle, to ensure you get the rest you need.

BEFORE YOU START 52 53 Striking a Balance

30 % MAKING IT WORK ❯ Find a mentor to bounce ideas off. Local chambers and members of small business groups associated with your industry can offer peer mentoring owners report or networking events, and it can be helpful to talk to others who working more than understand the pressures of running a business. 50 hours per week ❯ Stay social and meet up with friends to keep you grounded and www.thealternativeboard.com, 2013 put work concerns in perspective.

❯ Draw up a schedule to block

out work and leisure time

activities, and maintain it to

monitor balance.

JUGGLING

PARENTHOOD

Childcare is a challenge for all

working parents and especially for

those who run their own business.

Organizing work around childcare

responsibilities can help and is why

parents often choose to start a

home-based business.

❯ Instead of working traditional

9–5 hours, parents may choose

HOME LIFE to work from 9 a.m. until 3 p.m.,

stopping work to collect children

❯ Spend quality time with family, but also make from childcare or school, then

sure you find personal time just for yourself. spending time as a family before

❯ Plan weekends and regular breaks for resuming work once children

activities you can all do together. are in bed.

❯ Share domestic tasks. ❯ Parents can share the load by

taking it in turns with co-parents

or friends to do the school run

when they have time-sensitive

tasks, such as presentations to

finish or urgent emails to send.

Working with

Family and Friends

You can make a success of your business by working with family and

friends who share your vision. However, it is advisable to set rules

and boundaries that keep your working relationships professional.

Working together team members are more flexible Facing issues There are many advantages to and more willing to make sacrifices Start by gathering your team working with family and friends. than other employees might be. Yet together and asking everyone to You know and trust each other and to avoid misunderstandings that write down their hopes for the can be more relaxed. You all have could damage that bond and lead new business—and their concerns. a vested interest in the business, to resentment or disappointment, it Discussing these points, which are shared values, and a shared desire is important to set guidelines and likely to vary, leads to a greater to succeed, which often means that put processes in place early on. awareness of everyone’s perspective.

Agreeing the rules

The bonds you share with family and friends are intensely personal, so working with them is both a pleasure and a challenge. Agreeing on roles and settling on job descriptions is an important first step. You must also decide practical details, such as vacation time and how expenses will be claimed. Discussing your goals can help cement the team, but you will need to be able to address disputes, too.

Agree on roles Create formal processes

Try to be objective and think about what value each Consult your team members and agree to guidelines

friend or family member is adding. They may be on how the business will run. These may include voting

providing finances, or perhaps they came up with the rights, rewards, vacation time, and how expenses will be

idea for a new product or service, or have useful access claimed. They should also cover what will happen in the

to contacts. Knowing the strengths of each team member event of a dispute, such as two people wanting to take

will help you and others plan what they should do. Agree their vacation at the same time, which is not uncommon

on roles with them and create job descriptions as you in family businesses. Once decided, put the agreement

would for any other employee. in writing.

BEFORE YOU START 54 55

Working with Family and Friends

You should also create a charter wrong or illegal that could damage NEED TO KNOW

(see pp.28–29) to establish team the enterprise, you need to respond

It is important to draw up a legal ❯ Buy-sell agreement sets out in the company. Failing to act could members’ roles and responsibilities. as if they were any other employee

how shareholders can sell stock,

agreement that sets down any set a terrible example to other who can buy it, and under what

investments in the company that members of the team. circumstances it can be sold.

individual members have made Working with friends and family ❯ Owners’ council is when the

and establishes how assets and can be fun, but the team must business owners gather to discuss

investments would be divided if operate professionally. Good their goals and direction and relay

the business does not work out. communication is key to settling their thoughts to its board.

While the bonds of friendship disputes and misunderstandings ❯ Succession planning involves

and family can create a supportive and dealing with the changes that deciding who will lead your new

be boundaries in place that prevent for any reason. Without such a grows. Your strength is the stake plan, the business could fail. special treatment. If a friend or workplace environment, there must business if you are unable to work every business experiences as it

you all have in the business and the

family member does something shared goal of making it a success.

“If you want to walk fast,

walk alone. But if you want

to walk far, walk together. ”

Ratan Tata, former chairman of Tata group

OUR GOALS

Create shared goals Avoid and resolve conflict

Discuss the goals of the business and the strategy Good communication is essential to avoid conflict.

and tactics you believe will achieve them. Make sure If a problem arises, try to talk it through. Do not rush

everyone has a chance to contribute their ideas and to judgment, but listen to your friend or family

that all team members understand what needs to be member. Create a process, if possible, for resolving

done. When working with friends and family, it is serious disputes. Overwork can make people

easy to assume that they are thinking the same thing impatient and irritable; remember that it is just as

as you, but it could be the case that each person has important for those involved in family businesses as

a slightly different picture in their head. it is for others to have time for leisure and relaxation.

FIRST

STEPS

Choosing a Name

First impressions count, so consider carefully when deciding on a name

for your business. Think about how to make it descriptive, catchy, unique,

and, above all, memorable, so you stand out from the competition.

Getting it right Formal names can convey ideas of reliability and trust

Since your company’s name is likely to be the first but may lack youthful appeal. Your name should be thing customers note about your business, it is crucial simple, easy to say, and easy to remember. A name to get it right. Decide whether it should personify what that is fun, clever, or humorous may grab attention, but

your start-up offers, reflect your values, or capture your be careful because wordplay may not translate, and brand’s personality (see pp.60–61). you risk your start-up not being taken seriously.

Sole proprietors looking to build a personal brand Research your business field to make sure that your

might include their own name and a description of preferred name is not already in use. If it is similar to

what the business does. Businesses targeting local another company’s name or trademark (see pp.96–97),

clients might include their location in the name. you may have to change it—or face a costly lawsuit.

???

What makes

a good name?

The best names are memorable Unique Simple

for the right reasons—they are

accessible and have positive Your company’s A simple name with

easy to say, write, and spell, unique to avoid legal easier to recall, say, issues or confusion and search for— and should be an asset to associations. They should be name needs to be fewer syllables is

your business. If you plan to with other brands. Skype or Twitter, for Consider making up example. Customers trade internationally, check a new word. IKEA, might abbreviate how your name translates for instance, is an longer names to a in other languages. acronym of the less favorable

name of the founder, version. Unusual

his family’s farm, and spellings can also

his home town. backfire, so take care.

FIRST STEPS 58 59

Choosing a Name

REGISTERING YOUR NAME BE AWARE

You must register your company’s their businesses only if they choose ❯ Search national business name with the appropriate a “doing business as” name. Whether registers to see whether your government agency (see pp.212–215), sole proprietor, partnership, or prospective name has already and perhaps at local or state level, company, make sure you register been taken (see pp.212–215). too. Depending on the legal form a domain name for your business Sole proprietors can consult

name may end in a suffix such as LLC address that you will use for your ❯ Check trademark registers and (Limited Liability Corporation) or Inc. website. While a fee is payable, you choose for your business, the (see pp.114–115). This is the internet local website listings.

(Incorporated). You must also registering will give you sole use (see pp.212–215). intellectual property office sites register for corporation tax when of that address. The domain name

Sole proprietors and partnerships cannot register one that is taken, your business name, but it helps if as well as social media, too. are required to register the name of you register your business name. ❯ Look at domain names, as you does not have to be the same as

the two are fairly similar.

Descriptive Meaningful Unusual Alliterative

You might decide A name that has Company names Using alliteration— on a name for your meaning behind it that seem unrelated starting words with company after to the nature of the makes for a more the same sound or compiling a list of compelling brand business may also be letter—makes names brief descriptors of story. LEGO, for highly successful, as fun to say and is what your business example, comes from they can capture another way to make does. Facebook, attention. Good the Danish term leg them memorable. WeChat, and Netflix god, to “play well.” examples include Brand names such all have names that The name Hotmail online retailer, as Coca-Cola or convey their arose from HTML, Amazon, and IT and TikTok, for example, purpose or function. media giant, Apple. the language used stand out through

to write web pages. their alliteration.

Developing

Your Brand

A brand is a tool for helping a business stand out from the crowd.

Creating and refining your own brand will enable you to inform

customers what your business is about—and what sets it apart.

Creating a brand In order to attract sales, the particular personality, such as Your brand is more than just a owners might promote the idea a spirited or youthful outlook logo or design used for advertising. that the product is sustainable, (see below). It is a means of communicating ethical, and healthy. By building You must be consistent and your company’s purpose and these values into their brand, the authentic, however. For instance, values to your customers. start-up owners can convey the if customers discover that the drink

Imagine, for example, that a benefits of their product to contains artificial ingredients or is

start-up develops a new fruit drink customers. In addition to its values, sourced unethically, they may lose made only from organic ingredients. the brand might also embody a faith in your brand.

Deciding on your brand

Consider what your customers are looking for, what you BRAND PERSONALITY are offering, and what your company stands for. Ensure

that these align. Your brand is about conveying your values,

such as being ethical, along with your “personality,” which

is the public perception of your company’s character. Traditional Bold

Reliable, Carefree,

comforting, spirited,

familiar youthful

Sophisticated Rugged

Exclusive, Tough, strong,

romantic, outward-bound,

elegant masculine

Developing the concept Choosing your brand personality

Consider the benefits that your customers derive from Your brand’s personality is the human characteristics

your products or services. Then decide what ideas you that you would like to be linked to your brand. So, would like customers to associate with your brand. This if your target audience is involved with sports, for could be notions such as “traditional and reliable,” example, you might want your brand’s personality “sophisticated and exclusive,” “rugged,” or “bold.” to embody energy and vibrancy.

FIRST STEPS 60 61

Developing Your Brand

It is wise to register your brand as DEFINING BRAND IDENTITY your trademark (see pp.212–215), so

that rivals cannot imitate it and French professor of marketing strategy Jean–Noël Kapferer created the Brand

undermine your business. Identity Prism in 1996, with six aspects he considered vital to brand identity.

Personal branding Physique The brand’s physical Personality The type of

Developing a personal brand appearance, materials, and qualities, person the brand would be

can also be highly beneficial for including its packaging and color. if it were human.

is a reflection of how you present Relationship The bond between Culture The building of a cult the brand and the consumer, freelancers and contractors. It

yourself to colleagues and clients. following, closely allied to the which is particularly important for brand’s country of origin. Like a business brand, a personal retailers and the service sector. brand encompasses outward

appearance but is also about your Reflection The outward mirror: Self-image The inward mirror:

behavior—if people are to trust the type of person the consumer how the company perceives its you, your actions must be genuine perceives the brand to be aimed at. own brand. and consistent.

Audio-visual elements

Use memorable symbols,

phrases, and sounds that

resonate with customers.

Brand name Preference Empathy

Choose a name that reflects

your brand concept; make

it both different and

memorable (see pp.58–59).

Design and packaging

Pick a style that reflects your

image and values. If you are

a green business, choose Loyalty recyclable material.

Strapline

Use a few words to

encapsulate what your

business is about. Keep

it short and snappy.

Communicating your brand identity Nurturing the relationship

Brainstorm how you can best convey your brand to Branding is really about creating a lasting relationship with

potential customers, perhaps through eye-catching the customer, (see (pp.62–63). People will remain loyal and

design, a distinctive logo, and an unforgettable slogan. be preferential to your brand if they can empathize with its

Remember that you may need to communicate your concept, personality, and values. Ensure everything you do

brand across more than one media platform. reinforces this relationship and does nothing to harm it.

Telling Your

Story

People like to buy from businesses they feel reflect their own beliefs. Creating

a story around your brand will encourage your customers and clients to feel a

connection with you, leading to a sense of commitment and loyalty.

Boosting your brand While customers and clients product or service from that of More than just a description of how consider price, quality, and competitors and encourage trust, you began your business, a brand availability when making a choice, loyalty, and repeat business. A story reveals your personal reasons many prefer to buy from people and powerful story also makes your and motivations for doing so and companies they like and respect. business more memorable—much underlines what it stands for. If you can convey the personality more effectively than logos and

When people choose a product or of your business to your customers slogans do. Putting people at the service, their decision can be based and clients in the form of a story, it heart of your story will attract as much on emotion as it is on logic. will help you differentiate your potential employees, too.

How to tell the story DEVELOP YOUR STORY

At its heart, your story must encapsulate your

Your brand story must attract the attention business’s origin and core values. Think about the

of your audience and maintain their interest problem or personal goal that drove you and the

throughout. If you sell ethically sourced goods, insight that inspired you to solve that problem or

explain why, what you have seen, and what achieve that goal. Describe the ways in which your

motivated you. Keep it concise and compelling business meets those expectations today, and tie this

but also authentic and unique to your business in with your vision for its future (see pp.24–25).

so that it appeals to your target audience.

“If people love a

brand story, 55%

are more likely to

buy the product

in the future.”

The Brand Storytelling Report, Headstream, 2015

FIRST STEPS 62 63

Telling Your Story

Shaping your story BE AWARE It takes time and planning to create an effective brand

story. Begin by asking yourself what motivated you to ❯ Do not make false claims. If your story is not genuine, start your business. Perhaps it was because you could when the truth emerges, your customers will no longer not find something you wanted to buy so decided to trust you, and your brand will be damaged. make it yourself or because you were passionate about ❯ Focus on what makes your business different. Your a particular product or service and excited to make it story must be unique and stand apart from that of more widely available. Look beyond the potential your competitors.

financial rewards and consider what makes you ❯ Make sure that daily operations live up to the

excited about your business, and then jot down some story you tell your clients, and reflect the message

words that express your emotional responses. behind your brand.

Think about your customers and clients. How would ❯ Encourage colleagues to understand and embrace you like them to feel when they trade with you? What your business’s core message and the values you want

would you like them to say about your business? Note to convey to your customers and clients.

the answers to these questions and keep reviewing

them. You can then weave the elements you have

compiled into a positive and convincing brand story.

TARGET YOUR AUDIENCE SPREAD THE WORD

Not everyone will be your customer or client, and not Share your brand story on the social media sites

everyone will share your values, so tailor your story to most used by your customers (see pp.140–141). If you

those who will and do. Use the information you have have a website, post messages, images, and videos

gained about your market, and potential customers relating to your story on it. As you gain more

and clients (see pp.38–39), to target your brand story customers and clients, actively engage with them

accordingly. For example, if you have identified that to build closer relationships. Try to gain the support

your customers or clients are likely to have families, of online “influencers” who may share your story

weave a family element into your story. with their followers (see pp.198–199).

A Marketing Mix

When planning a product launch or marketing campaign, you need to

consider four key elements that together make up the “marketing mix”: the

product or service itself, its price, how it is promoted, and where it is sold.

Using the mix The next is the price structure, reflecting what your

The success of your product or service—however target market will accept. You must then decide how

brilliant or innovative—relies on sales. To achieve good to promote your offering and where and how to sales, you need a well-targeted marketing approach, distribute it. Each of these ingredients is a powerful

using a mix of four ingredients. The first is your tool you can use to persuade target customers that

product or service itself and what it offers the customer. your product or service is what they want and need.

4Ps—business- $

oriented

The product, price, promotion,

and place marketing mix is an PRODUCT PRICE

approach that is business-led

rather than customer-oriented. ❯ Will the product design, size, ❯ What is the usual price point for this

features, color, and packaging type of product?

appeal to customers? ❯ How much is the customer willing to

❯ What unique benefits and pay based on their perception of the

solutions does the product offer? product’s value?

❯ How does it compare with ❯ How might minor tweaks to the

competing products? price affect sales volume and profit?

4Cs—consumer-

oriented

Commodity, cost, communication,

and convenience emphasize that

ingredients in the marketing mix. COMMODITY customers are influencing the COST

❯ Has the product been designed, ❯ What will attract the customer?

developed, and possibly even Premium quality? Low cost?

modified to meet and exceed ❯ Do customers make buying customer expectations? decisions for this kind of product

❯ How and why will the design, based on quality or on budget?

size, features, color, and packaging ❯ Will target customers think it appeal to a specific niche market? represents good value?

FIRST STEPS 64 65

A Marketing Mix

Product, price, promotion, and place make up the “The 4Ps was about ‘What

“4Ps,” the traditional marketing mix. Today, many does the marketer want to businesses use the newer “4C” mix that combines

commodity, cost, communication, and convenience. say?’ while the 4Cs asks

This approach shows the increasing importance of ‘What does the customer focusing on your customers and their experience and

of seeking out niche rather than mass markets. To need to hear that the get it right, you must define and analyze your target

market, then examine each element in the marketing marketer can say?’ ” mix to ensure that it will attract customers and meet

their expectations. Robert F. Lauterborn, originator of the 4Cs

7Ps

In addition to the original 4Ps,

some companies use a model that

adds these extra 3Ps:

PROMOTION ❯ People Are they the ideal mix PLACE

to create a team that exceeds

❯ customer expectations with the Which combination of ❯ Where do customers prefer to best level of service? marketing channels and materials shop for products such as this? ❯ Process Are order-processing, will be most effective? ❯ Which distribution channel is and customer complaint and ❯ What type of promotions do preferred? Is it online, shops, or query systems in place and customers generally prefer? catalogs? sufficiently effective? When are customers ❯ most likely ❯ How can this offering stand out ❯ Physical environment Is the to respond to promotional calls from competitors’ products sold place or website from which the to purchase? in the same place? product is sold attractive enough?

7Cs

To the original 4Cs, some businesses

add an extra 3Cs. These are:

❯ Corporation Does the company

structure, its competitors, or

COMMUNICATION stakeholders unduly influence CONVENIENCE the marketing drive and results?

❯ ❯ Consumer Do you know what What type of messages get ❯ How convenient is it for busy

❯ and do the marketing materials the product into their hands? What marketing information and product itself address this? the best customer response? the customer needs and wants, customers to find, buy, and get

❯ this process as simple and ❯ Circumstances Can the business How do customers prefer to cope with adverse external factors will interest your customers? ❯ What can be done to make

receive marketing messages? Are straightforward as possible? that might impact sales? the messages relevant to them?

The Selling

Process

You may have great products or services, but you still have to sell them.

To do this, you will need to understand the selling process and know

how to build relationships with customers to generate further sales.

Understanding sales channels Fulfilling orders There are many routes, or channels, to bring goods Once you have made a sale you need to fulfil the order.

and services to market so that consumers can buy Think about your customers’ expectations, such as

them. These sales channels range from online and when they will expect to receive their order, and make

retail to selling direct to the customer and selling the process straightforward. You may decide to take

through a third party. Before deciding what channel is orders and despatch the goods yourself. However, as

right for your business, reflect on what makes people your business grows, you may want to outsource this

buy your type of product or service and where they buy task to a third party, such as an e-fulfilment company

them from. Consider the qualities of your product or (see pp.74–75). service. Are customers more likely to buy your product

if they can see and feel it? Is yours the type of service

people can buy online, such as producing illustrations? The sales funnel Whatever the approach, there are basic principles to

follow when you are selling. Know your audience and A good way of thinking about the selling process speak to them in a way that they can relate to. If you is imagining it as a funnel—one that shows the are selling a piece of technology to people who are not stages prospective customers go through before technically proficient, use words they will understand. making a purchase, each step bringing them closer If you are selling face-to-face, do not describe at length to becoming a customer. At the top of the funnel, why your offering is so good. Listen to your customer there is a large number of prospective customers, and let them know that their opinions matter. but these become fewer and fewer as you descend

through the funnel to the people who actually buy

your goods. Your job is to make sure there are

enough customers in the funnel to generate

sufficient sales for your business.

BE AWARE

❯ Thinking about price is one of the most important “We exist as factors when selling. Find out what your customers

really value, and be prepared to adjust your price. businesses

❯ Pay attention to your existing customers for they are

your best prospects for future sales. to serve our

❯ Tailor what you say to different types of customers,

based on their individual buying behavior. Do not customers use the same message for everyone.

❯ Beware of not listening enough to your customers. and they are

Your business will benefit from what they tell you. always right. ”

Manish Chopra, CEO of Little

FIRST STEPS 66 67

The Selling Process

1 Awareness

This is the stage at which prospective customers become aware of your product or service. Promote awareness through activities such as writing blogs, being active on social media, advertising, and putting your products on display. The key is to focus their attention on your business and away from others.

2 Interest

Once you have gained attention, you need to keep it by

creating interest. Consider how you can persuade someone

to spend more time looking at what you have to offer. A good

way to do this is to think about what problem you are helping

the prospective customer solve and focus on that.

3 Decision

At this stage, your prospect is seriously thinking about

making a purchase and is probably weighing alternatives.

Use supporting material to remove any doubts and help

them reach their decision. Provide testimonials from satisfied

customers or helpful comparisons with other products.

4 Action

Once your prospective customer has made a

decision, you will need to encourage them to

act on it. Make it obvious how they complete

their purchase and make it as easy as possible.

Online Selling

Selling online gives you access to a much wider market, while also

saving on the cost of a “bricks-and-mortar” shop. There are several

platforms you can use to sell to customers.

Identifying online opportunities To sell online, you have a number of options: to

There are obvious advantages to selling your products set up your own website; to use an e-commerce

online, such as avoiding the ongoing expense of site-builder; or to sell your products through an

maintaining a physical shop, being able to sell at any online marketplace. time of day or night, and reaching a much wider

market. On the other hand, you face the challenges Using third-party sites of customers being able to find you when searching While creating your own site gives you complete

online (see pp.118–119) and having to compete with control over how it looks and functions (see pp.114–

all the other thousands of offerings on the internet. 117), it takes time, money, and expertise. In contrast,

Choosing your platform Your own website

There are several ways you can sell online, with Building your own website allows you

advantages and disadvantages to each approach. to create a virtual shopping experience

The platform you choose will depend on your product. that reflects your brand. You can also

If selling a personal service, then your own website use additional software, allowing your site to take

may be preferable. If your product is very expensive, secure payments, and process invoices and shipments.

you may want to choose an online marketplace that

charges a smaller commission on your sale—or even

use a range of platforms for your various products. PROS

❯ Website promotes your unique brand

❯ Easy to change when necessary and according to

In 2018, how shoppers use it online global

❯ No concerns about changing internal algorithms, as

$2.8 e-retail sales found on online marketplaces, such as Amazon amounted to Office for National Statistics, 2020 ❯ Requires technical knowledge to create and maintain tn ❯ Easy to tailor your structure to improve searchability

using search engine optimization

CONS

❯ Takes time and money to maintain, market, and

host online

❯ Payment and data security are essential and your

responsibility: you will be liable for any breaches

❯ Larger competitors’ websites are easy to find and

may offer customers a better shopping experience

FIRST STEPS 68 69 Online Selling

e-commerce site builders, such as Shopify or Wix, SEARCH ENGINE

offer ready-made website templates onto which you OPTIMIZATION (SEO) simply drag and drop your content. They also provide

secure payment systems, customer data protection, If you are selling on your own website, rather than an

and elements such as shopping carts, search bars, online marketplace, it will be up to you to make your site

wishlist functions, and review options. visible to potential customers. Most people search the

Alternatively, you can sell your products on large internet using a search engine, such as Google, which

online marketplaces, such as Amazon, eBay, Etsy, creates a list of sites related to your search term. As most

or Facebook Marketplace, which also have the users only view the first few options listed, website

necessary infrastructure. Whichever option you owners compete to be as close to the top of these lists

as possible. There are various ways you can optimise

choose, your customers will buy your products only your website for search engines and improve your

if they like what they see and read. Be sure to describe ranking (pp.118–119). them clearly and accurately and include attractive,

but honest, images.

E-commerce site builders Online marketplaces

These website builders specialize These sites are like huge, online in e-commerce and offer software supermarkets, where thousands

services for free or by subscription. of products are listed internationally.

You can choose from a template and fill in information To sell on these sites, you just need to create an

fields to create a site and use the shopping cart account, choose a selling plan (in some cases),

systems to sell, ship, and manage your products. and then list your items.

PROS PROS

❯ Easy to set up, requiring little technical knowledge ❯ No need to create or market a website

and no ongoing maintenance ❯ Easier to market your product

❯ a global audience ❯ Multilingual and can deal with different currencies Provides secure ❯ Commonly multilingual , so more likely to appeal to ❯ Massive marketplace with international reach

e-commerce tools, with some guarantees and insurance payment and data systems, and other ❯ E-commerce tools are all supplied

CONS CONS

❯ Fees are payable, either as a subscription or as ❯ Thousands of sellers make it hard to stand out

commission charged on sales—typically 2–5 percent ❯ Referral fees (the commission the sites take when items or more are sold) can be high—up to 45 percent depending on

❯ Customer service terms and conditions are set by the site and product sold

the site builder, with no flexibility ❯ Site structure and selling terms are fixed and may

❯ Site structure is fixed by the site builder, which might not suit your business

not be optimized for search engines

❯ Design is limited to the site’s available templates

Providing

a Service

When clients sign up for a service, they do so on trust. Unlike buying a

product, there is nothing to handle or see before they part with money.

Every aspect of your service must meet, or exceed, their expectations.

Making promises hopefully even exceed it. Examine research their requirements Providing services involves using and analyze all the various stages carefully, because their needs your skills and knowledge to satisfy your client will have to go through are likely to be very specific. the needs of your clients—you as part of their experience with It is important that you are clear and what you do must meet their you, from seeing your marketing about exactly what your clients will expectations. Because of this, the material to using your service and receive when they sign up to, and relationship between you and your their satisfaction with it afterward. pay for, your service. To ensure clients is closer—and more clarity, write an SLA (Service-Level

important—than it is for a business Identifying expectations Agreement), which defines and that sells a product. By offering a When planning your business, agrees the commitment between service, you are making a promise always consider the services you you and your client in terms of to do something for your client and intend to offer from your clients’ service quality, responsibilities, satisfy their needs. perspective. For example, if you are and availability.

In order to run a successful planning a dog-grooming service,

service-based business, you must think about the level of service you thoroughly understand your clients’ would expect yourself from such a requirements and do everything business, the kind you would be

you can to make their experience happy to receive, and what would How to create a of buying from you a positive one. encourage you to return there. If

You must also convey a sense of you intend to target a particular successful service trustworthiness—that you will at clientele with your service, such least deliver on your promise, and Maintaining a strong relationship as older or more affluent people,

with your clients is central to running

a successful service business. Treat

MAKING IT WORK relationship building as an ongoing process—one that is essential to

❯ Stay in touch with your clients after ❯ Deal with problems immediately growing a loyal client base. Take time

the initial service; for example, by and try to put things right for clients. to understand your clients’ needs. Be

sending newsletters that will be prepared for those needs to change, ❯ Maintain your passion for what

useful or interesting to them. and look for ways to adapt, enhance, you do to generate enthusiasm and

❯ or add to the services you offer in Keep looking for ways to improve to make your clients feel excited

with whatever is happening in your Most important, always be honest, ❯ Remain alert for related services since the relationship relies on trust, business sector. your service, and keep up-to-date order to keep clients interested. about experiencing your service.

❯ which is easily lost. Regularly try your competitors’ you could offer; for example, if you are a personal fitness instructor, you

services to see what they do, and could also offer a sports massage how you can surpass their offerings. service or nutrition advice.

FIRST STEPS 70 71

Providing a Service

Generating

trust

Your clients will trust you if

you are honest about what you Exceeding

can and cannot do. If you are expectations

unable to offer a particular

service, suggest another business Personalize your service by

that can. Both the potential getting to know your clients and

client and the business showing you care. Own up to

will remember you. mistakes and apologize, and offer

no-quibble refunds. Surprise

your clients, perhaps by

sending birthday wishes

nin nce g from experie or even a small gift.

Creating loyalty

among clients

The key factor in winning loyalty

will be the quality of the service you

provide. Back that up with excellent

customer service, as well as

incentives such as discounted rates,

special offers, easier payment

terms, or other “rewards” for

longer-term clients.

Being easy

to work with

Be welcoming and friendly,

Understanding and put people at ease. Always

what your clients want. Ask Do not assume you know clients. Make sure it is easy to book, pay for, and even cancel clients’ needs reply promptly to messages from

ideas for improving services with people for feedback and discuss your services.People will be more willing to sign up if they feel in control. them. Do this regularly so that

the services you provide can

evolve to meet their

changing needs.

Taking Payments

For your business to succeed, you will need to be able to accept

payments electronically. Give customers several payment options, so it

is easier for them to make purchases and for fewer sales to fall through.

Paying electronically device that reads the customer’s debit or credit To enable a customer to pay electronically (using a card, or the mobile wallet on their phone. Merchant

debit or credit card either in person or online), you need services are widely available, and the convenience

to open an account with a merchant service provider, to both your business and your customers will easily

who will give you access to their e-payment system in outweigh the costs involved. return for a fee. Merchant services provide payment You may be able to manage without using a gateways (for online transactions) and payment merchant account—for example, by asking customers

processors (for use in person), and act as intermediaries to pay via online transfers directly into your business

to communicate between your customer’s source of bank account. However, merchant services not only

funds, typically a bank, and your own bank or other offer the widest range of payment options, but they

type of financial account. Some merchant providers can also help streamline your payment system, helping

offer combined gateway and processor technology. If you provide refunds easily, as well as shouldering

you make sales with the customer in person, you need some of the risk of customers attempting to a payment processor combined with a terminal—a reverse transactions.

How e-payment systems work

With cash use on the decline, e-payment—making the transaction is approved, and payment usually follows

paperless transactions via an electronic medium—is fast later. You might also wish to accept cryptocurrency, such

becoming the main way of making purchases. In the as Bitcoin by choosing a bitcoin payment processing

seconds it takes for an e-payment, the customer’s bank and provider (PSP) and opening a bitcoin account. Customers

your bank “talk” to one another through a payment pay you from their bitcoin wallets, and bitcoins can be

gateway or processor. If the customer has enough funds, converted to your local currency after the sale.

1 Customer provides Authorization Request approved 2 3 account information request sent or declined

Using a terminal, the customer The merchant service provider The customer’s bank inserts, swipes, or taps their card, or gathers the transaction data approves the purchase if taps their phone. When shopping and sends a secure request via there is sufficient money in their online, the customer inputs their a payment gateway/processor account; otherwise, it declines. card or digital wallet details. for approval to pay the seller.

FIRST STEPS 72 73

Taking Payments

OFFLINE PAYMENT METHODS NEED TO KNOW

Not everyone is happy making online purchases via ❯ Acquiring bank is the ❯ POS (point-of-sale)

websites, so if you can offer a range of payment seller’s own bank, which system is software that

methods, there is less chance of you losing sales. receives funds from enables retailers to take

❯ the customer’s bank. customers’ payments, Bank deposit The then wait for the funds send invoices, and customer pays into your to clear. ❯ Digital wallet is any manage data and business account before type of software that ❯ Cashier’s check The stock inventory. the order is sent. enables people to store customer can obtain a their bank details in ❯ PSP (payment services ❯ Wire transfer The cashier’s check at a bank the cloud for making provider) is a payment customer wires money and send it to you to pay payments online. gateway and a merchant from their bank or for the goods or services. PayPal and GooglePay service provider brokerage account into ❯ Cross-border payment are examples. combined into one. your bank account. This platform This is a may take up to 24 hours. ❯ Issuing bank denotes ❯ White-label platform computer program the customer’s bank, refers to a ready-to-use ❯ Check or money order shared with a partner which has issued the computer program that The customer sends you organization that enables debit or credit card in automates the sales and a check or money order, direct payments to be the customer’s name. payment system. which you deposit and made between countries.

69 % of customers abandon a purchase due to a lack of payment options

Baymard Institute consumer survey, 2019

4 Authorization Transaction sent Funds transferred 5 6 or decline sent for settlement to seller

Approval or refusal is sent back The merchant service provider may For each transaction through the card network via the wait to gather transactions from made, the customer’s bank payment gateway/processor. The several customers before sending releases the correct amount seller sees the message and the them to the various banks to of money owed and transfers order is fulfilled or declined. request the payments due. it to the seller.

Fulfilling Orders

If your business sells and delivers products, it is vital to develop

an efficient system for fulfilling customer orders. Customers will

value your reliability, and your brand will inspire trust.

Meeting expectations ensure that each part of the Initially, you might use multiple Over the past decade, advances process, from taking orders and spreadsheets to track incoming in managing orders from sale to packing goods to sending them out, orders and costs, to review and delivery have raised customer is as fast and efficient as possible. update inventory, and to set expectations of quick, convenient To facilitate this, make sure you delivery dates so customers know receipt of goods and their easy have sufficient stock, stored as when to expect their goods. As return. A positive experience at close to your premises as possible, your online orders grow, however, each stage strongly influences so that products can be easily you are likely to need order customers’ purchasing behavior, accessed, packed, and dispatched. fulfillment software to help you so a new retail venture needs to Keep careful records throughout. organize your systems—or you may

Managing the process

A basic fulfillment system should enable you to handle orders promptly, acknowledge receipt of them, keep a record of them manually or otherwise, and communicate with all parties involved—from the manufacturer to the customer. Keeping track of all your inventory (products and materials) is also crucial so that you have what is needed to meet demand. Coordinate each stage with the next one to ensure a smooth process.

Take orders Manufacture or retrieve the product

When a customer places an order, check whether Create the product or retrieve it from existing stock, the goods are in stock or when they will be available. simultaneously updating the inventory and creating When this is confirmed, send an email to the customer, or ordering more items to meet future demand. Then

supplying them with an order number and indicating carefully package, label, and prepare the package an estimated delivery date. for dispatch.

FIRST STEPS 74 75

Fulfilling Orders

all, or part of, the process (see 60

pp.50–51) to maintain a high ❯ E-fulfillment refers to the standard of customer service. processes used by businesses to E-fulfillment companies help with sell products or services online. online sales, handling everything of people buy ❯ Fulfillment management is from storage to dispatch. They can the overseeing of the ordering from the online also tailor their services to your process, from the initial sales % find it more efficient to outsource NEED TO KNOW

needs as a small business. If this inquiry to the delivery of the retailer with the

seems like an attractive option, product to the customer. best delivery choose carefully, ensuring that ❯ Warehouse inventory refers to

the costs are manageable and all the goods and materials that options that the company’s values, services, will be for sale by the company.

and operation are a good fit with State of eCommerce Delivery Consumer

your brand. Research Report, MetaPack, 2017

Distribute or deliver the package Notify customer

Choose an appropriate delivery method. If the Notify the customer when the package ships and,

customer is local, you can hand-deliver the item; if if required, contact them on the day of delivery to

not, send it by post or courier. Valuable items require confirm location, time frame, and any special

an insured shipping method or can be covered by a instructions. The package should include instructions

goods-in-transit insurance policy. on how to return the item, if necessary.

Identifying Initial

Costs

You will need to spend money on items to get your business up and

running. Give some thought to what you need now and what can wait,

and balance the cost of the essential items against your available funds.

Assessing your needs

Each business has different setup needs so will

require a shopping list depending on the industry,

location, and business model. Identify the initial costs

required for the basic setup of your business. These

start-up purchases could be for assets, such as stock

and equipment, or one-off expenses, such as acquiring

a license and creating a website. Remember that once

your business is up and running, you will also have INSURANCE, PERMITS,

ongoing expenses (see pp.78–79). AND LICENSES

It is not always necessary to buy everything; items Depending on your business,

can be leased (see box, below), rented, or shared you may be legally required to

with other businesses. Think, too, about buying hold insurance, permits, and

reconditioned items, which can be cheaper and are licenses in order to operate.

less wasteful for the environment (see pp.100–101). Seek advice to ensure your

business is compliant.

BUYING OR LEASING ASSETS

Some assets essential to starting your business might

be very expensive, such as premises, or be continually

updated, such as equipment or software. When deciding

what initial purchases you need to make, consider

whether it would make sense to buy or lease. If you

decide to buy an asset, you own and control it, but will

have larger upfront costs and have to pay for ongoing STOCK

maintenance. If you lease an asset, however, you rent Raw materials and stock need to

it for a fixed time, spreading payments over regular be bought and stored before

intervals. You avoid a large initial outlay, and payments you can sell. Buy the minimum

may be tax deductible. Leasing is also appealing if there amount of materials to meet

is a high risk of the asset becoming obsolete. However, if sales forecasts in the business

you intend to use an asset in the long term, it is generally plan. This avoids spending too

more cost-effective to buy it than lease it. much on storage.

FIRST STEPS 76 77

Identifying Initial Costs

PREPARING PREMISES UTILITIES

Whether it is an office or a shop, Getting your premises

if your business requires connected to telecoms,

premises you will need to make electricity, and water is vital.

upfront payments. Some costs Many utility providers offer

to expect include deposits and discounted deals for rates and

rent, health and safety checks, installations to business users, so

construction, and decorating. shop around before committing.

EQUIPMENT TECHNOLOGY AND IT

All businesses need equipment , In addition to computers and

whether it is machines to make software, you may also need

coffee or scissors to cut hair. technology and IT support

Make a list of your minimum specific to your type of business.

requirements to see what your This can involve a significant

budget allows before spending investment, so consider buying

on nonessentials. refurbished kit or leasing.

MARKETING AND

BRANDING

You will need to design a brand WEBSITE

and a marketing strategy. You will need to lease your

Anticipate the costs of hiring website’s domain name and its

a graphic designer to create a web-hosting service. You may

logo and any promotion for also want to commision a web

the launch of your business. designer. Secure your website

and the privacy of its vistors by

including online cybersecurity.

How Much Do You

Need to Spend?

Figuring out your start-up costs can be overwhelming. Take

a systematic approach and divide your expenditures by category

to calculate what you do—and do not—need to spend on.

Identifying potential costs three separate categories: assets, initial costs, and

Accurately calculating exactly how much money you regular ongoing costs. You will then need to compare

need to spend in order to get your business up and these three categories with your estimated monthly

running is a critical step. It will help you assess revenue for the first year. The comparison will give

whether you will be able to survive the first few you a realistic idea of your business’s financial health,

months of operation and will give you a clearer idea of alerting you to potential peaks and troughs throughout

whether you might need to raise additional funds. It is the year and showing when you are likely to break

useful to think about your start-up costs as falling into even and then start making a profit.

Estimating start-up costs BUSINESS ASSETS Create a spreadsheet so you can see at a glance the three Equipment and items of value that your main types of spending you will incur when you start business owns. These can be tangible, such as operating. In the first column, note business assets, such a computer, or intangible, such as a patent. as those shown here, and their cost plus the cash in the bank you need to get started. In the second, itemize

initial expenses, such as branding or legal work. Add all Stock/inventory these costs together to give you the amount you need to Items required for retail, spend to get your business to the point of launch. In the hospitality, wholesale, or third column, list regular ongoing expenses. manufacturing ventures

IT equipment

STARTING ON A SHOESTRING Technology such as desktop

computers, laptops, and

cell phones

If your finances are limited, be realistic, and prune your

start-up costs to the bare minimum. For example: Office furniture

❯ Upgrade your computer , rather than replace it, and Ergonomic desks and office

borrow other items from friends and family. chairs to support staff well-being

❯ Buy office furniture and equipment from auction sites,

secondhand stores, specialty resellers, and bankruptcy

sales, or lease special equipment initially. Vehicles

❯ Create your own website using a low-cost website Any mode of transportation

building service, and publicize your business yourself required for delivery or on social media platforms using smartphone images. business travel

❯ Use a fixed-cost contractor for tasks that require

expertise instead of taking on employees.

FIRST STEPS 78 79

How Much Do You Need to Spend?

When assessing how much you need to spend, Prioritizing your needs REGULAR ONGOING EXPENSES Regularly recurring costs that your business will face once it starts operating. Also tax consider your assets first—the essential items and deductible against income. equipment you need to run your business. There will also be other one-off costs (see examples below). In

addition, you will have ongoing expenses payable Utilities

monthly, quarterly, or annually. For each itemized cost, Payable for usage of electricity,

ask yourself whether you really must incur it, and focus water, internet, and phone usage

your spending on what is vital to run the business

right now. Research the cheapest ways to get what you

need, such as buying assets secondhand or renting, IT maintenance

rather than purchasing, equipment (see box opposite). Specialist help for managing

and updating software, your

website, and network security

INITIAL ONE-OFF COSTS

One-off costs that will be required to Raw materials

prepare your business to start operating. Creating a product will require

Unlike assets, they will be tax deductible raw materials to be replaced

against income.

Premises (preparation) Consumables

Installing networks, health and Items that get used up such safety, painting and decorating as stationery, printer ink,

and toilet paper

Website (design and setup) Repayment of loans

Creating and setting up your Any amounts of capital and/or £

website, including security interest paid to lenders for debt

Branding Wages

Graphic design to create your Usually paid monthly for logo and brand appearance any staff on the payroll

Legal work Contractor payments

Applying for permits and licenses; For others who provide services

getting advice on contracts on a temporary basis

Advertising/marketing Advertising/marketing

Getting the message out about For regular paid promotions your business launch and product such as pay-per-click

How Much Do You

Need to Earn?

Every enterprise needs to be financially viable, as most owners will expect to earn

a living from it. When starting out, you will need to calculate your business costs

as well as your living costs to figure out your expected earnings.

Estimating your income However, it is important that your business can deliver

As a business owner, you can draw a salary like an a realistic income within a reasonable length of time.

employee, but you may also take regular sums known Figure out these calculations so that you can add them

as dividends. The business must generate enough to your business plan (see pp.104–105). money to pay for all day-to-day running

costs, such as rent or stock replacement.

However, you will also need to put aside

costs and for financing growth. It is, POTENTIAL MONEY IN THE BUSINESS extra money for unexpected (contingency)

therefore, vital to calculate how much money,

after expenses, your business is realistically First, make a realistic estimate of how much the business may

capable of producing. In other words, when earn over a period of 6–12 months. Then deduct all expenses,

will it start to make enough money to give including investment and contingency costs.

you an income that you can live on?

START-UP COSTS RUNNING COSTS INVESTMENT AND

Income versus investment (which will CONTINGENCY

eventually be COSTS

There is a balance between taking money repaid) out of your business and retaining it to

invest in future growth. In the early stages,

your business is unlikely to make money New or replacement Premises Staff costs equipment as you may have only a few customers or

only a small income or none at all. This may development clients. It is not unusual for owners to take Stock Product or service Rent/mortgage

have to continue for some time to ensure

your company has sufficient funds to remain Consumables and Machinery Market research stock replenishment stable and to invest for the long term.

Website Utilities (broadband, Unforeseen gas, electricity) emergencies

Figuring it out Calculate the amount of money that you will have to pay

To calculate the viability of a business idea, in taxes (see pp.90–91) and add this figure to your costs.

you need to compare how much money it The amount of money left after all deductions have been

will generate against how much you need to made is available for you as a salary or dividend. earn. From this, you will get an estimate to use

as a guide, because the company is not yet

operating. You should be prepared to earn less

at first in order for the business to survive.

FIRST STEPS 80 81

How Much Do You Need to Earn?

“Never spend NEED TO KNOW

your money ❯ Revenue is the total amount of ❯ Retained earnings is money kept

before you have money taken by a business over in the business to support growth. a specified period of time. ❯ Dividends are earnings from the

earned it.” ❯ Profit is the amount of money company that are paid to owners remaining after expenses/payables or shareholders (typically annually) Thomas Jefferson, 3rd US president have been paid. in the form of cash or shares.

YOUR REQUIRED INCOME

Figuring out what you need to earn is similar to determining

what the business requires in terms of costs. Personal spending

usually falls into the following categories:

DAILY LIVING 7 8 9 Groceries Transportation Clothing COSTS

HOUSING Mortgage/ 4 5 6 Insurance Maintenance rent

UTILITIES 1 2 3 Electricity Water Telephone

EXISTING DEBT 0 • Personal loan Credit card

ENTERTAINMENT Vacations Eating out Subscriptions

SAVINGS Pension Emergency fund

Estimate how much you typically spend, and consider where

savings can be made. Be realistic about how much you have to

spend, rather than how much you currently do. Many banks

have online forms that can help you itemize your expenses.

Funding Your

Business

The biggest challenge facing you as an entrepreneur might be sourcing

enough money to start your business. Be aware of the different types of

funding that are potentially available to you.

Understanding funding approach is called “bootstrapping,” need external funding. Taking on The simplest way to fund your new and it typically suits businesses debt is one option. Debt takes many business is through your personal with low start-up costs. forms, such as bank loans, business income or savings. You can then If you lack savings, or if your early credit cards (see box, right), and rely on cash from your first sales to sales are unlikely to be sufficient to asset financing (borrowing on the develop the business further. This support the business, then you will basis of your company assets), but

Assessing $ Bootstrapping your options This means funding the business from your own savings

or income with little or no outside help.

Choosing a funding route will depend

on your personal cir cumstances as PROS CONS well as the wider economic situation. ❯ No debt means no repayments and ❯ Requires creativity and tenacity For example, bootstrapping may work thus no liability if income falters. to build a business with low funds. if your business is ideas-based with

few overheads. You may feel taking on ❯ Good for business-to-business ❯ You need skills to negotiate long debt is a viable option if interest rates (B2B) enterprises, for example, if payment terms with suppliers. on borrowing are particularly low, you offer services or technology. ❯ Not a practical option if you need while if you are skilled in social media, ❯ Suits web-based businesses and large sums, such as to fund premises crowdfunding may work. Equity those where staff work remotely. or to pay staff to work on site. funding avoids debt, but the

expectations of investors will be a

different pressure. Debt

63 $ This involves borrowing money—bank loans or finance secured against your personal or business assets. %

PROS CONS

❯ No need to sell equity to outside ❯ Loans mean detailed paperwork

investors, meaning you keep control. in the form of a business plan and

of start-ups are ❯ cash flow projection. Short-term borrowing helps with cash flow issues in times of growth. ❯ You may need security for a loan.

funded from ❯ All profits are yours, with no need ❯ Interest rates can be much higher to share with investors. if your lender sees you as high risk.

personal savings

Smallbiztrends.com, 2019

FIRST STEPS 82 83

Funding Your Business

but in each case the money you amounts and specify whether the BUSINESS

owe must be paid back regularly interest rate is fixed or fluctuates. CREDIT CARDS

over an agreed period of time. You There may be penalties for missed

might be eligible for a grant (see payments, perhaps also for early A business credit card is a form of

p.85), or you might consider equity repayment of the full sum. Discuss debt, but it can help you manage

financing, whereby investors put how you will meet your financial your cash flow. Before settling on

money into your venture in return obligations with an accountant. a credit card provider, make sure

for a share of your business. you compare a range of different Remember, if you provide security

to the lender, such as your house, cards aimed specifically at new

Meeting obligations you risk losing this if you default on businesses. Look for cards that offer management tools, such as Before getting into any financing the debt. An equity agreement the separation of business and agreement, read all the terms avoids debt but comes with the personal expenses and the option

carefully. They will set out strict “cost” of giving up some control of obtaining extra cards on the

conditions on payment times and over your business to investors. account for your employees to use.

A low-rate card is the best choice

for paying back large expenses over

Crowdfunding time. However, you often need a

good credit rating to be accepted

$ Individual investors put in cash in return for rewards, for low-rate cards, and the lender

repayments, or a share in the business (see p.84). may not offer cash back or other

rewards that may appeal.

PROS CONS

❯ Social media platforms offer ❯ Social media platforms need

many funding opportunities for constant, expert management to start-ups. ensure success.

❯ You can reach people worldwide. ❯ Set your target amount too high

❯ and you may fail to reach it. Investors may opt for rewards , so

you do not have to repay in cash or ❯ Set your target too low and you BE AWARE give away shares. may not maximize your potential.

❯ Be as accurate as possible

with your cash flow projections

Equity when applying for funding so that

you can be sure you will be able

to meet your obligations.

This depends on investors providing funds in return ❯ Make sure there is enough for a share in the profits or control of your business. cash in your current account

to meet monthly repayments

PROS if you are borrowing. CONS

❯ ❯ Agree on a strategic date Removes the burden of debt and ❯ Likely to be time-consuming to with your lender(s) when money eases financial worries. find the right investors. will leave your account. ❯ You benefit from the expertise ❯ Investors share profits and may ❯ Schedule repayment dates so of experienced business developers. want a return in less than five years. that cash flows into your business ❯ Investors can help build your ❯ You may lose some control over account before money is due to business through their networks. the running of your business. be repaid.

Who Might Invest?

There are many types of investors who can help to finance your venture.

You need to understand the implications of accepting each kind of

investment, from making repayments to giving up a share of your profits.

How funding works again, financial institutions will some of the potential investors who Any person, group, or organization not be the only ones attracted (or may want to help you get up and willing to invest in your start-up allowed) to put money into your running and at the same time be can do so in one of two ways: by business. Friends, family members, rewarded by a share of profits in lending money to your business at and business contacts are just the form of annual dividends. a particular rate of interest, or by

giving you a lump sum in return for

shares in your new enterprise. Family and friends

Many people, when considering People close to you may be willing to assist, but funding by

loan investments, wrongly think family and friends requires careful management.

that banks are the only potential PROS CONS

lenders. In fact, anyone is legally ❯ May offer useful advice and ❯ Risk of damaging relationships allowed to lend you money so long expertise as well as funding if things go wrong

as the loan is covered by a formal ❯ More likely to offer preferential ❯ Discussing money arrangements contractual agreement that sets out interest rates on loans may be awkward

the amount being borrowed, the ❯ May be flexible on repayment ❯ Additional pressure for the duration of the loan, the interest plans and dates business to succeed rate charged, and how much will

be repaid each month. Peer-to-peer

The other funding option for a Potential investors range from business colleagues and staff

small business is called an equity members to individuals on peer-to-peer (P2P) lending sites.

investment—putting money into

your venture in exchange for a say PROS CONS

in the running of the business and ❯ Peers have a personal interest in ❯ Risk of losing your reputation

a portion of its future profits. Once helping you succeed should your business fail

❯ Peers will understand the business ❯ Disagreements with peers over

environment of your start-up how to run the business

❯ Interest rates offered by peers are ❯ Your credit rating may suffer if

Types of investors usually better than bank rates you apply via a P2P site

Traditionally, small businesses were Crowdfunding

funded primarily by banks or perhaps Through crowdfunding, you can reach a global audience for

of investors run from individuals with PROS CONS spare cash to groups of professional , since wealthy relatives, but today the ranks either a loan or a stake in the business. investors who specialize in funding ❯ Wide pool of potential investors ❯ May be more demanding start-ups with good growth prospects. can be targeted online funders do not know you personally

Many countries have government ❯ Can raise money quickly , and you ❯ You must reimburse investors if agencies that assist new ventures via control the terms of the funding you fail to reach your funding target direct funding, providing grants, or ❯ Funding appeal might go viral ❯ Fierce online competition for linking them with potential investors. and raise more cash than expected investors’ funding

FIRST STEPS 84 85

Who Might Invest?

Banks ACCELERATORS

While not usually equity investors, banks will still assess the AND INCUBATORS stability and growth potential of your business before lending.

❯ programs—accelerators and ❯ Simple debt agreement with no May require a guarantor or incubators—exist to support PROS In most countries, two types of CONS

say in business operations security against the loan businesses at the start-up stage.

❯ You maintain independence in ❯ You need an excellent credit Joining either type can encourage

running your business rating for the best interest rates lenders to invest in your business.

❯ Banks adhere to government- ❯ You need to provide evidence of ❯ Accelerators are like intensive

imposed financial regulations your ability to repay from revenue study courses, and they are either

privately run or publicly funded.

Business angels Start-up owners apply to join and, if selected, enter for a fixed term, A wealthy private investor who puts money into a start-up in usually 3 to 6 months. During this return for a stake in the business. period, the owner receives a

❯ how to grow their business under Can provide mentoring and bring ❯ May wield more control than you the guidance of mentors. Private PROS concentrated, rapid education on CONS

valuable experience feel comfortable with accelerator programs may also

❯ Will make quick decisions and ❯ You are giving away a percentage offer to invest in your business.

have cash available of your future earnings ❯ Incubators are less intensive but

❯ May enhance growth potential ❯ High expectations about your still provide education and tactical

with their vision and contacts performance and the rate of return mentorship. These programs are

usually funded by a university or

Venture capitalists an economic development organization. With a focus on Professionals who manage pooled funds for investors seeking innovation, incubators typically a return from funding new business growth. run for a year or more and aim to

❯ an entrepreneur can hone their You do not have to repay the ❯ When you sell the business, your business model. PROS CONS provide an environment in which

money (as with business angels) share will be less

❯ Can give leadership and also ❯ Board of directors required, as

advise on day-to-day management well as frequent financial reporting

❯ Provides opportunities for ❯ Risk of losing your business if it “Investors are collaborating with experts fails to perform well enough

Government, local authorities, and charities employees you

National and local government bodies, as well as some can never hire.

charities, may award grants to new ventures (see pp.212–215). We made sure

PROS CONS

❯ Grants are essentially free and ❯ Often time-consuming to go to pick investors do not need to be repaid through the application process

❯ Generally easy to access , with ❯ Plenty of competition from other that thought

plenty of information online businesses for funding like us.”

❯ Helps build credibility and ❯ Restrictions and conditions on

promote your business how you spend the money

Biz Stone, co-founder, Twitter

Pitching for

Investment

If you need to borrow to finance your start-up, you will have to

persuade funders that your business is a good investment. Thorough

preparation is key; be enthusiastic but also honest and realistic.

Preparing to pitch

Once you have identified potential investors, you will Presenting the pitch

need to create a presentation—or pitch—to persuade

them to back your business. Investors are likely to judge a business at

Research your potential investors’ interests and least partly by the person making the

current investments, and see if they match your plans. presentation. Aim to appear confident

Make sure you can describe every aspect of your but not arrogant, and professional business, including your customers and competitors. without being inflexible and unwilling to

You will also need to show a detailed grasp of finances, listen. Build a rapport by introducing

so have financial projections to hand, including yourself clearly, making eye contact (or

expected turnover and profits in the short to long term. looking into the camera if online), and

Start your pitch with a short, engaging summary of delivering a strong statement of why

what makes you and your business stand out from the your business exists and why customers

will buy its products or use its services.

crowd. This is known as an “elevator pitch”— Watch the audience to ensure they are

deliverable in the time it takes to ride in a lift. Then still engaged, and note points that raise

describe what the business provides, highlighting the particular interest as these may appear

problem it aims to solve or customer wish it can fulfil, in later questions. Keep in mind the

before moving on to your service or product solution. three key questions below, which may

The detail should follow. Outline the marketplace, decide future investment. End with a

competition, customers, operations, others involved in statement of what you are looking for

the business, and finances, using high quality visuals, and establish what the next steps will be.

such as product examples, artwork, or digital It is usual to send a follow-up email a

presentations. Finally, set out what funds are needed few days after a pitch.

and their exact purpose. Be sure to practise your pitch

to get constructive feedback.

Online presentations

Pitching over a video-conferencing platform, such as

Zoom or Google Hangouts, poses particular challenges.

Practice your pitch using the platform’s various

functions and prepare for technical issues, such as What does the losing connection while presenting—perhaps by business offer? having a colleague ready to take over. You are not in Your business needs to control of your audience’s environment, which may be offer a viable product filled with distractions, so get to the point quickly. or service in order to Since it is harder to read the room, make your repay any potential presentation more discussion-based, asking questions investment.

and engaging, but allow for time delays and the

possibility of talking over each other.

FIRST STEPS 86 87

Pitching for Investment

“When we are selling our ideas, the

audience must first buy us.” Peter Coughter, The Art of the Pitch, 2012

DO… DON’T…

❯ Keep it short and to the ❯ Be unrealistic about

point, and make your first financial projections.

sentence count. ❯ Focus too much on

❯ Invite the audience to technical detail or jargon.

ask questions, and listen ❯ Assume your audience to them carefully. will share your enthusiasm

❯ Make sure you have (you must persuade them)

evidence for claims (such ❯ Talk too much about as market research). yourself—focus on

❯ Show enthusiasm for the business.

and belief in your ideas; ❯ Read directly from a demonstrate motivation. screen or turn your back

❯ Stay relaxed—head up, on the audience if

with good posture. presenting in person.

❯ Speak at a steady pace, ❯ Fidget—this can be

especially at the start of distracting.

your pitch. ❯ Overload visuals with

❯ Use powerful images to words, bullet points, and

back up the messages in complicated graphics.

the presentation.

Who will buy? What about the

You must show there competitors?

is sufficient demand Your business needs and the business can to either create a

actually meet that new market or beat

demand. Otherwise, its rivals to provide investment could be a realistic return on

too risky. investment.

Balancing the Books

To keep track of your business finances, you need a proper system in place.

Balancing the books—or balancing the figures—is a method of ensuring that

all monies entering and leaving the business are accounted for.

Keeping a record The traditional way to record business transactions

Balancing the books—bringing the totals of debits is to write them down in a ledger book and calculate

and credits into agreement—is the basis of business the figures manually (see below). Alternatively, you

accounting. Businesses typically balance their figures can also use spreadsheets and simple accounting

at month end using double-entry bookkeeping (see software, which is widely available. This allows you

below). This records every transaction as both a debit to easily record, store, sort, and retrieve information

and a credit, making it easier to spot errors and helping about your transactions and to generate essential

to protect your business against fraud, whether from documents, such as sales invoices and financial

customers or clients, suppliers, or employees. reports. It can also highlight unbalanced transactions

Managing your business accounts is vital, but if in your records as well as calculate totals. However,

you are not confident, you could hire an accountant make sure the software you use is up-to-date so that

to do the work for you. Or learn how to do it yourself. it is in line with current tax rules and requirements.

How double-entry

bookkeeping works ACCOUNTING RECORDS

As the name implies, double-entry involves

recording every transaction twice. A double- DEBIT CREDIT entry spreadsheet or ledger will have a debit

column and credit column for each transaction, INVENTORY showing how one form of asset—cash—has been (ASSETS ACCOUNT) $200 exchanged for another form of asset, such as

materials. Thus, all the cash you spend as part of (LIABILITIES ACCOUNT) $200 stock for resale, a piece of equipment, or raw ACCOUNTS PAYABLE the business over a set period is replaced by an

asset or service you have bought. For example,

if you buy $200 worth of stock on credit, add

this amount to the debit column as inventory

and in the credit column as accounts payable.

Repeat this for every purchase made, daily or

weekly, throughout the accounting period. TOTAL $200 $200

FIRST STEPS 88 89

Balancing the Books

Financial reports NEED TO KNOW Creating an effective bookkeeping system allows

❯ Assets are the cash and resources owned by the

you to produce financial reports to help monitor the

financial health of your business, such as a balance includes accounts receivable, which are sales that business, including equipment and stock. It also

sheet (see box, below right). Prepare a profit and loss have been made for which money is outstanding.

statement, also known as an income statement, to ❯ Liabilities are the business debts, such as bank loans assess how profitable your business has been over and accounts payable—money owed by the business.

a specific period—comparing revenues with expenses. ❯ Equity is what is left after the total value of business

Create a statement of cash flow (see pp.160–161) to liabilities is deducted from the total value of your assets.

show how money is moving through the business ❯ Income is your revenue—the money you receive

and your ability to pay its bills. Use these reports to from sales of goods or services, or from investments

help you make informed business decisions, such and dividends.

as setting budgets, assessing costs, and measuring ❯ Expenditure is the money you pay out for goods,

business performance. Study them closely, looking for materials, services, salaries, rent, utilities, etc. potential irregularities and problems as soon as they

occur in order to prevent them from developing further.

THE BALANCE-SHEET EQUATION

Debits Provided that your bookkeeping is correct, the assets

your business. Although the stock check for your business. If liabilities are proportionately has yet to be sold, the debit entered low and equity high, you will be in a better position represents the value of the extra to expand—or weather downturns in the economy. Debits record all monies flowing into liabilities and equity. A balance sheet is like a health on your balance sheet should equal the sum of your

stock that you have purchased.

Credits

Credits record all monies flowing out ASSETS LIABILITIES EQUITY

of your business. Although you have $1,000 $400 $600

not yet paid for the stock, they will

have to be paid for in the future, so

they are entered as a credit.

Balanced total “Accounting is the

Totals record the sum amounts of language of business...

both the credit and debit columns, a little study, early on...

which should match or “balance.”

If the totals do not match, check the

entries in both columns for errors. pays off big later on. ”

Warren Buffet, CEO of Berkshire Hathaway, 2014

Understanding

Business Taxes

All businesses are required to pay tax. Understanding business taxes

will ensure you pay the right amount at the right time. It will also help

you to set aside enough money to meet your tax obligations.

Paying your taxes year. This is difficult to predict,

As a business owner, you will be so it is important to monitor NEED TO KNOW responsible for paying tax on monthly profitability consistently profits. How much your business (see pp.88–89) and set aside ❯ Capital gains tax (CGT) is a tax

you make, and the percentage of assets such as land, buildings, your annual tax bill. You can stocks, and shares. Small pays depends on how much profit on profits from selling capital enough cash each month to pay

tax you pay on that profit depends complete your own tax return, but

on how you choose to structure many business owners choose to exempt or able to apply for businesses may be considered your business—as a sole entity appoint an accountant, who will discounted rates.

(or sole proprietor), a partnership, advise on how to maximize any ❯ Tax threshold is the amount that or a company (see pp.26–27). Each deductions you can claim. you or your business can earn of these legal structures has tax before tax is payable, or before

advantages and disadvantages, paying a higher rate of tax. A

your business, you will usually In your first year, as you set up ❯ Dividend is money paid by a company to shareholders from “No government can exist have high expenses. However, without profit. Dividends are usually taxed at a lower rate than salary. these expenses can be deducted taxation.” gives you the most favorable rate that no tax is due on profits or income below that amount. of tax for your expected earnings. so thoroughly research which one threshold of $10,000 means

from your income, leaving you with

a lower tax bill at the end of the Frederick the Great

Calculating tax Revenue Expenses

Regardless of whether you have Also called “turnover,” These are the costs a company or operate as a sole this is the total amount incurred by running your

proprietor or partnership, you will of money your business business—such as rent,

need to register to pay taxes and receives from its wages, raw materials,

complete a tax return each year. On customers in payment and stationery. Investing

the return, you or your accountant for its products in your business also

have to show your income and then and services. counts as an expense.

subtract expenses to find gross profit

on which taxes will be calculated.

FIRST STEPS 90 91

Understanding Business Taxes

COMMON TYPES OF TAXES

Business owners may have to pay many different types of country in which it is registered (see pp.212–215). The most

taxes, depending on the nature of their business and the common types of taxes include the following:

Sales taxes Company taxes

In many countries, a sales tax, or If you set up your business as a value-added tax (VAT), is added to the company, you will need to register

price of most goods and services. Your it in order to pay tax, file an annual

business may be required to register tax return, and pay tax on profits.

for sales tax if revenue exceeds a The tax rate will vary depending on

certain threshold. The amount of national tax law but is often a flat rate.

sales tax you receive can be offset against sales tax Late tax payments usually incur a penalty, which is

paid out, and the balance is paid to the government. added to the total tax amount owing.

Income taxes Other taxes

Sole proprietors or individuals in a It is common for taxes to be levied

partnership will pay tax on profits by local authorities and jurisdictions,

$ made through their business activities even at city level. For example, in the

as though they were employees. If you US, businesses with commercial or

are a director or employee of your industrial premises pay business rates

company and are paid dividends or to their local authority, in addition

wages from the company, you will pay tax on these to tax paid to the federal government. Small businesses

personal earnings, which are treated separately can often claim a discount or relief on business rates,

from company tax. especially if profits are below a certain threshold.

Gross profit Tax Net profit

This is the amount of This must be paid This is the amount of money that remains according to the tax profit left after taxes have after expenses and system of the country been paid. This amount is taxes have been in which the business available for the business deducted. Investing is registered. Paying or for the owner in the in the business tax remains a legal form of a dividend. increases expenses requirement in most and therefore reduces countries. gross profit.

Setting Up a

Business Account

Setting up a dedicated bank account for your business is not always

essential. However, it can be a sensible step, granting you access

to useful banking services available only to business owners.

Understanding the benefits payments made by credit or debit cards as well as

Depending on your business type (see pp.32–33), online, which customers may expect. You can also

you may be required to set up a business bank exchange foreign currencies more easily. An account

account that separates business finances from your allows your business to build up a credit history, own. A business account can offer advantages. which may help you raise finance in the future. Importantly, it allows you to clearly see how much

money the business has available at any time and Considering options when payments have been made or received. Plus it As well as traditional banks, there are also financial

makes it easier to manage regular business expenses, technology (“fintech”) organizations (see below left)

such as software, utilities, or travel costs. A dedicated that provide a range of automated financial services.

account means that your business can collect However, your choice will depend on many factors,

such as whether your business makes mainly online

consumer transactions, transactions with other

businesses, or transactions in different currencies.

FINTECH $ 4, 754 bn ❯ Fintech (financial technology)

developed as banking became

increasingly digitalized. It provides

services such as mobile payments. is an estimate of the value

❯ Utilizing the technology available

on your smartphone, fintech has of the worldwide mobile fewer overheads and offers

cheaper options. payment market

❯ In regions such as Africa, Asia,

and India, where traditional banks Mobile payment outlook 2023, Alliedmarketresearch.com, 2020

can leave many smaller businesses at

a disadvantage, fintech offers access

to affordable payment services. Choosing and opening

❯ Start-up businesses can use fintech an account

to access finance from crowdfunding

platforms rather than from When you set up a business account, you will need to

traditional banks. provide documentation to prove who you are as well

as details of the business. You need to be sure that the

account meets your needs now and will continue to do

so in the future. You need to consider the different services,

products, and resources each account provider offers.

Before committing yourself, ask these questions (see right):

FIRST STEPS 92 93

Setting Up a Business Account

QUESTIONS TO ASK BEFORE YOU

OPEN AN ACCOUNT

How easy is it to open an account? Is there a relationship manager?

It can take four weeks to open a business This person works with you on your current account. Consider a savings accounts. Be sure you can contact them

account, if appropriate for your business. easily (face-to-face, phone, email).

ER Is there an introductory offer? Does the bank provide advice? ?

OFF If there is an offer such as a free banking Find out whether the bank offers advice

period, balance this against future and market expertise, for example, monthly charges. network events or investment advice.

What are the monthly charges? Is it easy to get an overdraft?

Typically, these are payable monthly. Ask about overdrafts and the terms or

Check also whether a minimum balance charges involved. See whether there are

is required. any short-term or quick lending options.

What are the transaction charges? How soon are deposits processed?

Find out what the bank charges are for Find out how long it takes to process paying money in and out as well as deposits, both large and small. This is

for mobile and online transactions. important for business cash flow.

PROVIDING DOCUMENTATION

To comply with banking regulations, including those to Proof of address—a utility bill, for example.

protect against money laundering, you will need to Business details, which could be supplied in the form

provide the following documents to open an account in of company registration documents from the relevant

most countries: national institution, or legal documents, such as

Proof of identity such as a passport or identity card. Articles of Incorporation.

Protecting

Your Business

All business ventures involve an element of risk. Identifying

them will increase your start-up’s chances of success. key risks in advance and figuring out how to guard against y bilit rs cove t lia nce you duc sura duct Pro ity in red y pro iabil epai Assessing risks fault e. uct l , or r se a mag Prod in ca , sold or da To effectively plan for risks, you must first identify you gned jury desi es in them. One way to do this is to carry out a simple caus risk assessment. This involves noting potential

risks, from threats to your intellectual property s on ion (see pp.96–97) to employee accidents and fire os ti by . pt l l d ng ru ia damage, then evaluating how severely these risks up te di er nc al would impact on your business and how likely they rr nt na h oo s i is te r fi r fl are to occur. You might find it helpful to create a es ity o in fo in re tiv chart (see top, right). us ou ss ac s fi y r b n a Your assessment of a risk’s likelihood should take es ne fo at he ch y w into account past performances and also encompass si ns su lic d nt pe re possible future events. Make a plan of action for each Bu po ve m A ffe e co weighted risk, and decide whether you intend to su an avoid, minimize, or accept it.

You might seek to avoid a risk by changing a

Where the risk seems small, you might choose to a c supplier or minimize a threat by altering a process. Th ag e e accept it, but monitor it. Another option is to guard om Le xp ain against risks by transferring them to a third party, leg m en ga st y erc se al pl p our such as an insurance company (see below). s a ro ial ndro bu

Types of business insurance tec leg co te sin tion al a sts esscti in ction ar sur aron isin e p br an ou aid g fr ce . gh om by t

type of work you undertake, where the business is based, Claims m

and what risks are involved. Identify your immediate ade by e ed or b ability insurance needs initially, then regularly review the situation workin are injur A start-up’s insurance requirements will depend on the Employers’ li

you might consider for your new business; depending on u are co ill while ility insur appropriate. There are several key insurance products that es who ers’ liab as the business develops, adding extra coverage as mploye employ g for yo ecome

the country you are operating from and the nature of your vered by ance. business, some may be mandatory (see pp.212–215).

FIRST STEPS 94 95

Protecting Your Business

VISUALIZING RISK ASSESSMENT

Once you have conducted a risk assessment, a good

way to visually display your results is to create a risk

Stock a impact/probability chart. The chart has two axes:

This co one to show the likelihood (probability) that risks nd con

equipm tents value o will become a reality, and one to show the severity vers the

been da ent, an a score for both probability and severity, then plot ment f materi of their impact if they do. Assign each of your risks replace maged als, too d stock them between the axes. Prioritize risks that fall in ls, , lost, o

that ha the top-right (red) corner; those in the bottom left ve r stolen (green) corner will require less immediate attention. .

fire ag w Th hich ainis in sur st da a b , su an Bu bsi m usi EXTREME ce ne ag de co ild nc e d ss o ve in ue pe e, a to rs t gs nd rat he Y ev HIGH bur es, bu en ILIT pro ild B st pi ts s A tec ing B uch pe in tin O MEDIUM s. as g PR

LOW

Publ ic li ab you ki th e or in if at w is or ns le ee s, hi pe oy ise m pl s w m co m re ion ill-e ility a . , p ed da em SEVERITY OF IMPACT ng jur t y ag ubl m our e ic

ty If a non ess p ss w se y lit os sin bi LICENSES AND PERMITS r p bu lia ei th You should also safeguard your business by

Professiona l liabili ensuring that you have the relevant legal onal of documentation. Some activities—from exporting fessi type g pro nd this goods to selling food—may require a license or erin eds urs a ss off s ne occ permit from the national or local government, sine vice take s. A bu r ser mis sue or other affiliated body (see pp.212–215). Failure ce o ase a lient advi r in c to comply with legal obligations may result in the c cove fines or even prosecution.

Protecting Your

Intellectual Property

Your intellectual property (IP), which you have created in your mind, can range

from original ideas to inventions. It is vital to protect your IP in order to stop

competitors from copying or stealing it.

Keeping ideas safe works and sound recordings. Some

Exactly what counts as intellectual protections, such as trademarks Types of IP property varies from country to and patents (see below), you will country (see pp.212–215), although need to apply for. The relevant body An invention or idea is the basis of

inventions, artistic works, pieces of intellectual property could determine applications. Take care that your your long-term profitability. fiction, commercial images (such as it typically includes product your success, and protecting this in your country will handle these

idea does not infringe on another’s Businesses of any size, and individuals,

photographs or illustrations), and IP, particularly where other people’s can use IP protection. There are five brand names. ideas have inspired you. main types of intellectual property:

The type of protection available Consider the type of protection patents, trademarks, copyright, to you will depend on the nature of best suited to your needs. Single registered designs, and trade secrets. the work. Some works are patents protect rights only in Depending on the specific IP, more automatically granted protection— individual countries, so you may than one type of protection might for example, copyright for literary need to take out more than one. be necessary.

™

ide tion, as

Without ad ir ow ly Trademarks s can r the cost idea ls fo er Mainly used to protect brand ad to new y riva Unp n equa easi rote te pr ly be cted otec

copied b an le own . names and logos, trademarks h the his c t win whic are registered in categories of fit. T y no tles, bene a ma goods and services called l bat lega e ide classes. After registering, you of th can use the ® symbol, which

shows permission is needed

to use your logo or name.

FIRST STEPS 96 97

Protecting Your Intellectual Property

Copyright Trade secrets

An automatic protection, this Confidential information that

does not need to be gives a competitive edge

registered. It protects original needs protecting. A new

work involving skill, labor, or business should have policies judgment, including books, to ensure confidentiality; visual arts, music, dramatic legal protection depends on

works, and software. local competition law.

Patents Registered designs

These apply to inventions that These cover a product’s are new, involve a unique step, external design or shape, such and can be used or made; they as visual representation and

give the right to take legal visually designed characters,

action against those making, and are useful for immediate

using, or selling without protection. For extra security,

permission. you might use a registered

design and a patent.

Staying Safe in

the Workplace

As the owner of a business, you have a legal responsibility to protect staff,

customers, and clients from harm. Proper safety procedures will help your

operations run smoothly, avoiding accidents and injuries.

Creating a safe work space or contractors may visit, to a retail location or a It is vital to protect your staff and visitors while they manufacturing facility—need to meet basic obligations

are in the workplace. Check with government and local in order to keep workers and visitors safe. Carry out

authorities for the legal safety requirements applicable risk assessments and act on any issues that arise,

to your workplace (see pp.212–215). A hairdresser, for instruct staff on safety procedures, and ensure that

example, will present different hazards from those in all equipment is installed correctly and regularly

a garage or tech start-up. Almost all types of business maintained. Safety precautions also help protect your

premises—from a home office or studio, where clients premises and assets from damage due to accidents.

Protecting yourself and others

When planning or setting up a workplace, pay attention to these key areas to protect yourself and those working for you or visiting your premises. You could be prosecuted if your working conditions are found to be dangerous.

Hygiene Food handling

Provide regularly cleaned toilets with Be sure staff involved in the preparation

soap and handwashing and drying facilities, as well as of food are trained to meet the legal requirements for

bins for secure waste disposal. If you offer hospitality food hygiene and storage, the proper cleaning of

services, you may need extra hygiene measures. utensils and equipment, and pest control measures.

Fire Toxicity

Follow government and local directives Avoid harm to people and animals by

on the fire safety responsibilities of landlords and preventing their exposure to chemical or gas toxins,

commercial tenants. Appoint key employees as fire such as asbestos, cleaning agents, and machine fumes.

marshals; hold regular emergency drills for all staff. Follow local regulations for the disposal of toxic waste.

FIRST STEPS 98 99

Staying Safe in the Workplace

Gas & electricity Machinery & equipment

If you are renting premises, be aware of Fit guards around dangerous machine

the landlord’s responsibilities to provide electrical and parts, display warning notices, and ensure operatives

gas safety checks. Inspect for defective plugs, broken are fully trained. Protect equipment users against

switches, and damaged cables; make repairs a priority. excessive noise, heat or cold, vibration, and radiation.

Trips and falls Personal protection

Make sure that lighting is adequate and Issue staff the appropriate clothing and

that floors are nonslip and kept free of obstructions. equipment to give them adequate protection in their

Clearly mark any sudden changes in floor height. work, such as face masks, earmuffs, safety boots,

Supply stable ladders for staff working at heights. gloves, and helmets.

Lifting and moving objects Vulnerable people

Teach staff how to lift objects safely, and Some individuals, for example, pregnant

discourage moving items that could cause injury. Store women and people with disabilities—whether

heavy objects on low shelves. Supply carts or other employees, clients, customers, or visitors—will need

equipment for moving large stock items and materials. special consideration when on your premises .

Safety notices First aid

Clearly display signs that follow local Give first-aid training to employees.

regulations and reinforce workplace safety procedures Ensure that first-aid supplies are readily accessible and

such as hygiene and waste disposal routines, hazard that injured persons get immediate attention. Appoint

warnings, and what to do in the event of fire. a safety officer to report and record all incidents.

Thinking Green

Creating a business that focuses on sustainability or other green

issues will not only help the fight against climate change but

can also boost your company’s image and reputation.

Taking action other options, such as natural or recycled fabrics,

To become sustainable, a business must try to limit or food products that carry the Fair Trade logo, its carbon footprint as much as possible. It should take showing that they are produced ethically (see pp102–

action to reduce any adverse effects while increasing 103)? With careful sourcing, greener options are

any positive ones. affordable, especially if the business ensures that

From a business point of view, a green image can there is minimal waste. However, running a green

be beneficial. More and more customers like to buy business might require more initial investment from companies that can show they care about the

environment. When they buy a product or service, Thinking local they want to know it is created sustainably. An

environmentally responsible business also Using local suppliers creates goodwill, tends to attract employees who prefer to work benefits the community, and helps a for a company that takes an ethical approach. business reduce its carbon footprint.

Additionally, reducing waste—whether by using

less electricity and fewer raw materials helps lower

costs. Sustainability pays other financial dividends,

too, as more governments around the world impose

taxes and restrictions on companies that pollute or

otherwise damage the environment. LOCAL RESOURCES

By sourcing raw materials

Achieving sustainability and supplies locally, and One good way to think about the sustainability hiring local staff, a new of a business is to divide it into three stages. The business can keep its fuel first is the inputs (source materials) it requires. costs low and build good If producing clothes, for example, that could be the local relationships. Waste fabric used, or if running a café, it would be the food or unwanted goods can ingredients. Consider where these materials come prove an invaluable from. Are they produced sustainably? If not, are there resource for local

innovative recycling

ventures.

ENVIRONMENTAL STANDARDS

Your business will need to follow the environmental

standards imposed by the government (see pp.212–125).

These cover activities such as waste disposal, and air

and water pollution. You might also follow voluntary

standards, such as choosing to produce only organic

food. Compliance with mandatory standards is crucial

to avoid penalties, whereas adopting voluntary standards

can make a product more attractive to customers and

add value.

FIRST STEPS 100 101

Thinking Green

to get these things right from the start. The next step HELP SOLVE THE is to think about the energy it takes to make your PLASTIC PROBLEM product or offer your service. Most businesses use fuel

and water. Is there a way to reduce consumption, for While ecologists warn that our instance, by using electric vehicles or working from oceans are polluted with plastic well-insulated premises? The third is to think about waste, entrepreneurs are finding

the further effects of the product after purchase. What new ways to recycle plastic into type of packaging was used? Is the item made from desirable products. Some create

recycled materials or can it be recycled? Perhaps the fabrics from plastic waste, while packaging can be returned by the customer for a refill, others transform it into furniture,

bricks, clocks, and fuels, or add

which is also a good way of ensuring that the customer it to asphalt to strengthen road comes back. surfaces. If you are going to use

Finally, a word of caution. Sustainability credentials plastics in your product make

can help promote a business and build a reputation, sure they are recyclable (see but it is important to keep checking that the venture pp212–215).

stays environmentally friendly. A good name can be

lost if people discover that claims are not genuine. “Sustainable

development

is the pathway

MUTUAL BENEFITS to the future we

When a new business draws on local want for all.” resources, everyone benefits from its success.

❯ Ban Ki-moon, Secretary-General The new restaurant with a menu using local of the UN (2007–2016) produce served by local staff creates its own

community identity.

❯ The furniture restorer who transforms old furniture

into fashionable new pieces helps reduce waste.

❯ The company that turns scrap cars and vans into

fully electric vehicles benefits the local community

and supports the global move to cleaner fuels.

Operating Ethically

If you take an ethical approach to business by acting honestly

and openly with your customers and suppliers, you will gain

a reputation as a fair businessperson.

Taking responsibility Think about how you would like Running your business in an your business to operate by setting ethical way is important and pays out your values. For example, you dividends. Customers prefer to buy may decide that your company will from ethical sellers, staff prefer to be dedicated to supporting the work for those who treat them fairly, local community or committed to

and gaining a good reputation will protecting the environment. Or Workplace help you build a loyal following. you may focus on employee health Identify how you can make

your business a good place to

Creating a code work and ensure that you

treat all of your employees

of conduct fairly and equally.

Think about your business from

different viewpoints to help you

decide what to include in your

code of conduct. The following

headings are useful for most

businesses, but you may want Community to add others, depending on Think about how your business can the nature of your work. contribute to the local community. You

could sponsor a sports team or donate

to a charity. Try to avoid causing any

negative impacts on your neighbors

such as noise or pollution.

Environment

Think about the effects your business

has on the environment. Identify ways

you can minimize any damage. For

example, you could use only recyclable

packaging or adopt a cycle-to-work

program to help your employees offset

the cost of a new bike.

FIRST STEPS 102 103

Operating Ethically

and well-being. Once you have but then you force people to work to buy only from other businesses identified your core values, draw long hours, potential employees that trade ethically, then you may up a code of conduct: a rulebook for will hear about it and go elsewhere. have to pay more for your goods. how you and your employees will Make sure you can do what you If you run a clothing store, for act. Everyone must understand promise because it takes a long example, you will not want to buy how you expect them to operate. time to build a reputation and cheaper garments from factories You can share your code of conduct only a short time to destroy it. with poor ethical standards. with suppliers and customers. However, customers are usually

Whatever you decide to focus Making the right choices prepared to pay a little more when on, your code of conduct must be Your ethical stance might they buy from companies they trust

genuine. If you tell people you are sometimes lead to difficult choices. to take this ethical approach, so an employer who values their staff If your code of conduct allows you you may not lose out financially.

CASE STUDY

Solarkiosk AG

Start-ups like Solarkiosk place ethics at the heart of their

business. Founded in 2011, the German solar technology

firm is “driven by the mission of universal access to

who have an ethical program in place. Always choose to buy from suppliers Suppliers and customers energy.” About 20 percent of the world’s poorest people live off-grid. Solarkiosk’s flagship product is the E-HUBB, a solar-powered mobile kiosk that generates electricity. Kiosks are used to charge phones or cool medicines, but Buy locally to support the business they also act as small businesses. community. Strive to be open, honest,

and transparent with your customers

and build personal relationships

with them.

“Real integrity

is doing the

right thing,

Operations knowing that

Ensure that all operations in your nobody’s

business are ethical and transparent. going to know

Check that every employee and

supplier involved in your business whether you

understands and is working to maintain

your ethical standards. did it or not.”

Oprah Winfrey, media mogul

Writing Your

Business Plan

Creating a business plan will help guide you at each stage of your

business and convince others of its viability. The plan acts as a road

map to get you from where you are now to where you want to be.

Why do you need a plan?

When you start a business, it may seem clear where products or services. You can use your business plan

you want to end up but not how you get there. to secure funding or investment, set goals, monitor

Writing a concise business plan can give you focus the business’s performance, or reinforce your own

and direction, explaining the objectives of the belief in the venture. Take time to research and write

business, what it will sell, how you intend to win a a plan—the more thorough you are, the more likely the

market share, and how it will operate and promote business is to succeed.

How to write a business plan

Write your business plan clearly and explain any

technical terms. Back up your business proposition 2. THE BUSINESS

of sales and profits. ❯ Ownership Provide details about the with key market statistics and accurate projections

founders and managers and their roles.

Include information on any relevant work

❯ hot of yo ur busin ess This ❯ Trading State briefly where the business iness plan will trade from and where it will buy the A snaps your bus ly part of so make looks at, goods and materials it needs in order be the on mpelling y investor 1. EXECU TIVE SUM both received and planned. may MARY experience, qualifications, and training— that a bus ciently co plan to operate. business vides suffi y sure it pro ugh your ary, it ma ❯ Products and services Describe—in on. Altho tive summ informati fuller detail than in the summary—what the execu leads with t last. e the business will sell. Include images of to write i Clarify th be easier ructure products or of the proposed service in e and st marizing action. Touch on what makes your ❯ The nam ness, sum whom. your busi ell and to products or services different. basics of at it will s vator th an “ele quickly wh sells the ❯ SWOT analysis Review your business’s starting wi Consider 7), which strengths, weaknesses, opportunities, and e pp.86–8 llizing its pitch” (se ief, crysta threats (see p.155), and say how you

business idea in br ives. propose to respond to them. nd object purpose a

FIRST STEPS 104 105

Writing Your Business Plan

ITION

❯ ay who you ex ❯ Customers S segment. e—the market Premises and structure Describe the customers to b , based on iche segments base from which your business will operate 3. MARKET A pect your ND COMPET 5. BUSINESS OPERATIONS ❯ Identify any n ch (see pp. ntation resear and any equipment you will use. Explain market segme er profile be the custom why this location is well positioned to serve y to buy your market. 40–41). Descri y they are likel and identify wh rvice. ❯ or use your se Day-to-day running Outline how your product r business Compare you your business will operate, including how Competition List ady out there. customers will pay for goods or services, to what is alre

❯ your unique selling point (US r safety, and contingency planning. Include show whethe supply and distribution details about how de research to Trends Inclu g, and products will get from A to B. tatic or growin competitors, their products, rings. State ps in their offe services, and how you will pay staff and comply with prices, and ga legal requirements, such as health and P; see p.23).

the market is s e spotted. rends you hav highlight any t

❯ 6. FINANCIAL FORECASTS

Sales/costs Project your sales and costs

4. MARKETING AND (see pp.78–81), month-by-month, over at seasonal fluctuations. least one year, preferably three. Allow for

❯ attract customers. and what kinds of posts yo channels you will use to bu Social media Describe the social media ❯ Cash flow forecast Define the payment ild your profile terms for your customers and suppliers, u will share to and forecast the cash flow Pricing strategy Indicate h over a 12-month period. unit costs to make and deliv ow much each service, establish what cust er. Or, for a willing to pay. Discuss the p omers might be showing how it compares t rice point, and state your anticipated p ❯ advertising, or direct and o service, such as press and p our product or ods you figure (the predicted turnover of the business—all sales—minus the cost of sales) ublicity, and a net profit figure (what remains after nline marketing. all expenses are deducted from total sales). ❯ ❯ SALES STRATEGY intend to use to promote y Promotion Define the meth Profit forecast Provide a gross profit

❯ o competitors’,

Describe the customer exp to find, reach, and retain cu w you intend Sales methods Outline ho rofit margin.

you will encourage repeat p stomers.

erience and how

urchases.

Writing an

Action Plan

To turn your business strategy into reality, you will need to create

an action plan. This sets out the specific steps that have to be taken

to ensure that your business thrives.

Understanding the basics each sphere. Make sure that there are no conflicting

Your action plan should be designed to follow through deadlines in your plan and that the various aspects of

on your business strategy (see pp.36–37). Your your business will not have to compete for the same

strategy outlines the overall direction of your business resources. If your business is small, you may be able

and the major decisions you need to take—such as to cover all of your activities in a single plan. identifying who your customers will be and what your To measure the success of your action plan, specify

business will look like in five years’ time. However, deadlines by which key tasks have to be completed,

your action plan should provide precise details about and meet regularly with your staff to discuss any your goals and the actions needed to achieve them changes that need to be made. Be prepared to update

in the day-to-day running of your business. your plan as necessary.

When writing your action plan, involve your

colleagues so you can create and share new

ideas. Inviting others to contribute also means Making a plan that you are more likely to earn their commitment

to making your venture a success. In this example, a mountain tour guide company

wants to tell potential customers about its new

your company, such as marketing, production, Getting started winter routes, so it develops an action plan based on marketing. More complex steps in the plan, such as Start by thinking about the different aspects of the social media campaign, will benefit from having their own, more detailed action plans. and finance. Depending on how complex your

business is, you may want to write a plan for

THE GOAL KEY STEPS TO TAKE

To increase awareness Email existing and sales of the tour guide customers about the company’s new winter new winter routes, mountain routes offering discounts

Arrange advertising on hiking and mountaineering

websites

Run a social media

campaign that publicizes exciting features of the

new route

FIRST STEPS 106 107

Writing an Action Plan

“If you NEED TO KNOW fail to plan , you

are ❯ Action plans outline the specific planning to fail. ”

steps that a business will take to

execute its strategic plan, which

Benjamin Franklin, US inventor and scientist in turn fulfills its business plan.

❯ Business plans outline the key

objectives of a business, such

as what product or service it

provides and who for.

❯ Strategic plans describe in broad

terms how a business intends to

fulfill its business plan.

TIME FRAME WHO IS RESPONSIBLE RESOURCES NEEDED

Begins: August 17 Ashok (marketing) Ashok’s time; customer Completed by: August 21 mailing list

Begins: August 17 Ashok (marketing) Ashok’s time; list of suitable Completed by: August 21 websites; $500 advertising

budget

Begins: August 15 Jennifer (marketing) Jennifer’s time; digital Completed by: October 1 marketing tools

Understanding

Consumer Rights

When starting a business, you need to recognize your legal duties

toward customers. From the outset, make sure you are aware of

consumer legislation, which affects both goods and services.

Selling products In the US, individual states apply Consumer laws protect consumers their own rules in addition to against unfair selling practices and national law. However, legislation unscrupulous vendors. Wherever can be shared between nations, your business operates, you need as it is for member countries of to understand the rights your the European Union. There are customers enjoy under national also increasing efforts to and local law. These rulings are internationalize consumer law, encompassed not just in consumer particularly because of global trade legislation but also, for example, via the internet. The International in food safety, electronics, and Consumer Protection and

A customer’s basic should be as desc and be of good qribed consumer rights uality. A “leather bag,” fo labeling laws. Enforcement Network QUALITY The goods you sell

Government bodies and consumer ot contain synthetic example, should n r

watchdog groups firmly defend components. consumer rights and will investigate

unresolved complaints against

businesses. Before you start selling,

check local and national government

websites (see pp.212–215), and

those of consumer-championing

organizations, for guidance and

information relevant to your type of

business. Rights will vary from state

to state, and even region to region,

but are likely to cover the same ERY r fundamentals of buying goods or DELIV ble fo ponsi hey services—quality, being fit for re res until t You a r’s purpose, delivery, returns, and oods tome your g a cus repairs. If you sell handbags, for re are are in . If the , you example, you would have to meet hands blems with consumer rights in all these areas. ry pro deal delive fault ave to if the will h er. , even couri them ith the lies w

FIRST STEPS 108 109

Understanding Consumer Rights

(ICPEN), for example, works to an agreed time frame. If you fail

ensure minimum standards of to deliver your service to the “Treat the consumer protection for cross- agreed standards, you may have

border purchases. to repeat the service or provide customer like compensation.

Providing services A knowledge of consumer rights you would want Consumer rights apply just as much will highlight what protection you

to services, such as a plumbing, might need against any legal to be treated. hairdressing, and building, as they action, such as product liability

do to products. If you provide a insurance (see pp.94–95). It Period.” service, you need to be aware of will also help you meet your laws that demand certain basic customers’ expectations. An Brad Schweig, Vice-president of

standards, including reasonable Operations, Sunnyland Patio Furniture issue that is fairly resolved

care and skill, binding contracts, may renew a customer’s faith specified price, and delivery within in your business.

FIT FO must eet oods and m Your g mer rpose custo R PU be fit RPOS

for pu nable s. A reaso tation hould expec bag s old a laptope. le to h stanc be ab , for in laptop

If an i RETURNS IRS REPA ps t for evelo not fi er ld tem d tem is ustom shou If an i er’s se, a c fund t, you purpo d a re a faul ustom r ithin eman r the c pair o ent w hono g can d o a re lacem mber t. A ba right t ill or rep ain nu emen ing w s. a cert replac stitch ed of day oose repair with l to be ge. need f char free o

GETTING

GOING

Setting Up Your

Workspace

No matter where you base your business, planning and organizing your

workspace will improve your efficiency, productivity, and well-being,

as well as minimize risks to health and safety.

Assessing your needs accidents and illness or stress-

A successful workspace is one that related problems while increasing The basics allows your business to operate productivity and well-being (see effectively while also ensuring that pp.172–173). A business that takes care of employee your needs and those of your staff, When planning your workspace, needs by providing comfortable

These needs will depend on the equipment to temperature—will enjoy the tasks they will be performing, higher productivity and fewer days nature of the business—the ideal clients, and customers are met. and safe working conditions—from consider who will be using it and

ensuring that furnishings are lost to absenteeism. Although

workspace for a car mechanic appropriate and that devices employees’ specific needs will vary is very different from that of an and facilities are easy to use and according to the type of work they accountant working at home. fit for purpose. Importantly, check perform, there are some basic In each case, however, a well- that your workspace is in line with requirements that are common to designed workspace that functions any relevant health and safety most workplaces. efficiently can help reduce regulations (see pp.212–215).

55 % of typical employees spend the

majority of their time away from

their desks

iofficecorp.com, 2020

CALCULATING SPACE REQUIREMENTS IT EQUIPMENT Virtually every business requires

Buying or renting workspace a computer, if not several, together requirements. When calculating your

is a major cost, so you will want to with a Wi-Fi or wired connection. needs, take into account space for

use your space optimally. The typical You may also need printers, which people to circulate and any unusable

allowance per desk worker can vary in turn require space to store paper areas that are awkwardly shaped or

from 50–100 sq ft (4.5–9 sq m) and and ink. Check that your workspace poorly lit. Open-plan designs in

will include height as well as floor has enough electrical sockets for which people share facilities can

area, but check local regulations. equipment and that they are save on space but will not suit all

There are many free online tools located near workstations. types of businesses. Also allow space

to help you calculate your space for additional staff down the line.

GETTING GOING 112 113

Setting Up Your Workspace

SUITABLE FURNITURE LIGHT AND SOUND VENTILATION AND

You will need to provide furniture TEMPERATURE Employees will need good lighting

that supports good posture and that to work effectively. Aim for as Make sure your setting has good

employees can adjust to suit their much natural light as possible— ventilation and clean air. A

various needs—particularly if they fluorescent lighting should be comfortable temperature may

will be sitting for long periods or avoided since it can cause eye depend on the kind of work

may incur strains over time. Many strain. Protect staff from high levels being done (sedentary work

businesses lease their office of noise or vibration, whether versus physical labor), but

furniture from specialty suppliers. through office design, limiting the temperatures should be adjustable

use of noisy equipment, or using and take into account heat protective gear. generated by equipment.

HYGIENE AND WORKING SPACE ACCESS

SAFETY Certain tasks require more space or The space must be suitable for

You must provide access to toilets hazardous or noisy, so plan for this. equipment than others, or can be all staff, including anyone with

and drinking water and will also Other work may involve a need a disability. When setting up

need to regularly clean your for confidentiality or quiet workstations and facilities, allow

premises. Designate a suitable area concentration and require the use enough room to move around

for staff to prepare food and drinks. of a private area. If possible, also freely and safely. Allow sufficient

First-aid facilities, smoke detectors, allow for a communal space for storage for both work-related and

and fire extinguishers are also informal staff gatherings. personal items to keep floors clear

mandatory (see pp.98–99). clear path to fire exits. of obstructions and maintain a

Planning a Website

To succeed in today’s marketplace, an online presence is essential. A professional-

looking website will help you grab and retain people’s attention. Careful planning

will save you time, effort, and money—and deliver a better result.

Thinking about content target audience and investigate what kind of content is

A website’s look and feel are important, but engaging working well on similar sites, from instructional videos

content is what really attracts visitors to your site. to popular photo stories. Before writing any text, taking photos, or drafting

designs, outline what the content of your website will Choosing a domain name be when it launches, how it will be structured (see Deciding on the right domain name—your website’s

below), and how you will amend and add to the address on the internet—is as important as selecting

content as your business develops. the right business name (see pp.58–59). The domain

Consider your site’s purpose: a site that provides name and business’s name do not need to be the same,

content (information), for example, has very different although this can be helpful. Your domain name should

requirements from one through which people will be describe the business and contain key words for making purchases (see box, right). Think about your search engines. For example, a bike repair shop might

Mapping your

site’s structure HOME PAGE

Sketching out a possible structure

for your website is a useful way to

decide how best to order the

content, even if you are simply

using an existing website template

(see pp.116–117). A simple, Shop Services pyramid-like hierarchy—from

home page at the top to main

categories, then subcategories—

makes it easy for users to navigate

the site. It also helps search

engines find and index the content Product Delivery swiftly. This, in turn, improves the

chance of your site appearing

higher up in the results of internet

searches (known as search engine

optimization).

Product Product

area 1 area 2

GETTING GOING 114 115

Planning a Website

choose a domain name that includes the words “fix” WHICH TYPE OF WEBSITE? and “bike.” A short name that is simple, easy to type,

and memorable is best. You should also avoid numbers Your website’s purpose will influence the design and

and hyphens, since they can be confusing. whether the site is static (always shows the same content)

Select the appropriate domain extension for the or dynamic (shows different content according to the

business. Commercial businesses tend to use user). Many sites that aim to provide information, called

“.com,” whereas “.net” is more appropriate for internet, content websites, are static, while e-commerce sites—

email, and networking services. If you want to appeal online shops—tend to be dynamic, with pages tailored

to a more local audience, there are also country- and to the needs of individual customers who visit the site.

even region-specific extensions, such as “.ca” for a Content websites business in Canada or “.uk” for one in the UK.

To obtain your domain name, visit a domain name A content site might give a general overview of a topic,

such as caring for cats; focus on a specific aspect, such

registrar, check whether your preferred domain name as breeds; or narrow to key terms, such as a particular

is available, and pay a fee to lease the name. You will breed. You can secure funding for content sites in various

also need to use a web-hosting service, which allows ways: a cat site, for example, might be funded by a pet

your website to be accessed on the web. Some food company or have links to an e-commerce site. companies provide both hosting and domain names. Other ways to generate income include advertising and

affiliate marketing (see p.35). If your site is instructional,

you might offer products, such as e-books, or services,

such as courses, seminars, or consultancy. Social media

offers another way to be visible (see pp.140–141).

About us E-commerce websites Contacts

An e-commerce site showcases goods, such as pet foods,

and allows customers to make online purchases. Like real

storefronts, such sites need to be eye-catching and

regularly updated. The ordering and payment process

Team Message system, such as PayPal) with a clear return/refund policy. should be straightforward and hassle-free (via a trusted

Biography Contact

form

Designing and

Building a Website

An attractive, user-friendly website gives your business the edge on its

competitors. Take time to examine all your possible options and choose

carefully to ensure the site will meet your present and future needs.

Build for usability meet all your needs. Shared web hosting, for Whether its purpose is to provide information about example, means sharing hardware with multiple

your company or to sell goods or services, your website other users, which can slow down your website’s

must be accessible and easy to use. To get started, you operating time, and some website builders are will need a web-hosting service (see pp.114–115). Some not “search engine optimization” (SEO) friendly

website builders offer combined web hosting and (see p.118–119), making it harder for users to access

templates, which is an attractive option, but may not your content. A content management system (CMS)

Ways to build

a website

Website building can be quite

straightforward, requiring no

knowledge of computer code.

Website builders enable you

to simply drop your content into WEBSITE BUILDER

systems require a little more ❯ Website builders may also offer free web hosting. know-how but offer more control ❯ templates. Content management ❯ Requires little skill and no knowledge of code.

over your site’s structure. Building Various subscription models let you choose what you need in terms of ready-made page templates and tools your own site, or hiring someone to support page layout. Some offer multilingual options. to do it for you, offers the greatest

creative freedom but requires

technical skill.

GETTING GOING 116 117

Designing and Building a Website

offers more design options and your own choice of “Users often leave

web host, whereas creating your own unique site web pages within 10–20 from scratch requires web-design expertise.

However you build your website, your homepage

should set the scene with a clear statement that

summarizes the business. Use minimal text, bold

images, and a consistent design throughout to help

users identify key information and navigate easily. seconds but stay

Make it mobile-friendly much longer if they By 2022, monthly global data traffic will be

77 exabytes. To meet this challenge, it is worth perceive value.” ensuring that your website is also “responsive”,

meaning it is optimized to fit a screen of any size Jakob Nielson, “How Long Do Users Stay on Web

(even a watch) and can still be clearly read. Pages,” nngroup.com, 2011

CONTENT MANAGEMENT SYSTEM (CMS) BUILD FROM SCRATCH

❯ Requires some skill but offers more control over design ❯ Involves using code to program a website line-by-line.

and features. WordPress is the most popular CMS. ❯ Time-consuming but ensures design freedom rather than

❯ Software enables users to create, store, search, and relying on templates, resulting in a unique website.

manage content that is typically stored on a database. ❯ Requires knowledge of coding and web development

❯ Useful for sites with changing content, such as blogs. fundamentals, such as HTML and CSS.

Attracting

Website Traffic

Increasing the “visibility” of your website will help potential customers

or clients find it. There are various things you can do to make your site

more likely to get picked up by search engines trawling the web.

Making your site more visible that search engines will pick up on. Your site’s title To view your website, potential customers or clients page (as it appears in your website’s code), links from

must first be able to find it. You can make this easier other sites to yours (called backlinks), and the words in several ways, such as by promoting your website that you use in your links (phrases with hyperlinked online, through social media and advertising, and, text) can all help grab the attention of search engines.

most important, by making your website easy to Sites that are regularly updated with good content find using search engine optimization (SEO). will also rise in the ranks.

Understanding SEO

Search engines, such as Google, collect data from

every page on the web, then use algorithms (math

processes usually in computer programs) to

turn this data into search results. The higher

the algorithms rank your site, the higher it

will appear in the list of search results

and the more likely it is to be seen,

(see p.215). There are things you must

do to improve your search ranking,

such as including keywords in your

site’s content. These are words or

phrases that people might use as

search terms when looking for

your products or services and

SEO KEYWORDS BACKLINKS

Driving traffic SEO is not a one-off Research keywords The higher the quality

task; you will need to using a keyword tool, of your content, the

Focusing on factors that improve keep up-to-date with such as Keyword more other websites what factors will help Planner or Keyword will want to link to search engine optimization (SEO) search engines rank Explorer. Insert those yours. Provide html is an essential strategy. Having your website higher words and phrases links in your messages lots of backlinks to your site, in search listings, such relevant to your to copy and paste. for example, is something that as keywords and business within the An easy way to get search engines rate highly. Some backlinks, and update first 160 words of your backlinks is to sign up strategies for driving traffic your website content web page, using each to online business (increasing visitors to your site) accordingly. keyword only once. directories, then link are quick and cheap; others may from the directories to require more investment or your website. the hiring of expert help,

depending on your skill set.

GETTING GOING 118 119

Attracting Website Traffic

The first page of NEED TO KNOW

Google search ❯ Broad targeting means aiming toward a mass audience.

71 results captures ❯ Cookies are files placed on a website user’s computer, used % to track returning visitors

❯ Data management platforms

are software tools that track

website visitors with cookies and

of pull together a profile of customer traffic clicks

demographics and habits.

❯ Keyword targeting is using

Moz.com, 2014 keywords relating to your product

to improve your ranking in search

engine results.

❯ Narrow targeting, also called

interest group targeting, is seeking

a specific group of consumers.

CONTENT SOCIAL MEDIA MARKETING ADVERTISING

Generate interesting Create a profile for Build a customer Try pay-per-click social

content and keep it your business on the database and ask media advertising in fresh, updating it as main social media permission from your different channels, often as possible. It platforms, and post customers to send targeting customers by

will not only be useful when you know your them marketing age, location, or other to your customers but audience is active or information. Then run criteria (see pp.

will also boost your online. Offer further an email marketing 138–139). Monitor and search ranking. Also content that can be campaign with an then adjust keywords

post content on other accessed via a link to offer, including a link and targeting. Display sites, such as YouTube, your website (see to your website. your web address

that will link to yours. pp.140–141). offline, on business

cards, storefronts,

or vehicles.

Data Protection

It is crucial to protect all the financial data and any other sensitive

information stored on your business computers from cyber attack. Taking a

few basic measures can make the difference between safety and disaster.

Staying secure Many cyber attacks target technical weaknesses in

Small businesses are more likely to suffer a cyber computer systems. Make sure your computer hardware

attack than large ones, since they have less to spend on includes antivirus software and fire walls (programs

security and rarely have in-house IT teams. However, that block unauthorized access), and keep them turned

effective precautions can be cheap, or even free. on. This will place barriers between your computer

Information security

Protecting your business from online criminals is essential, as successful attacks can be financially damaging and undermine customer and investor confidence. You also have a legal obligation to protect customer data (see pp.212–215). You must take protective measures before any computer systems go live.

Budget for your cybersecurity needs Introduce essential cybersecurity To safeguard your data, purchase appropriate Around 80 percent of security breaches can be equipment and software and seek expert advice. prevented by installing software to protect systems

and control device usage.

❯ Back up all business-related data daily and store it securely—and separate from any computer ❯ Install and switch ❯ Control the use on ❯ Store data on a hard drive and a cloud storage memory cards fire wall programs of USB drives and

cybersecurity software for all your computers antivirus software ❯ Protect passwords ❯ service. A cloud software subscription buys ❯ Install and activate

❯ Pay for risk analysis and have the software as strong as possible firmware Update software and and make sure they are

installed by a certified technician (software

fixed into hardware)

GETTING GOING 120 121

Data Protection

network and potential attackers. NEED TO KNOW 63 % Criminals may also try to gain

access to data through human

vulnerability. To avoid this, train ❯ Malware is short for malicious

software—any program that

staff to recognize potential attacks, damages a computer’s operating such as phishing, where emails system and the data it contains.

are used to trick the receiver into ❯ Ransomware is malware that of data breaches

giving away passwords and user infects a computer and demands involve stolen, names, or malware programs, a ransom to be paid electronically

which install on a computer in return for restoring the

when you click on a link or email. computer to normal. default, or weak

Seek free data protection advice ❯ Denial of service is a cyber passwords from business organizations and attack that floods computer or government agencies. Also, be web systems with bogus requests

sure to meet any cybersecurity Verizon, Data Breach Investigations that stop users from connecting,

Report, enterprise.verizon.com, 2016 allowing criminals to gain access.

regulations.

Test and update computer security Keep staff alert Cyber attackers continually find new ways to steal Take the lead and inform staff of the dangers of

data, so you need to be constantly on your guard. cyber attack and how it can impact the business.

❯ Use vulnerability scan programs to identify any ❯ Teach staff, particularly those in closest contact with

weak points in your computer system, whether sensitive data, how to spot and report attacks outside the network or inside—once a “trusted ❯ Encourage safe browsing so that staff recognize user” has signed in suspect emails, text messages, apps, and web links

❯ Make sure the latest security software is

installed on your computers

❯ Check that all default passwords on new

devices and software have been reset

Finding the

Right Talent

Attracting the right people to work for you will give your business a

competitive edge. Although you may not be able to afford permanent

staff, there are other ways of bringing talented people on board.

Identifying your needs undertaken on a freelance basis. A specialist Before looking for potential employees, think carefully freelancer can provide the expertise you need about the work that needs to be done. Taking on staff for the duration of a specific task or project. is a big commitment, since recruitment (see pp.124– Alternatively, if the work is seasonal, or for 125), induction, and training all take time and money. a limited time period, and requires specific skills

Consider whether you could outsource the work to or experience, you may wish to employ someone

another organization instead (see pp.50–51). For on a fixed-term contract. This approach can provide

example, many small businesses now outsource the help you need without a long-term commitment

their accounting and payroll activities. This avoids and its associated costs. the need to employ dedicated staff, allowing you to

focus on running the business. Decide whether the

work is short term or requires special skills, such as

web design or marketing, and whether it could be

DO’S AND DON’TS

When looking for the right people

to fill roles in your business, here

are some factors to keep in mind.

❯ Try several sources to find

suitable talent

❯ Ask friends and family to refer

qualified candidates to you

❯ Identify several candidates in

case one turns the role down

❯ Keep in touch with skilled people Catching the talent you may need in the future Once you have decided upon the type of candidate

Don’t you need and how you want to employ them (on a freelance, contract, full- or part-time basis) you can select ❯ Promise anything that you the best way of finding them. Commonly used sources are: are unable to deliver

❯ Rush into making a decision;

consider all candidates carefully

GETTING GOING 122 123

Finding the Right Talent

Attracting candidates 50 % If your company has a good reputation, it will attract

the best candidates. To find out what makes an

employer appealing, ask your own employees, find of candidates will not out how other managers run their businesses, and

study advertisements to see how other companies work for a company entice their talent. Having a good reputation is vital,

but whatever you tell candidates about your business with a bad reputation must be genuine. If you promise training, for example,

and do not provide it, they may leave, and your time “2020 HR Statistics: Job Search, Hiring,

and effort will have been wasted. Recruiting & Interviews”, Zety.com, 2020

Websites

referrals from people you trust. Try to find candidates through Personal In addition to posting Colleges and positions online, use referrals universities recruitment search Contact higher education engines such as Monster establishments that have and networking websites If someone has a proven track programs to help their such as LinkedIn to let record and can get in touch students find your contacts know you with you through a friend, work experience, are seeking talent you may save months apprenticeships, to hire. of searching. or jobs.

TALENT

Recruiters Specialist

This can be a more journals and sites

short-listing candidates recruiters will save you media if the job requires notice on traditional job time by screening and particular expertise, such boards, for example in as a role in software store windows or libraries, expensive route, but Advertise jobs in specialist Posting a physical Local job boards

on your behalf. development. can attract candidates

looking for local work.

Recruiting Staff

To find employees with the right skills, knowledge, and attitude for your

business, you need to plan the recruitment process in detail—from advertising

the role and creating a job description to interviewing and making a decision.

Hiring effectively is key, but characteristics, such as to someone else. Experience of a Hiring the right person is a the ability to work in a team or use similar business is also invaluable, time-consuming process, so it one’s own initiative, may be equally affording insights into different is essential to plan ahead. Think important. If someone has to work ways of doing things. Looking at about the role and the qualities alone in an office, for example, they advertisements for similar jobs of the person who is most likely to will need to be confident enough will give you an idea of the typical succeed at it. Having the right skills to handle queries without deferring salary and the key skills for the role.

Finding the right person

A job description will help you attract and assess candidates

and decide who to interview. Planning the interview in detail

will guide you toward choosing the right person.

Reviewing applications

The job description provides a guide for

Creating a job description assessing candidates. Use the skills and qualities you have listed to decide This is an essen tial step in the recruitment whether candidates meet your needs. process, as it determines which applicants you

will attract. An effective descrip tion will provide ❯ Divide applications into three groups: candidates with a clear picture of the job and likely, not sure, and unlikely. the specific skills and knowledge required. ❯ Focus on skills and experience rather than

❯ personal details such as someone’s name, Define the job title ❯ Describe the which may be an unconscious bias. clearly , including how main duties ❯ Look out for someone who has experience the role fits into the and responsibilities. in the area you need but wider business. ❯ Set out the terms will still be learning in the role. ❯ Outline skills and of employment in ❯ Make notes as these will help form experience , plus any detail, such as hours, questions at the interview stage. qualifications required, salary, location,

being reasonable in sick pay, and ❯ Keep a record of candidates who are not

your expectations. vacation allowance. right for this job but might suit a future role.

GETTING GOING 124 125

Recruiting Staff

recruitment (see pp.122–123), %

including online job sites and ❯ Make sure that all interview talking to friends. Think about questions are nondiscriminatory the best place to find the person and relevant to the role. of the global appropriate for your post and begin ❯ Avoid personal questions about the recruitment process. Decide marital status or religion, which workforce is who will be involved and what could lead to legal action. seeking a job 30 There are many channels for BE AWARE your timeline and budget will be. ❯ Be mindful that health and at

Next, create an onboarding plan to disability are also sensitive areas. any one time introduce the new recruit to their

colleagues and the business. Business.linkedIn.com

Short-listing and interviewing Choosing the right person

A short list identifies the strongest applicants for interviewing. The interview should reveal which

You may wish to conduct short telephone inter views first to screen candidate has the best skills and

weaker candidates. Plan the timing and order of the interview, and experience. Make sure you feel that

make a list of questions to ensure consistency. the candidate has the right attitude for

the job, as this is hard to change later.

❯ Let the candidate know ❯ Find out what motivates the

in advance what form the interviewee. Ask what they like ❯ Make sure that you can justify interview will take and doing most or least. the reasons for your choice.

roughly how long it will be. ❯ Ask the candidate to describe ❯ Call the successful applicant to offer

❯ Put the interviewee at ease specific work situations that them the job. Ensure you know their

and encourage them to talk. illustrate their experience. salary requirements before doing this.

❯ Ask open questions that ❯ Devise a test to check the ❯ Draw up a contract, setting out the

cannot be answered with a skills of the candidate. conditions of employment to send

simple yes or no. to the new recruit. ❯ Introduce the interviewee

❯ Watch how they react to your to staff afterward—less formal ❯ Notify and thank the unsuccessful

questions and listen carefully to situations often reveal how candidates. You may want to give their responses. Make notes. likely an individual is to fit in. them constructive feedback.

Do You Need

a Manager?

As your business grows, you may have to think about hiring a manager.

Understanding the responsibilities and skills of a manager will help you

weigh the advantages against the cost of their salary.

Sharing the load Remember, you could bring Even if you have the time and skills a manager onto your team as needed to oversee every part of a temporary measure to begin your venture at the start, that may with, to see if this is right for change as your business develops. your business.

You could find yourself pulled away Directing projects from your priorities or without the Looking ahead Agrees and sticks to timescales and

skills to take the business further. While you are still able budgets, and makes sure targets are

Recruiting a manager could to run the business met and goals achieved.

reduce your workload and bring yourself, consider in much-needed expertise—but how it might it is a big decision. A managerial

salary will add a significant extra

cost to the business, and you may Managing staff

be apprehensive about handing Provides support, motivation, over authority to an outsider. and essential training to help staff

perform their roles effectively.

Coordinating

your business

A skilled manager will pull

together all the different

areas of a business to

produce a successful

outcome. They will Organizing

have an overview resources

of what everyone Makes sure people have

is doing, observe what they need to get their what is going well work done effectively.

and where the

problems are,

and take action

as necessary. A

good manager

will be adept at

the following:

GETTING GOING 126 127

Do You Need a Manager?

develop—you may need to take as the business grows. Planning IDENTIFYING A GOOD on staff, introduce new products, ahead will highlight which skills MANAGER or carry out more ambitious and experience you may need in a

marketing. Think about how much future manager, as well as which When choosing a manager, look of this you could manage on your parts of the business will most for someone who is

own, and identify areas where you benefit from your own skills. This ❯ Full of ideas that are relevant would benefit from experienced will also give you a time frame and fresh.

help. Also consider your existing within which to find, and budget ❯ Confident enough to challenge workload and how it will increase for, the ideal candidate. and improve existing methods.

Do not rush the recruitment ❯ Versatile and capable of thriving

process (see pp.124–125). A with minimal supervision.

highly capable manager may ❯ Trustworthy and personable, need some persuasion to join a inspiring loyalty in employees.

Maintaining order new business, especially if ❯ Passionate about coaching and it means resigning from developing a team. Puts efficient processes in place so an existing position. staff understand what to do and ensures

consistency in what is being done.

Communicating

Establishes good channels “Managers are of communication so all

employees understand their the most creative

role and what is happening

elsewhere in the business. people in the

world.”

Maharishi Mahesh Yogi,

Indian guru and businessman

Getting

things done

Observes activity

across the whole

business to assess the

effectiveness of work

processes and the

well-being of staff,

ensuring tasks are

completed and

roles are fulfilled.

Diversity

and Inclusion

A diverse and inclusive workplace makes for a more successful business. Recruit

from a wider pool of talented people and create an environ ment where all are

welcome and appreciated and more likely to enjoy their work and contribute.

What is diversity? Research carried out by US management consultants Diversity extends beyond considerations of race, McKinsey & Co. showed that diverse businesses are gender, and disability. More broadly, it encom passes more successful at winning top talent, score higher all the characteristics or qualities that make a person on employee satis faction, have a deeper understanding

different from your self. When recruiting, there is a of their customers, and are better at decision-making. subconscious ten dency to look for people who are Diversity is about recruiting and doing business like you, so pay attention to diversity to help you with a broader range of people, while inclusion move away from that bias and think more openly. involves sustaining an open and welcoming work

This is not just to ensure legal compliance: firms that atmosphere. A new business needs to strive to embrace diversity are likely to be more profitable, so it promote an inclusive culture, where people feel is good business sense to have a welcoming outlook safe to make suggestions, without worrying how and reflect the globally connected marketplace. their views will be received.

Why diversity

matters

Encouraging diversity brings many

benefits to a business. Not only will

your firm be able to draw on a wider

pool of talent with fresh ideas, but it

will also be in a better position to

A diverse company will also have a Set in place a plan to encourage People who think in the same way better understanding of the wants connect with a range of customers. STRATEGIES BENEFITS and needs of that wider audience. diversity from recruitment to are likely to come up with a similar,

onboarding to marketing. Everyone limited range of ideas. Involve a

involved must understand the diverse group of people, however,

benefits and not see a focus on and creativity will soar. Diversity

diversity as merely compliance improves innovation as people

with the law. Social media used to bring their different perspectives

promote the business should both and feel freer to propose original,

depict and engage with a wide even unconventional, ideas.

range of individuals and groups.

GETTING GOING 128 129

Diversity and Inclusion

Understanding unconscious bias ANTIDISCRIMINATION LAWS Studies have shown that people can have preferences

of which they are unaware that may guide their Many countries across the world now have choices—a state known as unconscious bias. These antidiscrimination laws of some kind (see pp.212–215)

preferences are often based on stereotypes and beliefs in order to stop businesses from discriminating against

that are ingrained and unconscious. Many organizations individuals based on protected characteristics. These

offer “unconscious bias training” that aims to bring characteristics can include age, disability, race, religion,

these hidden prejudices, held by everyone to a greater gender, or sexual orientation. Every individual must be

or lesser extent, to light. Further research indicates dealt with fairly, equally, and in accordance with national

law, all the way through the employment life cycle—from

that these biases can affect who is recruited even placing an advertisement for an employee to equal

when candidates are presenting with identical CVs, treatment in the workplace. Business practices are

so identifying and addressing these preferences is falling under greater scrutiny. It is not only a matter

key to becoming a more open and diverse workplace. of criminal law; in some countries, civil law may also

apply, meaning that an employee could claim for

personal compensation if an employer is proven to

have discriminated against them.

INCLUSION “Diversity is

It is also important to follow being invited

through on a pledge to encourage

diversity by making sure all to the party;

members of staff are made to feel

welcome. This may mean being inclusion is

flexible to accommodate different

ways of doing things. Keeping an being asked

open and honest dialogue with all

your employees will help everyone to dance. ” feel heard and valued.

Vernā Myers, US activist

Using a Customer

Data System

The better you understand your customers or clients, the better you can meet

their needs and encourage them to keep coming back. Customer relationship

management (CRM) software can help you with this.

Understanding appointments, or just ask questions. shop, and how much they spend. CRM systems These interactions (known as CRM software is widely available Your customers and clients will “touchpoints”) can tell you a great online to help you capture and expect to be able to access your deal about your customers—what analyze this data. You can use it business online, whether to order they are interested in, what they to ensure your business offers your goods, find special offers, book buy and when, how often they customers what they want, when

Using a CRM system

A CRM system works by collecting and analyzing data about customers’ or clients’ purchasing and communication history with your business. You can then use this data to better understand and target your customers and clients. Even a simple CRM system will help you in building customer relationships, improving customer service, and increasing the productivity and profitability of your business.

Gathering data from customers and clients

Existing and potential customers can interact with your CRM system in many different ways. Encourage this at every opportunity, so you understand their needs and expectations before they do business with you, and at every step along the journey. The more data the system collects, the more you can learn. Here are some ways to achieve this:

Create a website Reward customers Improve customer Create an eye-catching Offer incentives experience website that draws users to customers for Impress customers and in and promotes your recom mending your clients by exceeding

business. Use it to sell the brand business. Reward repeat customers. expectations. Offer a personalized and get people talking about you. service, quality goods, unique

Promote products packaging, and prompt delivery.

Use social media or services Create a business profile Give regular discounts Follow-up complaints and post relevant content. and special offers to Handle and resolve Aim to engage customers attract attention to your business. complaints properly.

and clients in a conversation. Where purchases

Meet customers require installation/service, follow

Send regular Plan events, where up with customers and clients e-communications you can engage with promptly, and provide detailed Email newsletters customers and clients. FAQs on your website. tailored to the interests Invite people to sign up to your

of clients and customers. Write a mailing list. blog and post videos online about

your business.

GETTING GOING 130 131

Using a Customer Data System

they want it, and at a price they NEED TO KNOW “There is only are willing to pay. You can also use

CRM software to manage how you one boss. The communicate with your customers ❯ Contacts are existing clients

or customers who have already customer. And he

and clients, by automatically purchased a product or service emailing personalized invoices, from a business.

receipts, reminders, and marketing ❯ CRM technology captures can fire everybody

material or promotional offers. and analyzes customer in the company data automatically through

Investing in CRM their transactions. from the chairman You may feel that you want to delay ❯ Data analysis examines the

installing a CRM system until your information gathered to help the on down, simply business is established. However, business operate more efficiently.

the better you understand your ❯ Leads are potential future by spending customers or clients, the more customers or clients.

competitive your business will be. ❯ Net promoter score measures his money There are many systems available, customer or client satisfaction by

including bespoke ones, so look their willingness to recommend somewhere else.” online to find independent advice products or services to others.

from a CRM consultant. Sam Walton, founder of Wal-Mart Stores Inc.

Using customer data

Capturing as much data as possible will give you a

broad insight into your customers and clients. You

can then organize and analyze this data into useful

information to guide future business decisions.

❯ Identify customers’ characteristics, including

their buying habits, seasons, and times of

purchase, as well as special interests—this can help

you target these specific groups. Using customer insight

❯ Highlight patterns and trends , such as fashions A CRM system will reveal how the behavior

and growing interests, which reveals areas you can of customers and clients changes over time. tap into and exploit. You can also spot new and This information can strengthen your business, growing markets and those in decline. enabling you to:

❯ Analyze marketing responses to monitor the ❯ Understand your customers’ preferences

effectiveness of your campaigns. If customers and expectations, allowing you to meet them do not respond, you know you need to try a now and in the future.

different approach. ❯ Ensure your marketing campaigns are

❯ Target customers or clients who are high targeted and effective.

spenders with customized marketing. ❯ Compete more successfully against your

rivals, especially those without a CRM system.

Preparing

for Launch

Before taking your business live, build in a prelaunch stage when

you can test each component—from branding to product—and

tweak as necessary to ensure you achieve the best possible launch.

Preparing to launch

Careful prelaunch planning will ensure that your groups to survey to gain more objective judgments. business is fully prepared for liftoff. This is the time If building a new website to support your business, for crucial small-scale testing of your product or consider creating a landing page with a form to get service, branding, website, marketing approach, on your waiting list to be let in the launch. and any other key component of the business.

Getting feedback from a sample of your target

audience a few months in advance of your launch 30,000 will give you time to adjust your approach if

necessary to address criticisms and to incorporate

helpful new ideas.

To keep costs low, discuss your ideas with as

many friends, peers, and family members as possible— new products are especially those who match the characteristics of your

target customer (see pp.40–41). Show them what you introduced to the market

plan to launch and get their honest opinions.

Ask those who match your target customer profile each year—95% fail which social media or internet forums they use; their

preferences will help you decide which external Clayton Christensen, Harvard Business School

Test strategy Testing and trialing Feedback mechanisms

Having created a product to Methods for refining your Talk to family, friends, and product include click-testing colleagues. Online, budget appeal to a certain audience, on a website frequented by for a brief survey; question you now need to find out where your target customers; customer groups; set up a those people gather (virtually running a trial in a store; and web page to solicit or physically) and seek their holding a pop-up event. reactions and advice. opinions. Approach them via

a website that sells your type

of product, host a brief online

survey, conduct shopping-

center or store interviews, or

use a focus group, if affordable.

GETTING GOING 132 133

Preparing for Launch

PRELAUNCH

CHECKLIST

❯ Complete any tweaks to

your product or marketing

program, and retest.

❯ Test how well your website

functions (if you have one),

and ask others to test it, too.

❯ Gather relevant publicity

contacts, such as magazine

editors, bloggers, and social

media influencers.

❯ Finalize the marketing and

promotion plan, covering

who to communicate with

and when.

❯ Create a timeline to your

launch day, and do a dry

run of any events planned,

if feasible.

Use focus groups

Setting up a focus group is not cheap but can be highly

effective. You need a venue,

5 to 10 participants who match

your customer profile, and a

mediator to moderate and ask

them well-designed questions

about your product offering.

Spreading

the Word

Before spending money on costly marketing campaigns,

consider using low-cost methods of promoting your

products or services yourself to generate sales.

Telling the world

Marketing your products and services is essential

in order to attract sales. While your budget may not

allow for professional campaigns at first, there are USE YOUR

cost. Known as “organic marketing,” this approach ❯ Ask friends and family to talk simply requires your time, energy, and creativity. steps you can take to spread the word at minimal CONTACTS

about your products and services

Organic marketing involves any means of getting to everyone they know, both your message out to potential customers and clients. on- and offline.

This can include writing a blog, attending local fairs, ❯ Approach business contacts handing out samples of your product, or posting your and former colleagues to help business details on free online directories. promote your venture.

This approach is less direct than conventional

advertising, so the benefits may be slow to materialize.

However, research shows that more than 70 percent

of consumers ignore paid-for advertising and have

greater trust in “word-of-mouth” messages, triggered

by customer experience, as they appear to be more

authentic. As such, even when you can afford to

undertake more traditional marketing techniques,

organic methods are well worth continuing.

Creative approaches REPRESENT The primary aim of marketing is to THE BUSINESS

conjunction with your public relations you can talk about and show your products or services. Share your activities, (see pp.136–137). When promote sales, and should work in ❯ Attend industry events, where

using organic marketing, be creative, details and build contacts. and use as many methods and ❯ Participate in community events,

channels as possible, to target such as fairs and shows, to meet

potential customers and clients. potential customers and clients.

However, always ensure your Demonstrate what you offer. approaches are consistent with

your brand and company values.

GETTING GOING 134 135

Spreading the Word

MAKE MORE

ONLINE CONTENT

❯ Demonstrate and promote your

products and services on online

video sharing sites and forums.

❯ Write blogs and articles that

feature your products and services.

❯ Publish positive testimonials from

satisfied customers. Encourage

customers to post feedback.

TARGET

SOCIAL MEDIA TRY OTHER

❯ Join all relevant social media TACTICS

❯ groups and highlight your business. ❯ Come up with quirky or

Develop social media relationships controversial products and

❯ Like and share their posts. ❯ Offer free samples and “mini” Befriend popular influencers with complimentary businesses. campaigns to attract attention.

versions of your products or services

to attract their followers to your to encourage trial purchases.

profile and website, if you have one.

USE

ALL CHANNELS

❯ Build a website, even just a basic

one, to promote your products

and services.

❯ Post your business details on all

relevant local and online business

directories with links to your website.

❯ Use online auction sites to sell 84 % and promote your offering.

OFFER

PROMOTIONS

❯ Offer friends-and-family benefits of millenials to existing customers.

❯ Reward customers for referring do not trust your products and services to their

friends and contacts. traditional

❯ Use giveaways and competitions

as an opportunity to get people ads to try your products and services.

McCarthy Group, 2014

Creating a Buzz

While marketing encourages the sale of your products and services,

public relations (PR) aims to promote your business and brand. It is

a valuable tool to help gain interest, customer loyalty, and sales.

Understanding publicity Generating media coverage is a vital PR tool in order to

As a new business owner, it is important to learn how reach your audience. For example, a journalist or online

to use PR to generate and maintain a positive image of influencer writing about your business will give you

your company and brand. It is key to establishing your valuable, free publicity. When launching your business,

brand’s personality (see pp.60–61), and can strongly publicize the story behind your brand, and why you

influence how willing people are to deal with you, launched it (see pp.62–63). Plan events, such as open

including customers, suppliers, and even investors. days, enter for relevant trade or community awards,

PR is an ongoing process that starts by creating a and share interesting news stories about your

public image of your brand, what it is, and what it business. Take advantage of free internet monitoring

stands for. It then uses publicity to carefully manage services, such as Google Alerts, to keep track of any

how the business or brand is perceived externally. media mentions, as well as to follow competitors.

USE THE INTERNET BECOME PART OF

The internet provides a wealth of free THE COMMUNITY opportunities to publicize your business. People like to support their communities,

If possible, build your own website, or including local businesses, which you can

make use of social media and local forums. benefit from - as part of the community.

❯ Advertise events and special promotions ❯ Organise open days, where the public

to attract people to your business. can meet you and your staff, and see

❯ Share news stories about your business, what your business offers.

such as interesting events, new products ❯ Join local business groups and contribute and services, or notable achievements. to the local area. Share your involvement.

❯ Create online profiles of yourself and ❯ Sponsor local activities and initiatives,

staff to give your business a human face. and attend shows and events. Help raise

Update them regularly and use them to funds for local good causes and charities.

promote the business.

GETTING GOING 136 137

Creating a Buzz

“A good PR story is better CASE STUDY

than a front page ad. ” MUJI

Sir Richard Branson, entrepreneur Japanese retailer MUJI has been

consistent in telling its “no brand”

story through channels other than

Spreading the word advertising. The company relies on

publicity, in-store events, lectures

Generating publicity need not be expensive, especially if products, and word of mouth. This that explain the thinking behind its

your customer base is local. Identify your target customers quiet approach reflects the MUJI

(see pp.40–41) and develop publicity and PR activities with brand. The effect has been to set

them in mind. Most people like promotions, with special MUJI apart from its competitors and

deals and free giveaways, but some may respond better create a loyal following. MUJI now has

to information via direct mail, whereas others are likely to stores from Singapore to New York.

prefer social media posts. Here are some ways to generate

publicity and get people talking about your new business.

BE CREATIVE BE THE FACE OF

The point of PR is to get people interested YOUR BUSINESS in, and talking about, your business. Think As business owner, you are central to of quirky ways to promote your brand that your brand. Use your knowledge and will capture the attention of others. enthusiasm to generate positive PR.

❯ Create posters and flyers that will ❯ Engage with local media and develop

amuse or inspire those who see them. a good relationship. Invite them to events, Make them available online for people share stories, and send press releases.

to share and repost. ❯ Become the expert in your field to raise

❯ Occasionally offer novelty products your personal profile and give greater

or services, unique to your business. credibility to your business.

❯ Launch innovative competitions, such ❯ Speak publicly at local and industry

as local treasure hunts or online puzzles. events. Join and start campaigns.

Advertising

As well as promoting your business with marketing and PR activities,

you can further increase your visibility by paying for advertising, using

the medium best suited to your target audience.

Choosing your channel the right means of communication for your target

Once you have launched your business with a audience. For instance, if your message is for an

promotion, paying for advertising can broaden your older demographic, traditional advertising in printed

reach. In a competitive market, it is important to use publications or on the radio can be more effective,

TRADITIONAL ADVERTISING

PROS CONS

❯ ❯ May be regarded as junk mail and discarded Reaches local/specific target market, such

as restaurant diners ❯ Typically low response rate

❯ Delivered directly to people’s homes/offices

DIRECT MAIL ❯ Low cost

❯ Fast publication process ❯ Offers no control over ad placement

❯ Themed specialty sections may allow for ❯ Competition for attention with other material

targeted advertising on page (including competitors)

NEWSPAPERS ❯ Can include coupons ❯ Short shelf life and lower-quality printing

❯ Is often in circulation for months ❯ Accurate circulation figures are hard to source

❯ Specialty titles and themed sections allow ❯ Advance planning is necessary to secure slots

focused adverts ❯ Is more costly than newspapers since it reaches

MAGAZINES ❯ Quality printing adds cachet to the brand a more targeted demographic

❯ Inexpensive and easy production process ❯ Listeners tend to “switch off” during adverts

❯ Useful for reaching a target audience ❯ Frequent adverts are required for an impact

❯ Good for creating immediate sales ❯ Increased competition and higher cost for “rush

RADIO hour” slots

❯ Highly visible, clear message, seen ❯ Format limits message length

repeatedly at all times ❯ Competition for prime sites

❯ Reaches people faster and more cheaply ❯ Digital billboards are more effective, but much

BILLBOARDS than other media more expensive than static billboards

❯ Potential to impress with creative, ❯ Limited audience numbers

professional production ❯ Audience may enter cinema only after adverts

❯ Captive audience are shown

CINEMA ❯ High impact

❯ Offers local, national, and global reach ❯ Generally more expensive than other channels

❯ High impact with vision/sound ❯ Repetition may cause viewer fatigue

❯ Adds cachet to brand ❯ Viewers may ignore or skip adverts on catch-up

TELEVISION television/internet streaming

GETTING GOING 138 139

Advertising

although more expensive than online options, via 90 % the internet or mobile technology. Online advertising

is more flexible, since it is not limited to a timed of US consumers publication or broadcast. Response rates, which

you need in order to figure out the return on your say that adverts influence

investment (ROI; see p.152), are also easier to them to make a purchase accurately track with online advertising. Look at the

pros and cons of each option to decide on the most

effective and affordable way to reach your customers. How Consumers View Advertising, Clutch, 2017

ONLINE ADVERTISING

PROS CONS

❯ Relatively affordable. Requires good software ❯ Building a mailing list takes time; buying one in

and a list of email addresses can be expensive

❯ Offers ability to send out bulk emails ❯ Adverts may not reach the right audience

ADVERTS EMAILED ❯ Easy to track the response rate ❯ Emails can be deleted or marked as spam IN NEWSLETTERS

❯ Affordable, since you pay only when someone ❯ No guarantee that website users will click

clicks on the ad ❯ Ad-blocking tools can prevent users from

❯ Can be visually eye-catching and build seeing adverts

PAY-PER-CLICK brand awareness ❯ Lower click-through rate than pay-per-click DISPLAY ❯ Makes it easy to target special interests/topics adverts on search engines (paid search ads) ADVERTISING

❯ Similarly affordable, since search engine charges ❯ Requires lots of testing to establish most

only when visitors click on the ad effective key words

❯ Success is the number of clicks so easy to track ❯ No guarantee that those who click will buy

ADVERTISING PAID SEARCH ❯ Higher click-through rate than for other ❯ No direct correlation between budget and pay-per-click banner and display adverts results

❯ Generally cheap to develop ❯ Creating a consistent advertising campaign for

MOBILE ❯ and can be costly Can target specific demographic groups, thanks ❯ ❯ different screen sizes and systems is tricky Quick and easy to track ad effectiveness

ADVERTISING to geo-location technologies Users may be annoyed by the intrusion

❯ ❯ Negative experiences are quickly shared Can engage individually with users

❯ Sponsoring a social media influencer who ❯ Large followings do not necessarily guarantee

connects with your target audience raises high engagement

awareness of your brand ❯ The appeal of influencers—especially

SOCIAL MEDIA ❯ A positive mention of your product or celebrities—can fluctuate SPONSORSHIP service encourages brand loyalty

❯ Easy to target a specific audience ❯ Continual posts and updates can distract user

❯ attention away from placed adverts Increased brand visibility and recognition

SOCIAL MEDIA ❯ ❯ Requires constant monitoring to maintain users’ Cheaper than conventional advertising

interest and find new users

ADVERTS

Making the Most

of Social Media

Thanks to social media, your business can engage with existing and

potential customers anytime, anywhere. To make the most of it, you

need to target the right platforms and use the most effective strategies.

Picking the right sites

Start by deciding what you want

to achieve on social media, such as

building your brand, reaching new

customers, or engaging better with

existing ones. Review the platforms

your competitors use and why; this SHARE CONTENT ACROSS will help you decide which are most Choose the right social media DIFFERENT PLATFORMS relevant for you and may inspire

new ideas. To further guide your ❯ Six key sites; look out for new ones, too. Repeat consistent messages

choices, ask your customers which but reshape content to suit ❯ Facebook—use to showcase your

different platform styles. products and services.

platforms they use, and compare

any profile you have built up of ❯ Tweak messages to suit the ❯ Instagram—share videos and photos,

vocabulary and the tone of and engage with customers.

you need to bring it to life. Start by them—plus of those you aim to each platform. ❯ Snapchat—post to 12–34 age group, attract—to the user demographic ❯ Boost impact by using the full and offer discounts and promo codes. information found in the business character limit for each platform. ❯ Twitter —post breaking news, tools on most popular platforms. ❯ Check images and resize them announcements, and promotions. Once you have decided your plan, as necessary for each platform. ❯ LinkedIn —post professional content, as well as jobs, to build credibility. creating compelling content, such ❯ YouTube —post educational and as posts, images, or videos, and instructional videos. post it on the most appropriate

platforms (see right).

EXTEND BUSINESS REACH

Creating a strong profile ❯ Target the maximum number Begin by choosing a username, of users who see your content.

which starts with the @ symbol, ❯ Use hashtags—“#” followed by called a “social media handle,” for words with no spaces, such as instance, @mycompanyname. Aim #hotdog—to create phrases that for a strong, consistent username are easy to search for, including across all platforms and ideally one your business name.

that matches your website domain ❯ Encourage engagement, using EXISTING CUSTOMERS name (see p.114). Use the same logo likes, comments, and shares. Engaging with existing customers

can result in repeat sales and

or personal photograph across all greater loyalty. platforms, too, so that your business

is easily recognized. Then, add an

attention-grabbing summary of the

business and keep it updated.

GETTING GOING 140 141

Making the Most of Social Media

CREATE CONTENT MAKING IT WORK

❯ ❯ Use free online tools and analytics (see pp.212–215) initially to track and Plan consistent ❯ Post compelling content. scheduled content updates. , regular, measure performance of social media interactions. ❯

❯ Respond to any negative comments on sites in a positive way, and avoid Personalize content to suit defensive or inflammatory replies. your target audience. ❯ Add your social networking profile links to your website, email signature, ❯ Use strong images or lively promotional materials, stationery, and business cards. infographics to draw attention.

❯ Tailor content to the platform

but keep a clear brand focus.

Follow the trends Invest in advertising If you have a website

❯ Identify “influencers” —people with ❯ Choose the most relevant ❯ Link to your website

a large social media following—in platform to your business and store , which is where areas relevant to your business and customers, and try to steer users, customer sales are that best match your brand. or “traffic,” to your own website. actually made.

❯ Subscribe to social media blogs ❯ Use online ads that target buyers ❯ Keep website content

(online articles and commentaries) by geography, shopping patterns, up to date, with news, to learn about the latest trends. personal interests, and other blogs, new products,

❯ demographic pointers. and trends. Look online at Google Trends for

a broad view of the topics that are ❯ Create compelling offers to attract ❯ Promote website content, the most searched for online. attention and customer interaction. such as blog posts and

❯ Join relevant online forums to see ❯ images, on your social Make sure ads have a clear, simple

what members are talking about and media platforms to graphic design, punchy memorable interested in. Start and lead threads generate website traffic. headlines, or both. on subjects involving your business. ❯ Encourage the sharing of

website content on social

media by adding “sharing”

tools to web pages that link

to Facebook, Instagram,

and other sites.

POTENTIAL CUSTOMERS

Raising your profile will attract new

customers, who may spread the

word about you.

Networking to Build

Your Business

As the owner of a start-up, you need to make connections so that your business

becomes better known and builds some support. As your business grows, these

connections may become mutually beneficial relationships.

Meeting in person interpret a person’s reactions Maintaining relationships Online technology provides plenty helps both understanding and Networking is not just about of good ways to connect, and video- the flow of conversation. It is also seeking out new contacts. Imagine conferencing platforms have come a better way to build credibility two lists. The first is your target list, into their own since the global and establish trust. containing people to get to know, pandemic. Apps such as Zoom, Face-to-face networking need or types of people to connect with, Microsoft Teams, Google Hangout, not be daunting. Think about it as for example, influencers in your and Skype offer facilities for people a way to gain personal exposure, sector. The second list contains around the world to see each other which will create opportunities and all your current contacts. Choose in real time, host meetings, share grow the business. Set a goal to the relationships to maintain and visuals, and vote on decisions. meet more people, have meaningful strengthen, and plan to have a

However, where possible, interactions, and build personal weekly coffee or phone call with

face-to-face contact, especially and professional relationships. at least one of these people. Do not when meeting someone for the first Look for professional networking assume anything; asking open time, is an easier way to establish a events as well as special interest questions may reveal connections. rapport with someone. A significant groups and associations linked to Always aim to help contacts as far part of communication is body your area of business where you as possible, even if it is just language; being able to see and can go along and make connections. emailing a link to an article.

HOW TO NETWORK EFFECTIVELY MAKING IT WORK

There are some important ways in ❯ Nurture and maintain your

which you can make your face-to-face current contacts by staying in

networking more successful. touch, but do not add people

❯ Dress appropriately . to your email list without

❯ their permission. Listen carefully to the people

you meet to find shared ❯ Trust remains the basis of any interests. Then, politely move relationship, so be sure to follow

on to meet others. through on any offers to share

❯ information that you make when Aim to develop relationships Veejay Nahar-Watson

❯ Any Business ❯ Inform your contacts when you Exchange a well-designed vnaharwatson@ are launching a new product or business card rather than sell something. you meet someone. Managing Director

❯ you want to connect with. with people anybusiness.com service and seek input from those www.anybusiness.com with relevant experience. 1-234-567-8910 Follow up with an email or

connection via social media.

GETTING GOING 142 143

Networking to Build Your Business

How to network in person

Consider people, from peers in the same sector to industry experts, who would make good connections. Face-to-face opportunities

include breakfast meetings, conferences, and business clubs; joining

a regular group is more likely to result in enduring relationships.

Make friends early Be interested

Most people want to give Curiosity and a genuine

someone starting out a interest in the other person

helping hand, so begin is the start of any networking as soon as worthwhile relationship.

you can, and quickly Converse equally, share

build relationships with information, and be

your peers. authentic in all interactions.

Build your list Be helpful

Gradually compile a list of Think of networking

contacts, and identify as trading. Have some ways

those that could be helpful in which to help

to you. These are not others, such as offering necessarily the most recommendations, useful

senior; consider those information, or

likely to be mutually professional contacts.

supportive also.

RUNNING

YOUR BUSINESS

Encouraging

Customer Loyalty

Building a base of loyal customers or clients will help you generate a

steady, sustainable income stream and bolster sales in times of uncertainty.

Faithful customers who refer others to you also help boost your business.

Understanding loyalty loyal, but if you back up sales with Promoting referrals Some customers and clients will great customer service, you will at A loyal customer base can, in effect, come back regularly to you because least receive some positive reviews. become an extra promotional arm you are familiar and they are short The most loyal customers will be for your business. Market research of time. It takes more effort and those who value the quality of your shows that up to 85 percent of they could feel like they are taking product, service, or brand and who consumers trust online reviews as more of a risk to find a new place. enjoy the experience of purchasing much as they do word-of-mouth

Other customers might buy from through your business. Gathering referrals. The challenge is to you because you have the cheapest and acting on feedback from your persuade loyal customers to take prices, but they may easily be lured customers (see box, right) will the step of either telling other away by a discounting competitor. improve your interaction with them; people about your business or These customers are hard to keep that, in turn, will help boost loyalty. brand or leaving an online review.

77% of consumers say Creating a bond

they stayed loyal to specific It is easy for most customers and clients to research products, brands, and service providers

brands for 10 years or more online, so they will have high expectations. Attentive, personalized customer service is a vital www.inmoment.com, 2018 tool in holding on to customers and developing

an emotional connection with them.

Key to this emotional bond is making memories

for the customer as they interact with you.

Remembering names, making transactions

surprisingly straightforward, and offering

customers something special can all be

memorable. In short, make sure that every

aspect of the customer experience is positive,

eliminating any negatives.

RUNNING YOUR BUSINESS 146 147

Encouraging Customer Loyalty

A referral program, such as offering COLLECTING CUSTOMER FEEDBACK

a discount for the customer who

refers a friend, as well as a discount Gathering information about what customers need and want can enable

for the friend, can be effective in a business to improve products and services, thereby building loyalty.

promoting recommendations. ❯ Simple surveys can be ❯ Post prompt replies to negative Ask customers and clients to sent by email, with statements reviews and offer to remedy leave an online review if they have evaluated on a scale of 1 to 10. complaints immediately.

had a positive experience. Invite ❯ If your business has an app, ❯ When face-to-face with

them to do so when they are at insert one or two pop-up questions customers, ask about their needs

their happiest—this is typically relevant to the page the customer and note what they say.

just after they have received the is currently on. ❯ Monitor website activity: how

product or service you have sold ❯ Live chat on your website allows long do visitors spend on your

them. Offering a prize or some customers to ask questions and website, what do they click on,

sort of incentive may encourage be asked for their opinions. and how often do they return?

customers or clients to respond.

Enhancing the customer experience

To earn the loyalty of your customers and clients, try to ensure that every step in the consumer journey is as convenient and enjoyable as possible, from ease of finding products and hassle-free

purchasing to prompt, reliable delivery and excellent

after-sales service.

Offering engaging Insider offers and Managing Outstanding

content social action expectations customer service

Engage customers with Rewarding loyal When it comes to the Consistent, thoughtful

your products and customers with gifts and logistics of delivery in customer service is

services by giving them discounts is one particular, customers important in building

useful information or approach to earning appreciate being kept loyalty. This might

inspiring them. This will loyalty. Alternatively, informed of when their include speedy

encourage them to keep supporting a cause or product or service will personalized replies to

coming back to you, community the be delivered and what customer emails or

giving you an edge customer cares about level of quality and trying to exceed your

over competitors. will also engage them. service to expect. clients’ expectations.

Building Customer

Relationships

All customers and clients are valuable to your business—especially

those who return, support your brand, and advocate it to others, which

you can encourage by building strong relationships.

Keeping customers satisfied products and services that meet those needs, Anyone who buys products or services from your then promote them in the most appropriate way business is valuable, although some customers and to reach your target audience. clients are more valuable to you than others. While To build relationships with your customers and those who make single, one-off purchases have value, clients, get to know them. Speak to them face-to-face,

the best are those who not only return, but who also engage with them on social media (see pp.140–141),

support and recommend your business to others. and use a customer data system (see pp.130–131).

While some people will only ever make a single You can then use what you learn to ensure that your

purchase, you can encourage others to develop products and services not only meet their expectations,

stronger bonds with your business. The first step but exceed them. Prove to them that they can trust and

is to understand who they are and what they need rely on you through the quality of your offering, (see pp.40–41). Once you know this, you can create customer service, and aftercare.

Marketing Communication Quality and reliability

Identify potential customers and campaigns Provide good-quality and clients and develop Use marketing campaigns products and services that marketing material designed specifically aimed at your target exceed your customers’

to attract their interest customers (see pp.140–141) to and clients’ needs and

towards your business. build interest in the products expectations.

or services you offer.

How to build

relationships

Building relationships with your customers Prospective Single purchase

with your business appearing relevant to A potential customer more about you and them. Once you have caught their attention, and clients is a gradual process that starts customer The customer knows

you need to inspire sufficient interest your business and appeals to them for them to make a purchase. From becomes aware of what you offer, which

this point, use your understanding of to buy from you. a purchase. your customers or clients to develop may be persuaded enough to make

and sustain good relationships.

RUNNING YOUR BUSINESS 148 149

Building Customer Relationships

CUSTOMER SERVICE NEED TO KNOW

Customer service and experience are key areas where ❯ Customer experience ❯ Loyalty programs

your business can compete. While some customers and management is the encourage return

premises, all appreciate feeling valued and cared for, business uses to manage to clients or customers which requires time and thought—not money. and improve interactions clients will be impressed by a flashy website or stylish tools and processes a business, offering rewards based on the amount

Regularly review how you interact with your customers with its customers. they spend.

and clients, and how well. Think about every aspect of ❯ Customer journey ❯ “Sticky” customers are

from your customers’ perspectives. What would they purchasing lifecycle, from return to your business think? How would they rate you? Are you better than initial interest, through your business, and the products or services you offer, describes the entire loyal consumers who to make more purchases.

your rivals? Then think about your customers and what purchase, to aftercare.

matters to them. Why do they buy from you? What do

they come back? Pay attention to the smaller details,

as it is often the little things that people notice and “It takes months to find appreciate – and remember.

a customer… seconds to

You can also target your marketing more effectively lose one. ” by offering tailored promotions, and communicate

with your customers or clients as valued individuals. Vince Lombardi, American football coach

Support and service Loyalty programs

Engage with your customers as Offer customers emotional

individuals and give excellent, benefits, such as rewards

personalized service. Offer for making purchases, and

guarantees and good aftercare discounts for their friends and

service to inspire confidence. family. Add them to your mailing

list and communicate regularly.

Regular customer Valued customer Advocate

The customer knows they The customer begins The customer makes can rely on your products to feel valued and regular purchases,

and services, and trusts makes regular feels loyal to your

you enough to make purchases in business, and actively

regular purchases. preference to other recommends it

businesses. to others.

Working with

Other Businesses

As a new business owner, it can be well worth seeking mutually

beneficial relationships—with your suppliers and also with companies

whose goods or services complement what your business offers.

Collaborating with others in your business model or provide a service that you

Although your business must compete against its need. For example, if you repair cellphones but lack

rivals, it can benefit from good partnerships with other direct access to customers, it could be mutually companies whose interests align with yours. As every beneficial to partner with a retailer who sells phone

business has its own strengths and weaknesses, a accessories and has space available. Alternatively, you

collaboration with another company may help fill a gap may be a start-up whose innovative product or service.

Types of alliances

Working with other businesses can help support your

start-up—by securing goods or services that you need or by

providing something that complements or fills a gap in your

business model. However, the partners and

suppliers you choose must be right for

your business, and you will need

to work with them to sustain

the relationships. Any

agreement must benefit

the business; if it does

not, be prepared PARTNERSHIPS

to walk away

if necessary.

To develop a successful partnership, you will need to work with a business whose products or services complement what your start-up is offering, helping to draw in new customers and provide extra value to existing customers. Whether you are looking at companies in the same industry or ones who provide a service, such as web design and maintenance, plan carefully before you enter a partnership, and consider the following tips on what to do and what to avoid doing:

DO ... DON’T ...

❯ Choose a partner that meets your ❯ Limit partners by location, as the best

criteria, such as their financial status, may be on the other side of the world.

willingness, goals, and personality. ❯ Accept the first offer; instead negotiate

❯ Formalize the agreement, recording for the deal that suits all parties the most.

what each party expects and offers. ❯ Be tempted by size, as the biggest

❯ Set realistic expectations to ensure partner might offer more opportunities,

that they are met as agreed. but these may not be right for you.

❯ Maintain communication and discuss ❯ Ignore issues, as they are unlikely to

any problems early, so you can take swift disappear. Timely, shared resolutions

remedial action. can strengthen a relationship.

RUNNING YOUR BUSINESS 150 151

Working with Other Businesses

attracts the support of a larger company. Working with NEED TO KNOW another business can give you fresh ideas and expand

your experience. You should also build excellent

❯ Horizontal alliances occur between businesses that

relationships with suppliers to enable you to work

together to support each other’s business long term. competitors, but have decided to work together. are in the same industry, and who may have been

Forming alliances ❯ Vertical alliances are partnerships between businesses

at different stages in the same supply chain; working

The Internet and social media have made it easier to with a supplier is a common example. find potential partners, but be sure to discuss your

plans in detail before you commit to a collaboration.

Explain to any prospective business partner what you binding contract, a clear, written agreement will help

want to gain from the relationship, and weigh up what to avoid any misunderstandings and will underline

is expected in return – it is vital to agree on shared the strategic objective you both aim to achieve. outcomes. While you do not need to create a legally

SUPPLIERS

Strong supplier relationships are critical for the long-term success of your business, but it may be prudent to have more than one supplier if your company is dependent on a single item. Examples of ways in which suppliers can impact a small business include the quality of goods and services; the timeliness/reliability of deliveries; competitiveness and innovation; and financial implications/payment terms. Here are some simple ways to ensure mutually beneficial supplier relationships:

DO ... DON’T ...

❯ Develop personal relationships, as ❯ Cancel orders without plenty of notice,

suppliers value familiar customers and do so only when unavoidable.

and are more likely to deal fairly with ❯ Forget your supplier is also in business those that they know and trust. and therefore needs to fulfill their own

❯ Share information with a supplier, objectives and make a profit.

particularly on critical lead times (and ❯ Play one supplier off against another that way you will avoid surprises). to secure an advantage, as both may

❯ Agree and stick to all terms, and eventually cease to trade with you.

especially those regarding payments.

Is Your Marketing

Leading to Sales?

Marketing is vital but can be costly. Assess the effectiveness

of your marketing activities, and monitor where most of your

sales are being made to ensure that your campaigns count.

Investing in marketing

Marketing is a creative process, and it is often viewed

as being one of the most exciting parts of the business.

However, since several factors can cause an increase in

sales, the effectiveness of your marketing campaigns

can seem hard to measure. For example, after 6. FINE-TUNE delivering new flyers locally, you need to be sure Use customer feedback and

that any subsequent increase in trade was not simply your market research to

the result of more people moving to the area. fine-tune your product,

promotional messages,

You need to view marketing as an investment sales, and service.

and understand which marketing approach will best

engage with customers and drive sales, particularly

since marketing is an ongoing and cumulative process.

Measuring success

Even for start-ups, digital marketing is an affordable

and valuable option, and there are many free online

analytical tools available (see pp.212–215) to measure

its effectiveness, such as Google Analytics, which

you can set up online without specialized knowledge.

These record data such as the number of new visitors

to a website, number of page views, clicks on paid ads,

and the rate at which sales have been made. Offline

campaigns can also be measured by counting response 5. GIVE GREAT SERVICE

activities, you need to assess the financial return. As well as measuring the response rate to marketing turning the sale into repeat purchases, word-of-mouth rates to flyers and ads featuring discount codes. Build on the relationship,

recommendations,

To do this, look at a specific time period, and divide and loyalty. your total marketing spend by the number of new

customers attracted. This gives a figure known as the

customer acquisition cost (CAC). Next, estimate how The marketing cycle much money an average customer will spend with you

over their lifetime, the customer lifetime value (CLV): The marketing process should begin with a good

to do this, multiply the product value by the number of understanding of your customers’ needs. Using this

times it is purchased, then multiply this by the average information, you can adjust your offering and craft a

customer life span. If it costs $200 to acquire each strong marketing message. Give great service to keep

customer, who will spend only $20 over their lifetime, customers engaged, and use their feedback to hone

you will need to review your campaign. your marketing campaigns.

RUNNING YOUR BUSINESS 152 153

Is Your Marketing Leading to Sales?

TRACKING SALES

Looking at overall sales may not

provide all the information

1. RESEARCH necessary for you to make the

Get to know your customers, best marketing decisions. Here

product, market area, are some ways to look at sales

and competitors. from different perspectives; they

will help determine the best areas

in which to invest marketing funds.

❯ Keep records for each day,

week, month, quarter, and year,

and compare with previous

time periods.

2. CUSTOMIZE ❯ Break figures down to

Adapt your product, price, understand the bestselling

“ and distribution to suit products or services. Email your customers’ needs ❯ Identify which customers make and your market.

marketing the most/largest purchases. ❯ Record sales made to new and

has the highest existing customers—look out for repeat purchases.

return on ❯ Identify and compare the best sales channels, such as face-to-

investment face retail or online transactions.

for small

businesses.”

Campaign Monitor, 2019

ANALYZING SALES

DATA

3. MARKET

Create and communicate As a business owner, you can your message to your collect sales data from many intended customers to different sources (see pp.154–155). interest and attract them. However, in order for it to provide

meaningful information, it needs

to be organized and analyzed.

For example, data such as a list of

customers who bought a particular

item does not reveal anything, but

Close the sale with your 4. SELL when organized by source, it could reveal that most sales were made customer, ensuring the to new customers. Use simple process is hassle-free. spreadsheets to analyze data.

Analyzing Business

Performance

You need to keep checks on which parts of your start-up are working

as you had hoped they would and which are not. Using key performance

indicators (KPIs) gives you helpful snapshots of your business in action.

Understanding KPIs Too many KPIs—or poorly chosen employees, perhaps displaying KPIs are targets that you set for ones—will overwhelm you with them as a “dashboard” (see below). crucial business areas, such as unhelpful data. Ideally, start with a Clearly defining KPIs and how they marketing, sales, and finance, and small number that relate directly to will be measured—whether as against which you check progress your business plan and the aspects quantities or as ratios or regularly (weekly, monthly, or most likely to bring success. percentages—will ensure that quarterly). Set your KPIs carefully. Communicate your KPIs to your everyone understands them.

The KPI dashboard

When sharing the KPIs for your business,

the best way is to display them graphically.

You can either do this manually but

drawing a simple chart or even just write

them as percentages on a poster. Marketing

software to create digital “dashboard”. ❯ Internet Keywords in top 10 search results However you present your KPIs, use Alternatively, make use of free online ❯ Company website The level of traffic

them as a tool to motivate yourself ❯ Social media Levels of sharing, liking, and retweeting of posts and your staff by highlighting ❯ Email campaigns Percentage of areas of success and where customers responding and buying goods improvements are required.

❯ Advertising Units sold

per $1,000 investment

Sales Customer satisfaction

❯ Customer lifetime value Total amount ❯ Turnover Proportion of customers

of money generated by the average customer making repeat sales or continuing a service

❯ Upselling Percentage of product buyers ❯ Website New visits to a site versus

who also take a service package repeat visits

❯ Conversion time How long it takes ❯ Feedback Percentage of high-scoring

to close a sale customer reviews

❯ Regional sales What is selling ❯ Complaints Ratio of complaints

where and in what quantity to number of customers

RUNNING YOUR BUSINESS 154 155

Analyzing Business Performance

Make targets realistic, neither so SWOT ANALYSIS high that they are unachievable nor

so low that they hold back growth. SWOT asks open-ended questions to address the strengths, weaknesses,

Updating your KPIs regularly will opportunities, and threats influencing a business. Identifying these factors stop them from becoming obsolete can help you understand their positive or negative impacts on performance.

(you may need to drop some and

devise new ones as your business ❯ Strengths What is your business ❯ Opportunities What external

best at? Does it have any intellectual changes can your business exploit?

evolves). A good set of KPIs will act property (see pp.96–97), special Do competitors have weaknesses

you are on course to meet your goals. ❯ Weaknesses What is your business ❯ Threats What might competitors SWOT analysis (see box, right) as a compass and show you whether skills, or financial resources? that could benefit your business?

not good at? Why do people not do that could impact your business?

is another useful tool. It identifies like/buy its products? Does it rely on How might changing social or

internal and external factors that outdated technology? Is it missing shopping trends undermine your

could affect the performance of strategic alliances (see pp.150–51)? business plan and affect profits?

your business as a whole.

Employees

❯ Employee satisfaction Proportion of

satisfied staff as indicated by surveys

❯ Staff turnover Percentage leaving over

time (high turnover rates are costly)

❯ Absence and sickness Average work

days lost per staff member

❯ Health and safety Number of

accidents at work

Operations Financial

❯ ❯ Customer payments Products Percentage Percentage of product defects ❯ of customers paying on time Output How many units produced ❯

per operating hour/day Expenses payments Proportion of

❯ invoices paid in 30 days, 90 days, etc. Efficiency Percentage of tasks or

deliveries completed in the allocated time ❯ Profit margins Gross and net profit

❯ compared to desired levels Overheads Actual use of

energy, water, and rent against ❯ Inventory turnover Time € £ taken to offload stock ¥ budgeted use

Maintaining

Momentum

Once you are up and running, it is vital to maintain momentum. Developing

your business is an ongoing process—you will need to keep researching ideas,

building products, seeking new markets, and growing your customer base.

Continual development chances of achieving it, set yourself In order to achieve the objectives goals and measure the results. For you set in your business plan (see example, you might aim to reduce pp.104–105), which can be months the cost of your materials by 10

or even years ahead, take steps to percent within the first year of Develop maintain your business momentum. operating, or to attract a new contacts

This means constantly trying to customer group within 6 months. Attend workshops and improve what you do and how you events, listen and ask

reduce costs and increase profits. resources such Making it happen It also involves searching for new do it and looking for ways to questions, use networking

as LinkedIn.

products and services to offer and Maintaining momentum is important in all improving those you already have. aspects of your business but critical in your This is particularly important with marketing activities. Customers can easily

lose interest and be tempted away by

your marketing activities, which competitive rivals, so continually developing

customers and sales. Identify play a significant role in attracting and perfecting your marketing is essential.

There is no specific process to partners approaches you could take. Here are some examples of different maintaining momentum. Instead, Collaborate with

treat it as a fundamental objective, businesses that enhance

and share it with everyone involved your brand; look for sales

in your business. To improve your channel and supplier

opportunities.

MAKING IT WORK

❯ Borrow ideas from successful rivals to improve how

your business operates. Read trade articles in the media

to discover the approaches they used.

❯ Share the need to maintain momentum with

everyone involved within the business in a simple

❯ F Do not be blinded by short-term success statement. Use it as a reminder for them and yourself. , which can w a ost

easily vanish unless you continually improve and Sl develop your business.

RUNNING YOUR BUSINESS 156 157

Maintaining Momentum

Create a Schedule

marketing plan offers

Build a calendar of Plan regular deals,

activities with deadlines often linked to promotions,

for advertisements, such as free trials,

events, trade shows, and discounts, two-for-ones,

online activity. and coupons.

Apply Master

for awards sales

Apply for relevant Know your target customer,

sector and local awards. design campaigns,

This is useful for PR, capture customer

building customer trust, information, and generate

and motivating staff. sales leads.

Develop Review,

loyalty/referrals measure, and

programs improve

Retain existing customers Set goals, regularly and acquire new ones by review them, and build on

offering incentives. whatever works best.

DEVELOPING NEW PRODUCTS AND SERVICES

Regularly reviewing your products and services and developing new ones is one of the most effective ways to improve

what your business offers customers. It can be costly and risky but also rewarding. Here are some points to consider:

❯ Keep lists of potential product ideas ❯ Analyze the market, looking at ❯ Test the market by trying out the

from customers, family, competitors, trends and your competition to new offering on customers who fit and articles in the media. assess any new opportunity and your target audience profile.

❯ its potential sales. Test concepts , offering samples to ❯ Launch the product using social

customers or testing new services on ❯ Develop the product, using media, email newsletters, and selected clients to see whether an customer or client feedback as well seasonal fairs to kick-start sales. idea is worth pursuing. as any relevant market analysis.

Managing Your

Finances

Ongoing financial management is essential to make sure your business

has the funds it needs, when it needs them. This means you must

maintain accurate financial records from the beginning.

Keeping records loss statement (also see pp.88–89). expense. For example, selling an Effective financial management Before you begin selling, you will asset creates a one-off lump sum, relies on accurate bookkeeping, need a system to record all sources whereas regular transactions better (see pp.88–89). This allows you to of income and expense. You can indicate income. Similarly, buying see how much money the business either do this manually or by using an asset is a one-off cost, whereas has at any time. It is all-important online software. You should also regular expenses give a clearer when calculating your profit and record the type of income or picture of your outgoings.

Understanding FIXED COSTS change over ss, but it can r your busine set expense fo business costs This cost is a les include: costs on time. Examp Insurance and There are two types of business costs: your premises or monthly Rent fixed s, fixed costs (also called overheads) machinery are mortgage cost um, be paid. n of the premi and variable costs. Fixed costs are for the duratio ary which have to the The cost can v the same no matter what business rates change, usually a year. When interest o ear. activities occur. This makes them easy ay can either g from year to y amount you p to predict and account for. However, up or down. being fixed, they are difficult to

relate directly to business activities for permanent reduce. In contrast, variable costs

them harder to predict at first, but you Licenses £ oyment are line with empl lter, or sell alcohol spitality so can go up and down. This makes to play music staff must be p $ Wages aid in

may be better able to do so over time. taff numbers a essential for ho contracts. As s ge. ts, u pay will chan As variable costs relate to business h as restauran the amount yo businesses, suc rs. activities, you can take steps to reduce hotels, and ba them when necessary.

RUNNING YOUR BUSINESS 158 159

Managing Your Finances

Making predictions Exactly how you keep records will 82 % Keeping clear, ongoing records over depend on you and your business. time will help you predict your However, there are many online expenditure and income. This is tools available for little or no cost. of businesses important to help you plan ahead The key thing is to choose a system

for seasonal variations in trade, that works and to stick with it. You fail because of when sales may decline or costs need to maintain thorough records,

rise. It can also help you forecast especially if you take cash or inconsistent profit or loss projections—how electronic payments.

much money your business may Keep receipts for all business or insufficient make or lose in the future—which costs and expenses. It is harder

is valuable for long-term planning. to look for missing items at the end cash flow Accurate forecasts are essential if of the tax year than it is to file them you are seeking external finance or on a regular basis. www.smallbizgenius.net, 2020 presenting to potential investors.

VARIABLE COSTS

can predict it. Examples include: This cost fluctuates in line with busin NEED TO KNOW ess activities, although you

used in a food-related business. sell, for example, the ingredients a product you make or company, such as stationery, materials, and equipment. be at a set rate, but the number of hours will not. ❯ Prospective costs are those These will change according relate to how much of Hourly wages incurred in the running of a for temporary staff may Material costs ❯ Business costs are those directly

to your needs. that may occur in the future. These cannot be accounted

for until they arise, but they

can be predicted.

have to use them. They are also fixed costs, since you referral sites and includes utilities, as the business third-party selling must have them, although the platforms can be a significant electricity) are partly Utilities (gas, water, ❯ Questionable costs are those Commission to that can be fixed or variable. This

to how much you consume. variable, as cost varies according cost of using them varies. cost to online sellers. Some may even see it as a fixed cost. ❯ Depreciation is the gradual decrease in the value of an asset

owned by the business. It is a

fixed cost, as it counts as a loss

on a profit and loss statement.

Managing Budgets

and Cash Flow

Your start-up may have healthy sales, but without a regular inflow of cash, you

will not have enough money to pay your bills. It is therefore vital to keep an

eye on cash and to budget wisely to make sure you do not run out of funds.

Managing budgets and, if necessary, your spending. Keeping your fixed

Cash is the lifeblood of your business. From the outset, costs (such as rent) as low as possible at the start

make sure that you have a reliable system for tracking enables you to allocate most of your money and any

the money coming in and going out (see pp.88–89 profits to steady cash flow, and grow your business.

and pp.158–159). These figures give you the basis for Although some start-ups have access to cash estimating how much cash you will need at any one reserves that enable them to run with a planned loss,

time to meet your expenses. Regularly comparing the most cannot. It is wise to keep a solid cash reserve

actual money flowing in and out to the figures you aside to cover a potential unplanned loss that might

estimated in your business plan budget will highlight otherwise be unsustainable. Running out of funds is

any discrepancies. You can then adjust your budget one of the main reasons new businesses fail.

How to improve

cash flow

However good you are at generating

new sales, maintaining cash flow

should be your priority, since it

enables you to pay your rent and KEEP CASH FLOWING IN wage bill at the end of each month.

Ensuring that money flows into your

business promptly and goes out only Depending on the nature of your business, one or as necessary will determine the more of these steps may help maintain your cash flow. survival of your start-up. There are ❯ Invoice immediately, as soon as work is complete, several ways of doing this, including to avoid unnecessary payment delays, or ask invoicing immediately and chasing customers to pay a deposit or the full price upfront.

late payments. At times, it may help to ❯ Chase late payments, setting up a process to ensure sell goods at a discount, to run special that no payments are missed. Consider offering future

business or supply costs. An accurate ❯ Generate cash by selling items of otherwise slow-monthly cash flow statement, selling stock at a large discount. offers, or to find ways to spread your discounts for early payments.

reporting the actual inflow and ❯ Increase sales by lowering prices or running special outflow of money, enables you offers to encourage purchasers. to monitor the situation and

decide which steps to take.

RUNNING YOUR BUSINESS 160 161

Managing Budgets and Cash Flow

RUNNING ON A LOSS NEED TO KNOW $38k All start-ups seek a healthy cash ❯ Burn rate measures how fast flow. However, highly innovative a new business uses its capital the average

down by failing to make a profit in occurs when costs exceed the amount owed money coming into a business. their early years. Many technology Amazon, Uber, and Tesla, turned ❯ Financial deficit is a loss. It traditional financial advice upside companies, such as Netflix, before making a profit.

companies now build loss-making ❯ Financial surplus is the same as to small

operations into their plans. From profit, which occurs when income businesses in

an early stage, they are helped by exceeds business expenses. Australia large investors who seek long-term ❯ Liquidity is the ability to turn

businesses hoping to raise capital ❯ Net worth can be calculated by www.kochiesbusinessbuilders.com.au, have to get a bank loan or find rewards. By contrast, most new earnings into cash.

investors who may demand a a business from its total assets. significant share of their assets. deducting the total liabilities of 2020

MANAGE CASH FLOWING OUT

Spreading your business’s costs (both fixed and

YOUR ❯ Use a company credit card variable) can help smooth your cash flow. to defer business costs

To fuel and grow your Pay suppliers on their terms, such as within Contingency 30 days, to keep cash in your account for longer. business, you need to Keeping some funds in BUSINESS and possibly earn rewards on what you spend.

have a continuous, ❯ Review regular costs, exploring other suppliers to

generated by sales and account ensures that ❯ Limit the stock you hold by using accurate sales your business will positive cash flow. This is an emergency savings find better terms, and seek one-off discounted offers.

is supported by careful forecasts, and use suppliers who deliver quickly. survive a crisis. accounting and financial

management. Also make

sure that you have

contingency funds in

place for emergencies.

Establishing

a Culture

Bringing a positive attitude and approach to your business right from

the start will help motivate you and your staff. A shared culture will

shape the personality of your business and how it operates.

Deciding on your values a set of values that reflect what staff and others connected to the The term “business culture” you want the business to achieve business, including advisors or describes the approach and style from the beginning. You cannot investors, to agree on a set of of your business—it is how you and dictate a culture—the people core values that are right for you. your staff operate on a daily basis. working for the business bring it Choose simple, meaningful Cultures develop and evolve over to life. However, you may want to values (see pp.24–25), such as time, although you can establish initiate a process that involves your honesty and accountability,

Creating the culture

Start to shape a successful culture by leading all staff

and others involved in the business in a simple

shared process to define meaningful values.

Get people Capture ideas Organize and

talking and discuss rationalize ideas

Find out what matters to No idea is a bad one. Write Group values together. Rank individuals. Look at how down all the ideas about them according to how much

other businesses have positive values. Explore the difference they could make

expressed their values and values and how they might to the business. Combine

consider what works well relate to your business. similar values together until

and what does not. you have around 10 in all.

RUNNING YOUR BUSINESS 162 163

Establishing a Culture

rather than a list of buzzwords LIVING YOUR VALUES

that are hard to interpret or uphold.

Once you have chosen your values, In order to instill your culture into the whole of your business, take you must incorporate them into a holistic approach.

your business practices and ❯ Begin by incorporating the values ❯ Avoid meaningless clichés, such processes. For example, if into all sections of the business. as “There is no ‘I’ in team.” innovation is one of your values, ❯ Communicate the values to all ❯ Use active language , such as allow people to take risks and make those you work with. “Do the right thing” (Alphabet, mistakes without being penalized. ❯ Google’s parent company). Actively demonstrate what You should also communicate you mean by the values in your ❯ Use your values to help guide your values to your customers, dealings with staff, customers, recruitment and decision-making.

clients, and suppliers, so they clients, and suppliers. understand your business better, ❯ Adopt values based on what is

which will help foster more achievable now, not in the future.

positive relationships.

Make sure everyone Pick the Incorporate the values

understands winning ideas Integrate the values into

Discuss what each of your Place the values in level of every aspect of your

chosen values means in importance. Choose the top business, changing practices practice. How will they seven values that reflect the where necessary.

benefit customers or clients? personality and aims of You could add them to your

How will they help the the business. Discuss how to marketing materials,

business succeed? How put these values into action. if appropriate.

realistic are they to achieve?

Managing the

Business

Running your own business is rewarding, but as it grows, it can

be hard for one person to deal with every aspect. You may need

At the beginning, you are likely to bring in people to manage different areas of the operation. / ction Produ tions opera and inates, coord s used Identifying skills recruiting new managers (see Plans, ystem ls the s pp.126–127) or developing your oods contro duce g to take on most roles in your existing staff in order to share to pro ices. or serv business to keep costs down. management responsibility. Even after you take on your first For example, if you excel at sales employee, you will probably still but find IT a challenge, recruiting oversee all areas of management, an IT manager will allow you to such as production and finance. concentrate on what you do best.

However, as your business Hum an res Plans st expands, you will reach a point Sharing responsibilities ource and trai affing; r

where holding all the management Your start-up probably cannot develo ns em ecruits ps the c responsibility means that you are afford to employ a whole team of s develop and grow. s; recruit one or two to oversee linked ulture a restricting opportunities to managers, but you may be able to value ployee s of the

ahead and identify where your To avoid this situation, plan nd tasks, such as customer service and compa ny. sales, or operations and production. skills are of best value to the As your business grows, so can business and also note where they your management team, allowing are less effective. This exercise each member to specialize in a allows you to start to consider given area of responsibility.

MANAGEMENT STRUCTURES

Dividing

When recruiting managers into your functions business, it is important to create a formal While you may manage everything management structure, with clear lines of at first, developing an effective authority and responsibility. In doing so, the

manager has a clear understanding of their management team is always

role and place in the business. It also allows something you should plan for in

any staff they manage to understand the order for the business to succeed.

chain of command. In large, established Divide your business into functional

businesses, the management structure areas, with a manager overseeing

typically includes multiple levels. However, each area, or spanning related areas,

in small ones, it is likely to have just two or and with you in overall control.

three levels, with you at the top.

RUNNING YOUR BUSINESS 164 165

Managing the Business

Sales/marketing

existing products and Over time, management structures Promotes and sells MAKING IT WORK services and plans Finance new ones. Takes respo can be changed to suit the needs nsibility for money in an

of the busin of the business. A function-based

produces fin d out structure (see left) is widely used,

reports; dev ess, but here are others to consider: elops ancial ❯ Team structure suits businesses

financial pla that need rapid responses to ns. problems, although it can be

hard to maintain overall control.

Customer se (nonhierarchical), decentralized, s, and and flexible. Its agility suits rvices ❯ Network structure is “flat”

customer serv Plans, provide ellent creative and technology promotes exc ice; sets companies; its low overheads rds. are appealing to start-ups. service standa

Information

communication s infrastructure; dev maintains technology data managemen elops Plans, implements, and technology t and

trategies.

“Never doubt

that a small group

of committed

people can change

the world.” Margaret Mead, US cultural anthropologist

Managing

a Team

As your new business grows, your focus may change from working

directly on tasks yourself, to team management. Setting clear, SMART

goals and establishing shared core values will help your team thrive.

Investing in your team shared core values (see pp.162–163), it can Employing staff can be a major expense for your new make your business a satisfying place to work. business, so it is vital that you make the most of your Set a good example by arriving early and being team. Employees are likely to be more motivated if they positive and polite, even under pressure. are well managed, have clear goals, and are rewarded Consistency is a quality employees value. for successes. Even a small business needs a sense People work best when they know what is going

of shared values and culture. When you and your on, so set clear objectives for your team and ensure

colleagues establish a positive work culture and information is shared freely around the business.

SMART management

The SMART approach enables you S—Specific M—Measurable to set and achieve clear objectives for Set precise goals using specific Ensure that you can quantify your your team. Each objective is measured figures or quantities. Make sure to objective. Establish a measurement against five criteria: it must be specific, establish an exact target—an increase system to record progress made measurable, achievable, realistic, and of 50 percent in productivity, for toward your goal. This enables time-based. This ensures that you example—so your team knows you to assess the success of the and your colleagues approach tasks precisely what they need to achieve. task once it is completed. in a consistent way.

S SALES M

10 15

RUNNING YOUR BUSINESS 166 167

Managing a Team

Make sure to share problems and possible ENCOURAGING FLEXIBILITY

solutions, and ensure that mistakes are

treated as learning opportunities. Holding While the business is evolving, it is important to

regular staff meetings and posting business keep staff costs to a minimum. You need your team

updates on message boards are good ways to to be flexible, as well as productive. This may mean

encourage open, honest communication. performing tasks outside normal roles or working

unsociable hours. Employees are often willing to

adapt to new demands if they feel they are being

“Train people well enough treated fairly. Remember to: ❯ Talk to staff before changing their roles or hours.

so they can leave; treat ❯ Show flexibility in return, such as accommodating employees’ need to start early and finish early.

them well enough so they ❯ Listen to employees who may know more detail about the tasks involved than you.

don’t want to.”

Sir Richard Branson, British business magnate

A—Achievable R—Realistic T—Time-based

Set goals that you can achieve. Assess Determine realistic goals. Consider Establish a time frame. In order to

whether you have enough staff and whether your objective is possible in achieve your goal, your team may

whether they have sufficient capacity practical terms. For example, do you need training or you could need more

to meet your goal. If your current have adequate equipment? If not, you storage space or better equipment.

systems cannot accom modate this, will have to source more equipment Take these factors into account and

you may need to hire additional staff. before you assign the task. set realistic deadlines.

A T R April

08 THURSDAY

Retaining Talent

You have to invest time and money to hold onto the best employees. Build good

relationships with your staff and help them develop their skills so that you do not

lose them to competitors. Aim to create a workplace in which everyone can thrive.

Valuing your employees Get to know and value your employees as individuals.

New recruits bring fresh ideas and skills to a business, Understand what motivates them and how they like to

but over time, good employees also develop a deeper work. This will help you pick up on any issues that are

knowledge of how things work. They get to know bothering them well before they consider moving on.

customers and suppliers. They understand the systems

used by the business. They build relationships with Persuading staff to stay other team members. Losing them can upset customers Hearing that a key employee wants to leave is never

and colleagues. Even worse, if your competitors recruit good news, and it can even feel like a betrayal. The

them, it can give those businesses an advantage. first step is to have an open and honest conversation to

How to retain talent

There are three main strategies for retaining your best

people. The first is to create an environment in which

employees enjoy working and can thrive. They need to

feel fulfilled and valued and have enough autonomy

to use their skills and experience. This is particularly

important for small businesses where it is not always

possible to pay high salaries. The second is to provide

staff members with opportunities to develop through

training, mentoring, and new challenges. The third is

to understand what value each person is adding to the

business and reward them fairly. Try to avoid finding out

what someone’s contribution was only after they have left.

1 A good place to work

“The magic formula that ❯ Treat your employees with respect and fairness

have discovered is to treat ❯ Offer flexible working arrangements ❯ Give staff the resources they need to work well customers like guests successful businesses ❯ Keep your employees informed ❯ Allow your employees to express their views and

employees like people.”

Tom Peters, US business management guru

RUNNING YOUR BUSINESS 168 169

Retaining Talent

find out what led them to hand in their notice. Perhaps CASE STUDY they feel undervalued because they are not getting the

recognition or reward they deserve, or they are seeking Multi-Ply Components promotion and new challenges. Ask whether there

is anything you can do to keep them. You may be Multi-Ply manufactures carbon fiber components for

able to make a counteroffer and persuade them to X-ray equipment around the world. To retain its best

employees, it is flexible and comes up with creative

stay. However, think about the effect your offer may solutions to retain the people it wants. When a valued

have on other people in the business. You will also employee was offered a higher paid job with a major

need to recognize their contributions. employer locally, they discussed why he wanted to

If your employee is determined to leave, accept their accept the offer. Although Multi-Ply could not match

decision with good grace. Be sure there is enough time the higher pay, it could offer him a better work-life

for a handover to a new person. If this is not possible, balance and a better job title.

ask them to type up the important aspects of their job,

including key contacts and advice for the newcomer.

2 Ways to develop 3 Appropriate rewards

❯ Involve your employees in new projects ❯ Thank employees personally for good

❯ performance Appoint internal mentors for more junior staff

❯ ❯ Allow time off at the end of a stressful project Encourage your employees to access training

❯ ❯ Celebrate successes with the whole team Make sure you undertake training yourself

❯ Pay a fair salary

❯ Offer a profit share

Running a

Sales Team

Generating sales and dealing with customers are vital to most businesses

and require expertise. If you do not have the skills to do this yourself,

recruiting and motivating dedicated sales staff is the best route to success.

Finding the right salespeople relationships will help a business reliant on

Whether you plan to hire a dedicated sales executive a small number of repeat customers. While or team or to adopt selling responsibilities yourself, it someone persuasive who can identify large

is important to pinpoint the skills or qualities needed numbers of potential customers will suit sales

to best sell your product or service. For example, a of one-off products or occasional services. If

salesperson adept at building trust and long-term competition is fierce, an experienced salesperson

Steering the team

Sales staff should be encouraged and

motivated to work to the best of their

abilities—and pull together as a team. Set

high, but achievable, sales goals that provide

staff with the incentive to push themselves

but in the knowledge that they have your

full support. Be transparent about how the

business is performing and all areas of its Set expectations

that staff are clear on sales progress and you ❯ Ensure that staff know s what is expected in term operation. Promote two-way feedback so

ideas. Invest in sales training so staff develop of sales targets and lev know their concerns and benefit from new el new skills and feel valued. of customer service.

❯ Define a clear team

structure and ways of

working together.

RUNNING YOUR BUSINESS 170 171

Running a Sales Team

can provide compelling advice that steers a customer BE AWARE toward making a purchase. Make sure to incorporate

the desired qualities into your job descrip tion (see ❯ When setting goals for sales staff, do not lose sight pp.124–125) when recruiting for a sales role. of other business objectives, such as customer

Representing the business ❯ Ensure targets are set against goals that will stretch satisfaction and profit margins. Salespeople may be the only contact customers have staff. Easy targets can breed complacency.

with your business. They represent the face of the ❯ Encourage drive and determination in staff, but watch

organization, so you need sales staff you can trust out for rivalries that can unbalance a team. Use different

to handle customers well, who believe in your approaches toward different personalities.

business vision, and operate in a way that reflects its ❯ Leave selling to sales staff. You should not be in values. It takes time and hard work to build a positive competition with them but rather be their guide. brand reputation and customer loyalty, all of which

can be lost easily through bad sales experiences.

“I have never

worked a day in

my life without

selling. If I believe

in something, I

sell it, and I sell

it hard. ” Estée Lauder, US businesswoman, 1985

❯ ❯ Empower staff Push the positives ❯ Allow staff the freedom Create a culture of and authority to interact achievement by sharing directly with customers. long-term strategies and good-news stories. Trust them to manage customers and to learn ❯ Reward the team for from mistakes. their successes.

Establishing a

Healthy Workplace

If you employ people, you will need to consider their well-being

in the workplace. By supporting your employees’ physical and

emotional health, you can help them reach their full potential.

Encouraging well-being a reputation as a business that cares for its staff, so

Well-being is a combination of feeling both physically prospective employees will be excited to join and

and emotionally well. People with a sense of well- contribute to the success of your enterprise. Poor being tend to be more energized, motivated, and well-being, with staff who are unable to work positive, as well as more resilient under pressure. effectively or are absent altogether, has the opposite

Employees with these qualities are likely to have effect and can prove costly. According to a 2019 paper

a significant, beneficial impact on your business. from the World Health Organization (WHO), depression

Looking after your employees will enable them to and anxiety in companies of all sizes costs the global

perform at their highest level, and you can develop economy $1 trillion per year in lost productivity.

Looking after Fairness

employees’ People who feel they are

well-being more likely to be well motivated and positive. When you make a being treated fairly at work are Studies into well-being at work decision that affects someone, be transparent show that employees need a sense and open, and make sure they understand why of purpose. They want to feel that you made your decision. Ensure pay and they are contributing to the success conditions are fair for all employees. of the business, that their efforts

are valued, and that they have

some control over what they are

doing—guidelines and instructions

are useful, but it is more important

for staff to feel that they have the

autonomy to decide exactly how Appreciation

to do their work. Thank people for their effort;

Employees must also be able even when something has not to cope with the demands of the gone completely to plan, it will still job. Providing appropriate training help raise morale. Appreciation can will help, but watch for signs be a financial reward or bonus, but simply of anxiety, and make sure that expressing your thanks in public for a job well done people know that it is all right is effective, too. Most importantly, your thanks to say if they have a problem. must be genuine.

RUNNING YOUR BUSINESS 172 173

Establishing a Healthy Workplace

Creating the right conditions LEGAL RESPONSIBILITIES Strive to create a working environment in which

your employees feel contented and fulfilled. You Although the specific details may differ around

will need to make the workplace physically safe the world, employers in most countries have legal

(see p.98–99), and provide sufficient lighting and responsibilities for the health and well-being of their

heating for the cooler months. employees (see pp.212–215). These typically include:

Develop a culture in which employees flourish and ❯ Undertaking an ❯ Having a suitably look forward to coming to work (see pp.162–163). This assessment of any equipped first-aid kit

does not mean there should be no rules or discipline; potential risks to people and ensuring everyone people understand these must exist, as long as they working in the company. knows where it is.

can see the purpose of them. Aim to create an ❯ Preparing a health ❯ Assessing employees’ environment where each person feels genuinely and safety policy risk of workplace stress

satisfied with their work and the way in which stating what will be and taking action to they are managed. done to make the prevent them from

workplace safe. becoming overly anxious.

Expectations IDENTIFYING STRESS

Most people find it stressful AT WORK

if things are unclear or if they

them. Set out clear aims, carefully problem in the workplace, so be alert for these signs. Be prepared to are unsure of what is expected of Stress leading to anxiety is a major

them a sense of how they are contributing to the talk to individuals if you think they selected goals to motivate people, and give

success of the business. Set up regular briefings may have a problem.

to keep them informed of their progress. ❯ Increased absences People have

time off work for various reasons,

but taking more time off than

normal or arriving late may be

a sign of anxiety.

❯ Withdrawing Those who are

anxious may isolate themselves,

Listen avoid engaging with others, and

Get to know your prefer to be quiet and alone.

employees individually. Talk ❯ Becoming overemotional to them and listen to what they If an individual is moody,

say. In this way, you not only show argumentative, or reacting in

that you value their unique contributions to a way that is out of character,

your business, but you will also be able to sense it is worth investigating.

more quickly when something is wrong. Make ❯ Working long hours A heavy

sure that no one is afraid to talk to you. workload might pressurize people

to work longer hours than usual

or fail to take adequate breaks

during the day.

Managing and

Resolving Conflict

Conflict can happen in any business and at any level. While debate

can lead to a positive outcome, constant arguing will undermine

your business unless you learn how to manage and resolve it.

Understanding conflict when to simply observe and Preventing conflict Most disputes that occur within monitor. Take action only when The best way to prevent unhealthy your team will be short-lived and you have to, and encourage conflict is to create a working minor, and it is impossible to individuals to take responsibility environment in which everyone prevent them all. Instead, aim to for finding a solution. When serious feels able to say what they think limit the damaging aspects of any conflicts arise, speak to those and express their feelings. This will friction between colleagues. Make involved but look beyond what help stop problems from escalating. sure to resolve any conflicts that people tell you (see box, right) for If, for example, someone is feeling occur between yourself and team the real reasons behind the issue. under pressure to meet a deadline members, tailoring your approach It is important to be calm, rational, but they do not feel able to ask for to the situation. Take advantage of and unbiased. Do not be drawn support, they may become stressed. new ideas or outcomes that result. into the argument, but try to put This can then result in a loss of

Resolving conflict between people at ease. Listen carefully to confidence, leading perhaps to a

people can be time-consuming. what they are saying and look for period of absence from work and Learn when to intervene and evidence to back it up. feelings of tension

Handling conflict

and Ralph Kilmann published a model for resolving conflict. This approach involves Widely used today, it sets out five possible approaches. In 1974, American professors of management Ken Thomas Avoiding

approaches, but understanding and being able to conflict until a better time. It utilize all five modes will help you handle conflicts works for minor issues, such as with or among your colleagues more effectively. trivial disagreements, when you Most people have a natural preference for one of the postponing dealing with the withdrawing from a situation or

With trivial issues, for example, avoiding can cannot invest time or effort. be the best approach. However, for issues

that must be resolved decisively,

competing may be the better option.

Accommodating

This means accepting another

person’s position at the expense of

your own. The opposite of competing,

this approach is helpful when you know

that your colleague is right or you want

to protect a working relationship.

RUNNING YOUR BUSINESS 174 175

Managing and Resolving Conflict

or conflict. It is essential that your CAUSES OF CONFLICT colleagues understand their goals

and know how to achieve them, To resolve conflict, you need to understand its root causes. Do not simply

because a lack of clarity may take things at face value—look for the underlying reasons. These causes lead to misunderstandings and commonly fall into the following groups:

disagreements in your workplace. ❯ Differing personalities and ❯ Lack of clarity can lead to Create space for both formal and working styles can clash, when misunderstandings between people informal communication. Get to people prefer to behave and work with opposing views and opinions.

know and understand your team in a particular way. ❯ Sense of being undervalued or members. This makes it easier to ❯ Stress caused by pressure, such “not heard” at work can make

pick up on any causes of tension. as demanding deadlines or a lack of people become dissatisfied

training, can cause tempers to fray. and argumentative.

“Peace is not the absence

of conflict, but the ability

to cope with it.”

Mahatma Gandhi, Indian politician and activist

Compromising

This entails finding a mutually

acceptable solution, giving both

sides something but not all of what Collaborating

between yourself and a team searching for a position that fully satisfies both sides. It involves member or mediating a digging deeper into the sources of dispute among colleagues. whether you are handling conflict This approach means they want. It suits many situations,

conflict. Use it when an issue is important

and merits the time and effort invested.

Competing

This involves pursuing your concerns

at the other person’s expense.

Competing relies on using power and

your ability to argue. It is useful when

there is a time pressure and reaching

a solution is vital.

Managing Staff

Performance

Whether you have one part-time worker or a hundred full-timers, your staff

will have a huge impact on your business. When employees perform well and

realize their potential, they make a big difference to the success of the business.

Setting expectations employee is underperforming, you they do not understand something As a business leader, one of your will need to act before the issue or if they encounter a problem. It is most essential tasks is to assemble becomes more serious. better to know that something is and maintain a high-performing It is good practice to set out your awry early on than to discover it staff. The keys to this are threefold: expectations of performance levels later simply because someone has recruiting the right people, making on the first day that someone starts been too hesitant to approach you. sure that everyone knows what you work. Take time to talk to the new Mistakes happen. It is important to expect of them, and regularly recruit, get to know them, and let learn from them and make sure monitoring performance. If an them know they can speak to you if they do not happen again.

CONDUCTING PERFORMANCE APPRAISALS

Hold a formal, structured discussion about personal

performance with each member of staff at least once

a year. Meet with them in private to talk about how

their work is going. Use the meeting to agree on

goals, monitor progress, and discuss concerns.

❯ Give the employee plenty of advance warning of

the meeting’s time, location, and duration.

❯ Make it a conversation rather than an interrogation.

❯ Use the time to discuss the employee’s ambitions

and training needs, as well as their immediate work.

❯ Allow time for them to give feedback to you about

what is working for them and what is not.

❯ Do not shy away from discussing any performance

problems you have picked up.

❯ Make notes to summarize the meeting—including

any actions that have been agreed on—and send

them to the employee.

RUNNING YOUR BUSINESS 176 177

Managing Staff Performance

“The key to successful leadership BE AWARE

today is influence, not authority.” There is considerable legislation

Ken Blanchard, US management and leadership author around discipline and dismissal.

Make sure that your business has a

Motivating staff If you get to know your staff as policy that reflects this and that all

Defining achievable goals for individuals, it will make it easier for staff are aware of it. If in doubt, each employee is the best way of you to spot if something is wrong. engage the services of a legal

getting across your expectations professional. Be sure to: Adopt a “walk-and-talk” strategy, and motivating your staff. But take ❯ Gather regularly mixing with employees to relevant evidence. care to ensure that targets for find out how they are and whether ❯ Give the employee an individual staff members do not opportunity to improve. they are coping. Let them know undermine collective working. what is happening in the business, ❯ Be fair and impartial.

Setting the wrong targets can and remind them of their value in Failing to follow the law is likely to result in employees competing with the workplace. Remember that if result in a claim for unfair dismissal each other rather than cooperating (see pp.212–215). staff feel appreciated, they are and sharing information. more likely to perform well.

DISCUSSING PERFORMANCE PROBLEMS

If a member of staff is not performing as well as they

should, act quickly to prevent the problem from

escalating and affecting your business. Speak to

the person informally to establish what can be done.

If this does not work, then you will need a more

formal meeting.

❯ Gather evidence of any poor performance in

advance. Let the person know why you are meeting.

❯ Be firm but fair , making sure you focus on the

problem and not on the personality of the individual.

❯ Be calm and supportive; it is likely to be a difficult

and possibly stressful experience for the employee.

❯ Explain the situation as you see it, then invite the

employee to respond.

❯ Work together to agree on a performance

improvement plan; this is better than imposing one.

❯ Put your agreement in writing and set a date for

a follow-up meeting.

Streamlining

Business Processes

A process is a series of activities that are linked together to deliver a particular

product or service. Mapping your processes will enable you to visualize how

efficiently your business is organized and reveal any areas for improvement.

Creating a visual representation growing plants, and selling them to customers.

Mapping out the key processes that your business uses In each case, the aim is to identify each step and

will help ensure that your operations run as efficiently its relationship with others. Creating a map is not

as possible—reducing costs and waste. It will also complicated and simply involves recognizing each

highlight which activities within your key processes step of the processes within your business and

that are worth investing in, or even eliminating. sketching it out in sequence to create a visual

The concept of process mapping originated in representation of all the activities involved. manufacturing, where raw materials are transformed

from their natural state through a series of steps into Understanding value the finished product. However, you can use process Once you have created a map, you can examine each

maps for any type of operation—from a restaurant step of your process and find ways to streamline it.

business receiving a booking, greeting the diner, This will help eliminate wasted time and effort and

taking their order, and serving the food, to a reduce costs. However, you can also use the map to

gardening business, which involves buying seeds, assess the value of each step.

Using a process map Nonessential/ A business-process map can provide value adding revealing and valuable information. Activity 2

Consider each step or activity your Activities like these benefit your business uses to complete each key business but could be eliminated if process. For example, if your business they cease to add significant value. delivers a service, map out every

activity you undertake from start

to finish. You can now assess each

activity to decide whether it is

essential or not. Similarly, you can also Starting point Activity 1 identify whether it adds value to your

business or not. While essential tasks

must be retained, nonessential ones

that add value are also worth keeping.

Review your processes regularly, as

new technology may enable you Essential/value adding

to simplify them.

Activities like these are valuable

to your business and customers.

Consider investing in them.

RUNNING YOUR BUSINESS 178 179

Streamlining Business Processes

Business processes are often described as “value BENEFITS OF A BUSINESS MAP adding” or “non-value adding.” The former are part

of the operation that adds value directly to customers A process map of your whole business will give you a

or clients, such as physically making a product or full overview of the operation, and can also be used to

performing a service, such as delivering food to a inform others – both within, and outside, the business.

customer. Non-value-adding processes are support By mapping out each step clearly, and how it relates to

services, such as IT or accounting, which are essential the others in the sequence, you can use it to ensure that

for the running of a company but are invisible to everyone involved with the business knows exactly how

customers and do not add direct value to them. it functions. This can be useful when talking to potential

investors or when inducting new recruits, allowing them

As your business grows, try to ensure that your to see and understand how the business works. value-adding and non-value-adding processes are

in balance. Since all processes incur some cost, such

as material or staff costs, spending more on value-

adding processes should result in a better return on “There is nothing investment. Beware of neglecting your non-value-

adding processes, however, since failing to produce so useless as doing your accounts or monitor cash flow, for example, could

cause a serious problem for your business. Both types efficiently that which of processes can easily be mapped by thinking through

each step that must be taken (or if your business is should not be done at all. ”

already running, by observing) and putting it into

your business-process map. Peter Drucker, US management consultant

Essential/non-value adding

Activity 3

Activities like these are important to retain

but are not worth investing in unless they

start to add value.

Activity 4 Activity 5 End point

Nonessential/

non-value adding

Activities like these should be removed

as soon as possible, saving you time

and money.

Managing Your

Supply Chain

A supply chain is the network of people, processes, and activities required

to deliver the products or services you sell. Creating an efficient supply chain

will save you time and money and increase profitability.

Understanding supply chains packaging from various suppliers, make the products,

A supply chain is like a series of steps that you have package them, then either sell them directly or deliver

to take in order to deliver a product or service to your them to the customer. If any link in your supply chain

customer or client. Every business has a supply chain, fails, you will lose time, potentially incur extra costs,

although some are longer and more complex than and disappoint your customer or client. Similarly, if

others. For example, an ice-cream shop may only your supply chain is poorly organized or includes require ice-cream, spoons, and cartons to do business. unnecessary steps, you will waste time and In contrast, a baker will need to source ingredients and money (see pp.178–179).

Managing a supply chain

The strength and efficiency of your supply chain plays It should also be flexible enough so that if a single link a key role in how reliably your business can deliver its breaks, it can be quickly repaired and not disrupt the other

products and services. To save time and money, aim links in the chain. Start by reviewing your chain and look

to create a chain that is robust and efficient. for ways to strengthen each link.

Understand your Identify potential Create contingency

supply chain weaknesses plans

Know what each link in the Examine each link and look Plan ways of avoiding

chain is and how it connects for possible weaknesses. problems should they occur.

to the next. Research all of Consider what the impact of Create contingency plans your suppliers and ensure those weaknesses would be and make sure you can put

they meet your ethical for your business. them in place quickly if

standards, and can abide the need arises. by your code of conduct

(see pp.102–103).

RUNNING YOUR BUSINESS 180 181

Managing Your Supply Chain

Managing your supply chain 79 % To ensure your supply chain is strong and effective,

you need to understand how it works, and where

potential weaknesses are before you can find ways

to improve it. For example, if your business makes

and sells necklaces, you may have a bead supplier in of companies with

China, and a designer and jeweler in France who make high-performing the necklaces before sending them to you to sell in your

shop. What would happen if your bead supplier failed supply chains to send the beads in time and your jeweler could not

meet your agreed delivery date? Once you understand achieve above-average what could go wrong, you can put plans in place to

mitigate any risks. You can also look for new ways of revenue growth doing things; perhaps you could buy in ready-made

necklaces as well as creating them from scratch, so www2.deloitte.com, 2020 that you would always have stock available.

Streamline your Seek professional Review your supply

supply chain advice and insight chain regularly

Look for ways to streamline Talk to your suppliers to Things change so keep

your supply chain for gain insights into how you reviewing your supply chain

maximum efficiency. could do things better. to check that it still works in

Perhaps you can use Ask them about their the same way, and that it still

technology to cut down experiences with runs smoothly.

on the time it takes other clients.

to do things.

Improving

the Business

Even if your business is currently performing well, you can never assume that it

will continue to do so. To remain competitive, it is important to regularly improve

your processes to ensure you are offering what your customers expect.

Reviewing your business Another way to make improvements is through Many small business owners spend much of their “step change”. This means rethinking your business,

time dealing with unexpected problems, such as and making bold and rapid changes. For example, you

customer complaints, quality issues, and late deliveries. may scrap entire products or services from your range, As a result, they have less time to spend on planning or decide to outsource activities currently performed

and growing their businesses. The best way to avoid inhouse. (see pp.50–51). However, the safest way is

this is by streamlining your processes (see pp.178–179), to improve and change your business slowly and

and improving performance (see below). methodically over time.

Improving business performance involves looking Improving your business should be continuous,

at your operations and processes, and identifying not a one-off exercise. Invite your staff to be part

ways in which they could function better. You can of the process, so that they are prepared for change

do this slowly and incrementally over a period of (see pp.204–205). You should create a culture in time, by analysing each stage and activity in your which everyone observes what is happening business to determine how it could be done more and feels able to make suggestions for how effectively and efficiently. things could work better.

Improving

performance

1. Quality

It is essential to review your business

processes regularly, to ensure that Quality comes first. Unless you deliver quality everything is working well. One way products and services first time, every time, you of improving performance is by risk upsetting customers and clients, and wasting using the “Sand Cone” model. money. Getting it right first time means there is no Although this approach was devised rework and there is consistency in delivery time, so for manufacturing, it can be applied your processes are reliable. to services, too. The model divides

the capabilities of a business into a

hierarchy of priorities: quality, speed,

flexibility, and cost. For optimal 2. Speed performance, the model suggests

that you begin with quality; move Reliable processes are costly, so you need to look on to speed; then improve flexibility; at how to run them faster. Doing things quickly and finally look at cost. If you use this reduces costs, but quality can suffer, so work on method, remember to be patient— delivering quality quickly. Can you speed up you need to believe that your costs delivery, for example, by using new technology? will decrease in time.

GROWING YOUR BUSINESS 182 183

Improving the Business

Entrepreneurs OPERATIONS

typically spend MANUAL

68% of their time As your workforce grows, you might want to consider creating

firefighting and an operations manual, which is a document that explains exactly

only 32% on long- how your business functions. Although they vary from business

Cost term planning to business, they typically detail the steps used to complete your business processes; staff roles and The Alternative Board, 2016 responsibilities; best practices; and

emergency procedures. Having a

record of every business function

is more than just a tool to train

new employees—it serves to record

valuable knowledge in the event of

staff leaving the business.

An operations manual also makes

your business far more attractive to

prospective buyers. If you plan to

sell or franchise your business, it is

evidence that the business can run

without you being present.

Flexibility

3. Flexibility

The wider the range of products/services delivered

by the same process, the harder it is to deliver

Speed quality quickly. Focus on your core products/ services, but stay flexible by creating alternative

processes for special or unexpected orders.

4. Cost

Only once you can ensure the quality, speed,

and flexibility of your processes, should you

seek to improve costs. It would be a waste of time

Quality trying to address costs while other areas of your business still require improvement.

Preparing for a

Business Crisis

You cannot predict exactly which crises will arise in the future.

But when you prepare careful plans and processes, your business

will be better equipped to handle unexpected events if they occur.

Planning ahead business more resilient. You

Major incidents such as fire, flood, may also find that planning for Making your plan

small business. Create a plan for input from your colleagues and Different kinds of crises can create suppliers. Allocate responsibility how to deal with such crises to similar constraints. For example, for specific actions such as save you time, reduce stress, and have a devastating impact on any Assemble crisis control plans with in another unexpected crisis. and IT failure happen rarely but can one eventuality may prove useful

you might want to create a plan for customer contact, or dealing

enable you to cope more easily. You people to work remotely and deliver with emergency services. can predict some of the impacts of a customer services online in the Write down the plan and crisis, for example, being unable to event of a major flu epidemic. In ensure everyone is aware of communicate with your customers, the event of a natural disaster, it and understands their role. and dealing with a lack of stock or such as flooding or an earthquake, If possible, test your plan with a

prepare in advance for these as situations change. Use the travel, your plan for an epidemic processes below to identify scenarios, it will make your damage to your premises. If you mock crisis and review it regularly which could limit people’s ability to

could still be put to good use. what should be in your plan.

Consider possible scenarios Assess the likelihood

Crises can be external, such as flood and fire, Some businesses will naturally be more prone

or internal, such as manufacturing a faulty to specific problems. Food poisoning is more

product or causing food poisoning through likely in a restaurant, for example, and

insufficient hygiene practices. Consider businesses sited near rivers are more likely to

what would happen if any of these flood. Focus on planning for situations most

events occurred. likely to occur in your business.

RUNNING YOUR BUSINESS 184 185

Preparing for a Business Crisis

DEALING WITH A CRISIS

❯ Keep a cool head when you need to act quickly, and

take a moment to think about what you are doing.

❯ Establish your priorities to ensure that your actions

are likely to have the best impact on the situation.

❯ Communicate clearly with precise instructions

so that everyone understands exactly what is

expected of them.

❯ Manage people under pressure by listening to

their concerns but remaining calm and reassuring

to prevent any panic.

❯ Stay positive and be alert to the unexpected;

sometimes a crisis can open new opportunities.

“Many small businesses

across sectors came into

the COVID-19 crisis with

low financial resilience. ” US small-business recovery after the COVID-19 crisis,

McKinsey & Company, 2020

Identify possible solutions Analyze the implications

When figuring out solutions, think about ways Consider the consequences of your proposed

of limiting the damage and how you could actions. Additional cost is the most likely prevent it from happening in the first place. implication, but your plans could also affect

For example, ensuring your data is backed your staff morale or your business reputation

up with adequate security if you do not adequately take into account

is always a good idea. the needs of clients, colleagues, or suppliers.

Harnessing

Technology

Making effective use of technology will speed up

communication, improve engagement with your

customers, and enable you to work more efficiently. Portable hardware

Portable devices such as

laptops and hard drives

Investing in technology hardware—such as computers enable colleagues to Even the smallest, one-person or printers—and software that is work remotely. Ensure business faces a mind-boggling colleagues can access not strictly necessary or offers only

array of software, applications files from devices out short-term benefits, so it can be

(apps), and other digital tools, of the office. worth paying for specialized advice. all offering constantly changing A technology expert will consider features and benefits. Most will your business activities and digital add purchasing and training costs options, then make a plan for your to your business, so deciding how immediate requirements, while and when to invest in technology also allowing for future capacity to

requires careful consideration. be easily integrated. You cannot Free software

Every business has specific future-proof technology, but you

technology needs, increasingly Commercial software can can build some adaptability into

or customers, such as the ability starting with free-to-use hardware and software that can software and apps, but to book services and pay for goods driven by the expectation of clients be costly. Consider your tech systems by choosing

easily be expanded and updated check that they are

online. It is easy to overspend on over time. compatible and secure.

DATA SECURITY Working smarter

As your business grows, it will As part of an integrated technology

hold increasing volumes of data, plan, the right computer systems, data

such as customer cell phone and management software, and apps

numbers and email addresses and can help you and your business work Cloud services lists of suppliers or investors. It is more efficiently and improve your essential to keep this data safe to Online cloud servers are products and services. protect your business and to a way of using someone Whatever tools you decide to ensure compliance with relevant else’s computers to store use, you should make sure they are local data regulations (see p.212). data and run programs. compatible with each other, both Businesses are increasingly Reduce your costs by in terms of technology and in how vulnerable to hackers, malware, moving business they work together to develop the and other forms of cyber attack, so functions to the cloud. business. Here are some examples it is vital to ensure the security of of how utilizing technology could your systems. Even the smallest help your business. business should take at least some

simple steps to protect valuable

data (see pp.120–121).

RUNNING YOUR BUSINESS 186 187

Harnessing Technology

NEED TO KNOW

Digital ❯ Algorithms are sets of

social media can connect into a business and its customers. Helpdesk applications people across the world. and feedback apps put ❯ Near-field communication Collaborate more customers at the heart of (NFC) enables two closely placed effectively with suppliers technology solutions. devices to exchange data, such as and colleagues. Video-calling apps and into a computer, which can then Online support process data to produce insights communication mathematical instructions fed

Respond to customer’s a chip and pin payment system.

needs more efficiently ❯ Open-source software is a

using online support. usually free-to-use technology,

although the source code is

shared and open to modification.

Digital marketing “Once a new

Traditional marketing technology

(see pp.64–65) is being

overtaken by digital. rolls over you,

Build a social media

presence and identify if you’re not online opportunities

(see pp.140–141). part of the

steamroller,

you’re part

Data analytics of the road.”

Online analytical tools Stewart Brand, US author, 1987

Mobile technology capture and study data

about customer behavior

Smartphone apps and experiences.

allow product browsing Improve your service

and instant purchases. or product with these

Monitor customer essential insights.

habits and identify

online buy ing and

selling trends.

GROWING

YOUR BUSINESS

Growing Your

Business

For your business to grow, you will need to sell more of what you

are currently offering. There are many ways of doing this, from

finding new customers to coaxing existing customers to spend more.

Developing a growth strategy which should fuel growth and keep you ahead of your

To give your business the best chance to grow, you competitors. While lack of growth or slow growth is

need to decide on a strategy for retaining buyers, clearly undesirable, it is important to manage the

winning repeat sales, and expanding your customer growth process. Growing too fast can knock your

base. This may include offering enhanced customer business plan off course. Think ahead and ensure

care, better delivery options, improving existing that you can increase financing, staffing, production

products or services, and offering new ones—all of capacity, and your supply of materials when needed.

Cultivating success

Increasing sales is challenging,

but by applying simple strategies to

your business, and developing your

employees’ capabilities, you can

achieve growth.

MANAGING GROWTH

Pay attention to talented personnel who

have the potential to grow your business.

Maximize cash availability and borrowing

power so you can fund growth strategies

(see pp.196–197), and invest in systems and

tools to help you.

PROMOTING GROWTH

Nurture existing customers and

improve service to encourage loyalty.

Reach out to new customers through

social media and email, local

networking, advertising, and

marketing (see pp.198–199).

GROWING YOUR BUSINESS 190 191

Growing Your Business

BE AWARE

It is vital to keep pace with demand, but not to

MAXIMIZING GROWTH grow your business too quickly. If demand grows

To maximize growth potential, keep too rapidly, you may not be able to fulfill orders or meet

in touch with—and be ready to promised delivery times, and this can lead to customer

exploit—changes in the world at large. and client disappointment. On the other hand, if growth

Shifts in buying habits and new is too rapid, you can run into cash-flow problems if

could open up fresh markets for your developments, and social trends rising expenses. Likewise, if staffing levels do not increase to match the extra workload, the burden on employees payment methods, technological revenues do not come in quickly enough to cover your

business, or expand existing ones. may result in personnel quitting. Such issues may put strain on your leadership and management abilities

and divert you from your ideal business plan.

LEADING GROWTH

Since you are in charge, you will have

to communicate clearly with your staff

and inspire them with your enthusiasm.

If you feel unsure of yourself, consider

undertaking training to improve your

leadership skills or working

with a coach or mentor.

Expanding

Your Business

As your business grows, you may be tempted to expand, but you will

need to recognize when the time is right. Consider different ways to

expand, and decide which approach makes sense for you.

When should you expand? could decide to expand its original range of rich

Expanding a business is different from growing it. desserts by introducing fresh fruit sorbets to appeal

Growth would be selling more of your product or to increasingly health-conscious customers. Or a

providing more of your service. Expansion is a graphic design studio might expand into offering

step further. It can include product diversification full-service website building to attract more clients.

(see pp.194–195), which means adding new products Keeping up-to-date with consumer news and social

or services alongside your original ones. Expansion and technology trends, as well as carefully tracking

could also involve moving into new lines of business your earnings over time, will help you figure out

and new markets. You may want to expand if your when the time is right to expand. growth has slowed and efforts to increase sales have

not worked. This can happen if your product or service Expanding too fast becomes outmoded due to old technology or changing The main challenge when expanding your business

tastes, or if its value is underappreciated in your will be managing your time, which will be stretched

current marketplace. For example, an ice-cream shop more thinly over both your original core business and

Ways to expand Products or services There are various ways to expand your Creating a complementary enterprise. As a small business owner, or “add-on” product or you may want to focus on offering a service to accompany new product or service, while staying what you already offer, within your existing marketplace. or heading in a different Alternatively, you may be expanding direction with a brand new beyond your current location, but product or service are both with the original product or service, effective ways to expand. or perhaps combining both strategies.

In all cases, you need to research your

chosen path, cost it, create a schedule,

and adjust your current business plan Acquisitions to ensure the expansion progresses Acquiring or investing in a smoothly. Here are a few options for related business may help expanding your business: you create new products or

establish a new market in

a more cost-effective way.

GROWING YOUR BUSINESS 192 193

Expanding Your Business

the new venture. To avoid losing touch with your “Scale is important for a customers, be prepared to recruit people to support

your customer service. You will also need to manage start-up. Think big, but

increasing demands on existing staff. If they feel too take it one day at a time.” much is being asked of them, they may quit, leaving

you to hire and train new employees. Plan your rate

of expansion carefully to avoid these problems. Kunal Bahl, cofounder of Snapddeal

WHAT AN EXPANDING BUSINESS NEEDS

To meet the additional administration and service requirements that come with expansion, you need to take steps in advance to prepare and manage the process effectively.

❯ Recordkeeping and infrastructure Update your ❯ Personnel Manage your existing staff, promoting where

software and systems so that they can manage more appropriate, and hire new members to fill key roles. Treat

products or markets, when the demand for tracking your personnel with sensitivity, so that you maintain a business operations also increases. positive and engaged workforce.

❯ Capital Plan ahead to secure the extra financing that ❯ Delegating Be less hands-on. As your business expands,

expansion often requires for new equipment, staff, or your role will demand more leadership and the delegation

other needs. You can then show investors or lenders a of day-to-day operations to others in your team. Review

business plan and projections based on current trading. how your business is managed, (see pp.164–165).

Partnerships Global expansion

Teaming up with a partner Crossing national borders

business could enable you (physically or online) can bring

to share resources or you rewards, but poses logistical

expertise. The business challenges. To be successful, you

may be able to provide may need to employ a mixture

a specific service that of strategies. Consider partnering

your business needs in with companies in the new

order to expand.. region or seeking help from

trade organizations.

Regional expansion

Establishing new locations,

such as a branch office or

store in another part of the

country, or supplying

your product to outlets

in new regions can all

help you to expand.

Growth Strategies

There are a number of strategies you can use to help your business grow,

depending on what you want to achieve. Once you have decided which

option supports your objectives, you can start working toward it.

Planning to grow starting your business (see pp.42–43), to ensure

Before committing to a growth strategy, first ensure sufficient demand and to identify what competition

there is sufficient demand to support your plans. If you you will face. Finally, be certain that the financial

are hoping to target similar customers as you do now, rewards of your intended strategy exceed the costs

make sure your new plans will continue to meet their of implementing it (see pp.80–81). As part of this, also

needs and expectations (see pp.40–41). Similarly, try to evaluate the disruption your plans may bring to

research the market thoroughly, as you did before your existing business—and to your personal life.

58 % Typical growth strategies The four strategies shown here are based on a model proposed in 1957 by Igor Ansoff, a of small Russian American mathematician and business manager. The Ansoff Matrix is still used to explain businesses lack common growth and expansion tactics. w

a plan to grow Ne smallbusiness.co.uk, 2015

CASE STUDY

Zomato et

Founded in 2008 in Delhi, India, as rk

a simple restaurant listing service, a

Zomato operates in 24 countries M

and 10,000 cities. Key to its growth

is a willingness to diversify: as well

as listings and reviews, it now offers

delivery, a membership program,

and the option to book both a g

table for, and a taxi to, the venue in

via its app. Zomato has reached out ist

to eateries, too. It helps owners Ex develop their own apps, provides

advice based on data from users,

and offers digitized management

services. Acquisitions and forging

alliances with other companies

helped it enter markets overseas. Starting point

Your market stall sells organic tomatoes that you

grow on your small farm. Every week you sell out

of tomatoes and have to turn customers away.

GROWING YOUR BUSINESS 194 195

Growth Strategies

Deciding your route DECIDING NOT TO GROW Once you understand your customers, the market, and

the costs involved in growing your business, use this Although growth can potentially bring great rewards, it

information to decide the best of four strategies (see always entails some risk—many companies fail because

below). Essentially, you can sell more of your offering they try to grow too soon, too quickly, or by too much.

to your existing market, sell the same offering to a new Ask yourself, do you even need to grow the business? For

market, sell a new offering to your existing market, or some businesses, staying the same size but improving

sell a new offering to a new market. how they operate can be more rewarding. Much will

Each option involves risk, which increases as your depend on why you started the business and what you

want out of it. If your business is already successful, and

plan diverges from your existing business model. allows you to maintain a healthy work-life balance, there

However, your research will help you choose the may be little to gain by growing it further. strategy most likely to lead to successful growth.

Market development Diversification A few new restaurants open up nearby, Your local supermarket does not stock

prompting you to offer daily deliveries organic pasta sauce. You invest in more

to them. This represents a new market, bottling equipment, buy up tomatoes

helping balance out monthly from other local organic farms, and

revenues, since your stall begin selling your sauce to the

trade slows down in supermarket chain, which

cooler weather. has 20 stores.

Market penetration Product development To meet excess customer You are selling as many demand, you will have to market-quality tomatoes

build a new greenhouse as you can produce, but

in order to grow more you have to discard any tomatoes. However, the that are misshapen. You

increased revenue you decide to use these to gain from selling more produce organic pasta tomatoes will justify the sauce, which you sell from

expense you incur. your existing market stall.

Existing New

Products

Financing Business

Growth

Once your business has reached the point where it needs more money

to grow, you will have to make decisions about how much additional

finance you require and how to raise it.

Assessing your needs budget for each item. Overbudget how you will spend it. The next If you have decided to take your slightly to allow for contingencies step is to find the right type of business forward either by growing (unexpected costs that may financing for your business. it or expanding it, your next step suddenly arise and potentially

will be to plan a strategy to fund derail your project). Having arrived Types of financing this phase. Start by listing the at an overall figure, you should be The nature of your business will resources that your business able to calculate how much funding dictate the types of financing you requires in order to grow, and you need. Be prepared to justify might seek. For example, if you

Preparing your Compiling the Improving your 1 2 finances information credit score

When you approach potential lenders, Whatever the type of financing you To ensure that you have a good investors, or grant-funding bodies, apply for, you will need to produce credit score, pay business bills you need to be clear about what you the accounts for your trading promptly, minimize debt levels, are asking for and why. You must also history and revenue projections. register your business with a credit

be prepared to provide evidence reference agency, and optimize

of how far your business has come, your personal credit score. how strong its finances are, and how

promising its future is. To do this,

make sure your finances are in order

and you have a well-thought-out plan

for spending any money you borrow.

4 Planning how to Calculate the 5 use the money impact on cash flow

Prioritize expenditure so that you Interest repayments on new loans

do not run out of money before will require you to have more cash

the key resources for growing your available every month. Time your

business have been acquired. repayments carefully to ensure

that funds are available.

GROWING YOUR BUSINESS 196 197

Financing Business Growth

are in manufacturing, you may FUNDING OPTIONS decide that buying rather than

renting premises will enable you Once your business has a track record, lenders (see pp.82–85) may be more

to increase production capacity open to you, and offer better interest rates. Venture capitalists will be most

and add value to your business, interested in your business during its high-growth phase, whereas grant givers

in which case it may make sense will be impressed if you are pioneering a new product or service.

for you to apply for a commercial ❯ Lenders If you already have a will invest and take a share of the

mortgage. Also, think about loan, discuss consolidating this profits but not get involved in

whether your needs are short debt by taking out a new, larger managing the business).

term or long term. If short term, loan that may offer more favorable ❯ Grants Funds are available through

investigate ways to help you rates of interest. government (see pp.212–215),

growth period. If long term, your already showing promise, you will philanthropic bodies, especially for be in a stronger position to attract manage cash flow during a ❯ Investors If your business is civic, university, corporate, and

best options are to get a loan or crowdfunding investors, venture businesses making a positive impact on society.

a grant or to find an investor. capitalists, or a business angel (who

3 Preparing a business plan 48 %

Write a document that of small business loans in the explains your business objectives,

measures your progress, and US are made by large banks projects how your business

will fare in the future.

finimpact.com, 2020

6 Preparing your pitch

Highlight why and how your

business is positioned to take

(see pp.86–87). Back this with 88 99 advantage of the current market 77

valid research and statistics.

44 55 66

11 22 33

••

Attracting

Gaining new customers or clients can help your start-up New Business Offer promotions and discounts

grow. Conventional marketing may be costly, but you For first-time buyers,

can achieve good results with smart ideas. offer discounts, free express delivery, a gift,

or other incentive.

Analyzing your customers have occurred, and which group is most Get the word out on It is vital to focus your efforts on valuable to your business. By always paid-for social media, the customers who are more likely knowing who your potential customers through your website, to give you repeat business and or with local flyers are, and understanding their buying

spend more on each purchase and marketing. habits, you can target them.

(see pp.152–153). Regularly

examine your sales data, use free Becoming more visible tools such as Google Analytics Boost your presence in the places (see pp.212–215), and gather where your customers like to shop, information on growth in your whether virtually or face to face. Run a market to identify any changes in paid social-media marketing campaign your customer base. Although your containing compelling or educational business may have appealed to a content, or an offer—starting small and certain type of customer at first, analyzing the response rate—and list you need to know whether that has your location on all popular and free changed, why those changes may online business directories and maps.

WORKING WITH Ways to increase your INFLUENCERS

customer appeal Reconnect with

past customers

with a large social media following, An influencer is an individual Many of the methods for bringing new Give lapsed buyers an

sometimes with millions subscribing customers to your business will cost very incentive to return by

to their channels. They “influence” little, other than your time. Brainstorm emailing a “we miss

followers by posting paid-for with staff, friends, and family to generate you” offer, with a

content promoting a brand’s and improve ideas. Research what other discount or free gift on product or service. successful businesses have done. Make their next purchase.

Partnering with influencers the most of staff who understand and

can be a valuable tool, enabling engage with social media, and sustain you to advertise your business to a genuine interest in your industry and a particular target audience—the customer communities. influencer’s followers. For example,

if you sell fitness equipment,

you could sponsor an influencer

known to be an exercise fanatic,

whose followers would likely be

interested in fitness and find your

product appealing.

GROWING YOUR BUSINESS 198 199

Attracting New Business

Find a partner

Collaborating with a

complementary

business enables you

and your partner to

market to one another’s

Increase referrals customers, and to

rewarding them when customer base by and expertise. Build a network they refer their friends Tap in to your existing other’s experience benefit from each and make a purchase. Consider joining trade

Giving both parties a bodies, chambers of

reward will build commerce, and goodwill in your networking groups to

customer community. gain ideas and win new

clients. Sponsor

activities for your

customer or client

community to make a

direct connection.

Promote your

website

Refine your SEO

(see pp.118–119),

thinking about the

social media influencer audience by tailoring Reach your specific Target specific words your customers Monitor online might use to find you. feedback audiences Analyze social media Keep an eye on your content that gets the online ratings and best response, and reviews. Deal with any targeted advertising create similar material. complaints right away, campaigns and respond to positive (see pp.138–139). For comments. Link good example, sponsor a reviews on external sites to your website to promote your brand and social media. (see box, left).

Retaining Your

Customers

Surviving in your first year of business depends not only on

building your customer base but also on prioritizing customers

who consistently spend the most and ensuring they stay with you.

Know your customers cheaper to keep existing custom ers customers face-to-face, asking Establishing a loyal customer than to acquire new ones, which for honest feedback, and analyze base can bring rewards to your may require considerable customer interactions online (see business. Research by the Harvard marketing effort and cost. pp.140–141). Armed with good Business School suggests that a To retain your most valued information, you can tailor your 5 percent increase in customer customers, you need to engage product or service to meet specific retention can increase profit by with them and find out what needs of your customers, so they as much as 95 percent. It can be interests them. Talk to your feel valued and value you in return.

How to keep

your customers Relating to your customers

There are two key ways of keeping ❯ Support a cause your customers beyond your direct product can relate to, such as sustainable offering, such as blogs, useful your customers loyal. The first sourcing of goods or community tips, quizzes, and competitions. involves improving your relationship projects, and promote it so that ❯ Be transparent with customers, with customers by personalizing their customers always feel good about sharing the efforts that go on experience and helping them feel buying your goods or services. behind the scenes, to reinforce connected to your brand or business. ❯ Personalize communications the integrity and quality of your The second involves maintaining the with your customers, using their product and the team behind it. quality of your product or service. preferred means of contact, such ❯ Reward customers through To do this, keep a keen eye on what as email or Twitter. loyalty bonuses and offers, goes on behind the scenes in your ❯ Inform and entertain customers refer-a-friend schemes, business. Regularly analyze your with relevant additional content and personalized discounts. supply chain and look for ways

to make it run as smoothly

as possible (see pp.180–181).

GROWING YOUR BUSINESS 200 201

Retaining Your Customers

Benefiting from loyalty CALCULATING CUSTOMER RETENTION RATE Loyal customers are more likely

to buy higher-priced or additional A simple equation can show you, as a percentage, how effective you are

products or services from you. For at keeping customers. It is known as the customer retention rate, or CRR. example, you could propose a more If your CRR percentage goes down over a particular period, you may have expensive product to them—known a customer retention problem that will need fixing. If the percentage goes

as upselling—such as a higher up, you are becoming more successful at retaining customers, and this

specification cell phone. You could should be reflected in increased sales.

also entice a loyal customer with

an additional product—known as Customer retention rate (CRR)

cross-selling—such as a screen S = number of customers at the

saver for a cell phone. Making start of a specific period E-N E = number of customers at the recommendations and suggestions CRR = x 100 end of that period [ ] S throughout the buying experience, N = number of new customers

right up to checkout, are simple acquired during that period

ways to upsell or cross-sell.

Optimizing your customer services “It can cost five

❯ Prioritize customer service flexible payment process. Always times more to

and response times. Offer staff be available to answer queries. attract a new

bonuses, tied to meeting customer ❯ Use analytics tools, such as customer than it service performance targets. Google Analytics (see pp.212–215),

❯ Respond immediately when to monitor website and social media does to retain an a customer makes contact. If interactions and continually learn something goes wrong, apologize about customer needs.

right away and rectify the problem ❯ Set targets for efficiency and existing one.” as soon as possible. speed in the flow of goods and

❯ Make it easy for customers to buy services and their delivery. When www.forbes.com, 2018

from you, with a fast, secure, and targets are not met, investigate.

Changing

Your Direction

When business conditions change, you may feel a sense

of panic. However, you can use such times to reinvent

yourself and to set off in a new, better direction.

Changing circumstances

Staying alert to early signs of a change in business

conditions enables you to take action before it is too

late. Change may be dramatic and unexpected or the

result of an evolving retail climate, new technology,

regulatory updates, or increased competition. General

Motors, which led the US auto industry for almost a

century, collapsed because it ignored its customers’

needs and failed to embrace new technologies and ADAPT

improve quality. As a small business, you may not have Rowena adapts to the closure of the restaurant

huge resources, but this can work to your advantage. during a pandemic by offering home-delivery

You have the benefit of being lean, naturally agile, services to customers who cannot get to the

and able to adjust quickly in the face of change. restaurant to collect. To widen her customer base,

she starts using a popular home-delivery app.

Ways of changing

To meet the challenge of a changing environment, you

may decide to adapt, pivot, or diversify. Adapting means TAKEAWAY making small changes to your existing business strategy,

continually refining your product and sales approach.

Pivoting means adopting a new business model or PIVOT

strategy. Diversifying means broadening the scope of In response to strong competition from

your business to offer different types of goods a new restaurant nearby, Rowena decides

or services. In this example, the owner of a restaurant to change her restaurant into a cookery

adapts, pivots, and diversifies in response to three school offering classes in fine cuisine. She

different changes in her business environment. also posts how-to videos on social media.

GROWING YOUR BUSINESS 202 203

Changing Your Direction

Considering your options CASE STUDY Whatever the cause of the change in the business

climate, first address its effect on your business, and Stagekings

then identify any opportunities that it could create.

Talk to staff or colleagues, collectively assess your In the face of the 2020 coronavirus pandemic, specialist

resources, then brainstorm and research ideas to designers of theater and movie sets, Stagekings, found

themselves idle as the Australian entertainment

find a solution that is cost-efficient, timely, and meets industry closed down. The company responded to clearly defined market needs. The solution may require the unexpected circumstances by pivoting. They

adjustments to your product (adapting), taking a thought about the needs of the millions of office staff new direction (pivoting), or adding new products now working from home, and deployed their skills to (diversifying). Aim to build on what you have already create a range of work-from-home desks.

learned rather than starting over from scratch.

NEED TO KNOW

ROWENA’S ❯ Black swan events are unexpected changes that could not have been predicted.

COOKING SCHOOL ❯ Horizontal diversification involves replicating your product,

such as by opening more stores.

❯ Vertical diversification involves

taking ownership of a part of your

supply chain.

OPEN T W A is failure to U E DIVERSIFY N R adapt. ” To increase profits in the face of strong A A competition, Rowena cooks and packs S E R “All failure O R

flavored oils. She uses social media to her delicious sauces, dried herbs, and N ’S The Art of Winning in an Age of Uncertainty , T Max McKeown, 2012

publicize the new range.

Managing

Change

Anticipating change and managing it successfully are key to

running a business. Take a methodical approach, with clear steps,

and you can adapt successfully to new business conditions.

Reasons for change For example, new technology or unexpectedly, an environmental When you start a business, making shift ing consumer trends could crisis could throw the markets any significant changes in the short lead to significant rises or falls into total chaos. to medium term may be the last in demand for your products or

thing on your mind. But external services. Alternatively, you Planning for change and internal factors can affect what might have to comply with new If you prepare in advance to handle your business offers at any time, so regul ations in your industry, set change and put a logical process in being able to adjust is essential. by the government. Or, even more place, you will be ready to adapt

Managing the

change process

When a business is faced with

change, it needs the support OUTLINE and enthusiasm of everyone THE PLAN

involved to guarantee a positive Set out a course of action.

outcome. For this to happen, it List what changes need to

is important that you, as leader occur at each level of the

of the business, are open and ASSESS business. Think about what points

affected business associates, that the change should deliver. Consider how quickly you will such as suppliers or investors, need to implement change, is also critical. If you actively whether it will be gradual or involve them in the steps you sudden, and who it will affect. take, they are more likely to is happening. Engaging staff, you will address these. Identify the business goals important clients, and any transparent about why change staff may be resistant to and how THE CHANGE

support the changes required

and contribute to a smooth

development of the business.

GROWING YOUR BUSINESS 204 205

Managing Change

and move forward when the time MAKING IT WORK comes. By providing a clear action

plan, “change management” helps Before introducing changes to your business, develop a plan that

minimize the risk of failure. The acknowledges the practical and emotional implications. media giant Netflix is an example

of a business transformed through Practical action Emotional awareness

careful change management. In ❯ Schedule milestones at which you ❯ Thank your staff through regular

2007, after 10 years operating as can assess the impact of the change emails and informal meetings.

a DVD rental service, the company and spot potential problems. ❯ Reinforce the reasons for change moved to digital streaming in ❯ Review progress weekly, and keep regularly to remind your team why

response to emerging technology. staff and all stakeholders informed. change will make working life better.

Netflix managed this change ❯ Remain calm if change takes longer ❯ Reward colleagues for their service

carefully from the outset, with than expected. A longer wait with if the change involves letting anyone

the support of employees might be go, and help them find new jobs

clear communication to its whole more effective than rushed change. through networking or agencies. workforce, ensuring a highly

successful and lucrative transition.

“Where there

business associates why change Explain clearly to staff and COMMUNICATE are changes, MONITOR there are Set a good example always business as an engaged and decisive leader of the business and opportunities. ” learn from any mistakes—made by you as well as staff. Continue to AND ENGAGE Minoru Makihara, Japanese engage employees, not only industrialist, 1996 during the change period but also in the long term. is necessary, how it will affect

them day-to-day, and how you

will support them. Encourage IMPLEMENT

feedback and answer AND EMBED

any concerns. Introduce changes, following

your formal plan. Make sure

staff receive any new training or

equipment they need. Encourage

and motivate staff, giving them

recognition for each step of the

change achieved.

Licensing

Once you are up and running, licensing is a way to grow your

business. As a licensor, others pay to use your ideas, or as a licensee,

you can pay to use other peoples’ creative output.

Becoming a licensor and technical inventions. Under the another business to use it, such as Some entrepreneurs do not sell licensing model, the licensor still in their branding, or to produce a tangible product. Instead, they owns their IP but allows someone merchandising products. sell the use of their intellectual else (the licensee) to use it under

property (IP) to other parties. IP agreed terms, for a set period, and Being a licensee includes virtual creations, such in return for a fee. For example, if Licensing gives licensees access to as designs, music, photographs, you create a fictional character, you new ideas, concepts, and creations illustrations, written text, software, could sell a license allowing without needing to generate them.

How licensing works

Licensing is a legal agreement between the

person who holds the IP (the licensor) and

the person or business who uses or sells that

intellectual property to a wider market (the

licensee). The licensor assigns rights to the

licensee for a particular purpose and specifies

the territories they can sell in. In return, the

licensee pays a fee or percentage of any profits

made. A licensee can also use IP as the basis

of another product. For example, an

illustrator might create an image that they

license to a clothing manufacturer who

prints it on a T-shirt and sells it (see right).

WHAT CAN I LICENSE? STEPS FOR THE LICENSOR

You can license a range of different Register your chosen product Identify potential licensees 1 3 Before registering your IP, ensure Investigate who is selling or kinds of IP, from virtual creations that existing patents and copyrights creating products in the same industry to physical products. For example (see pp.96–97) do not prevent you as yours. Visit the websites of trade you may be a software designer from developing your ideas. shows for exhibitor lists to identify who licenses a new program out to contacts to approach. universities. You might be a wildlife Develop your USP 2 photographer who licenses your The more innovative your Approach and pitch 4 photo collection to a commercial idea, the more valuable it is to the Make contact with the potential

picture agency. Or you may have licensee. Research the market to find licensees you identify. Ask permission invented a new gadget, then sell a out just how unique (see pp. 24–25) to send samples and let your idea license to an established company your offering is. sell itself. to distribute as part of their range.

GROWING YOUR BUSINESS 206 207

Licensing

However, they must have the skills Getting the right licence

and resources required to make use IP is protected by law (see pp.96– NEED TO KNOW

of the IP, and to fulfil the terms of 97) in order to stop others simply the license. As such, licensors tend ❯ Advance is the payment made copying it without your permission.

license to, who are more likely to usually when they sign the licence. Copyright applies to licensing agreement. to choose established companies to from the licensee to the licensor, There are four main types of IP

succeed and generate higher sales. artistic works such as literature, To be a licensee you generally ❯ Infringement refers to music, photographs, and website

unauthorized use of someone

have to be in a good financial designs; a patent applies to else’s IP, or the making of

position. You will also need a technology; a trademark protects counterfeit products.

good track record in your industry, brands, including the logo; whereas ❯ Licensing agreement is the otherwise licensors may not be a registered design covers the look contract between licensor and

willing to license to you. of a product. licensee that becomes legally

binding once both parties sign.

❯ Sublicensee is an extra (third

party) licensee appointed by

the main licensee. This may be

for production or marketing

purposes, for example.

❯ Territories are the countries

or market region in which the

licensee will use the licensor’s IP.

❯ Trade secrets are another

kind of IP, usually some type of

commercially valuable “know-

how” or formula.

STEPS FOR THE LICENSEE

1 Decide which product Secure funding Determine how successful 3 6

you want to license Calculate your expected profit, the product will be

If you lack the resources necessary to prepare your accounts, and approach Assess any practical issues around

develop an idea from scratch, such as lenders or investors, if needed. introducing the product into your

an artwork or logo, look for potential proposed market area. Prepare the Search sources 4 licensors in that field or industry. relevant figures for negotiation. Look for potential licensors.

2 Prepare a profile Explore international licensing Negotiate costs 7

Put together a detailed exhibitions, patent registers, and agents. Agree on an annual fees or

description of your company. Include royalties with the licensor. Decide who Contact preferred 5 current products, details about your will benefit if you develop the original licence holder market, and your manufacturing and IP further. Gather information from the licence production resources. holder to assess how their IP compares

against the rest of the market.

Selling Your Business

There may come a time when you choose to sell your business. This is

likely to be a difficult decision, but with careful planning and research,

you can make the process as smooth—and as profitable—as possible.

Organizing the sale Choosing when to sell Selling your business depends on you being able to Industry estimates put the average selling time for

convincingly state why you are selling. You may be a business at six months to a year, so it is not worth

retiring, taking up another opportunity, or perhaps rushing—advance planning and patience will splitting with partners and making a fresh start—all maximize your chances of success. If potential buyers

plausible reasons that are easy to convey. Be honest feel you are desperate to sell, you are unlikely to with all parties about your finances to encourage trust; achieve a good price. Seasonal timing may also be

if your business has not made a profit, call it a going- important for introducing your listing to the market.

out-of-business sale to encourage a quick transaction. For example, an ice-cream business will logically

A broker or agent can help communicate with attract more attention in summer than in winter. potential buyers and identify those who are genuine,

especially if your business is large or high value. Preparing to sell Seek advice from several brokers, and choose one who

gives a realistic valuation. Listen to their views, and It is essential that you prepare thoroughly for a commercial

consider the sales results of similar busi nesses that sale. Think about how to improve sales revenue well in

have recently sold, or the cost of those on the market advance. Decide whether you will manage the process

currently, and any local factors that may impact price. yourself or engage a broker. Research your market, prepare

For example, if your business is a burger bar and a new financial figures, and develop a pitch. This will set you up

university is about to open in the neighborhood, use with the best chance of attracting a committed buyer.

this information to support your asking price.

DUE DILIGENCE

In the world of commercial transactions, “due diligence” DOG GROOMERS

is the term used for a review of the financial records of a

business. Carried out before a contract is signed, it helps

the buyer identify any risks or problems. FOR

❯ Ask potential buyers to sign a nondisclosure OPEN SALE agreement before allowing them access to your

business data.

❯ Approach the sale from the buyer’s perspective

and prepare an honest analysis of the business.

❯ Put together a seller’s pack with all the financial

details the buyer will need to make a decision.

❯ Identify your business assets, liabilities, sales, gross

profits, rates of return, accounts receivable, and other

key accounting measures.

❯ Be ready for any questions from the buyer, and do

not attempt to conceal negative information.

GROWING THE BUSINESS 208 209

Selling Your Business

50 % 1 Valuing the business ❯ Calculate the value of your business. A rough estimate of this would be three times annual profit, but this will vary widely and depend on market conditions. of agreed ❯ Research the prospects of your market sector and take into account how this might affect your valuation. deals never ❯ Be honest about figures , even if you are losing money.

close , as they

do not make it 2 Preparing documents and contracts

through the due ❯ Compile records documenting the financial history of the business, and seek advice regarding the tax implications of your sale. diligence stage ❯ List all of the assets that will be included in the sale.

Benchmark International, 2020 ❯ Include any regulatory certificates and licenses for your

business premises.

FOR 3 Finding a buyer ❯ Seek professional help through a broker, who can

SALE provide advice and guide you through the selling process. ❯ Continue your involvement in the sale and actively

promote it, even if you are using a broker.

❯ Screen potential buyers to make sure they are genuine.

4 Negotiating an agreement

❯ Research your buyer , and decide on the minimum figure

you would accept from them.

❯ Discuss the deal structure, including the payout, and the

shares or assets to be transferred.

❯ Agree on a handover process , including what will happen

to existing staff.

5 Managing the profits

❯ Take time to consider what you will do with the sale

$ proceeds instead of spending them right away.

❯ Set out your financial goals, such as retirement or

paying off debt, and plan for them.

Moving On

It can be difficult to give up a venture you have nurtured from the start,

but eventually someone else may need to take over. Start succession

planning early so that you are well prepared when you step away.

Choosing a successor succession can provide a chance to find someone with

Preparing to hand over control is a challenging task for different strengths ready to help expand the business

any business—whether you plan to sell your business, and bring fresh energy and ideas. retain ownership but hire someone else to run the Succession planning is not just a task for the end

operation, or bring in a family member. There could be of your career. It should be considered well before

a number of reasons to seek a successor. You may be retirement. An unexpected event could leave your

ready to retire or want to spend more time on personal business without clear leadership, so you need a projects, or you may have achieved all of your goals backup plan to keep the operation running in your

and decides to focus your attention on exciting new absence, for the benefit of both your employees and

ventures. If your business is stag nating, it could family. Consider the shape you would like your benefit from a transfer of power. Whether you have run business to take when you have moved on. To preserve

out of steam or are busy with other new projects, the value of your business, it is vital that whoever

Handing over

Start the process of handing over control by reviewing

your existing leadership practices. Assess the qualities and

skills required in a leader for your business, and look within

your workforce to see whether an existing colleague would

make a suit able candidate. Before you approach a potential

successor, set a salary level and any benefits you are

prepared to offer.

Review the Construct a Consider the existing leadership leadership profile potential candidates

❯ Establish who will most be ❯ Reflect on the attributes ❯ Consider leadership potential of

affected by a leadership change. required to preserve and existing staff or family members.

❯ develop the business. Determine which qualities ❯ Look beyond the business if

staff would want to see in ❯ Compile a profile of skills and necessary, to find recruits with their new boss. experience your successor needs. required skills.

GROWING YOUR BUSINESS 210 211

Moving On

takes over respects what it represents and has the PLANNING YOUR EXIT

skills and drive to build on that. Identify staff or family

members who show the potential to lead the business.

If you feel none have the right abilities, be prepared An important part of your exit strategy is to plan for

how your next venture or retirement will be funded.

to look for people beyond the business. Cultivating a

successor should be part of the management process. ❯ Start planning early, when you set up the business.

❯ Have an idea of the milestones you want to reach

Stepping back before you step away, or at what age you would like to retire, and how much capital you would need to fund Ideally, your exit should be planned in stages, giving your next project or desired lifestyle. the new leader a chance to settle in and win the trust ❯ Get advice on the tax advantages and rate of return of staff and key customers. Step out of the picture for different types of pensions. gradually, reducing your days in the office, for example, ❯ Build savings into the business plan so that money is but do not linger too long, or your successor may feel regularly paid from the profits into a pension fund and hampered by your presence. The timing will depend savings accounts. on the identity of your successor—an existing member ❯ Make a will to ensure your family is provided for. of staff who has worked closely with you may need far

less time to get up to speed than an outside recruit.

58 % of small business owners have

no succession plan

Wilmington Trust, 2018

Develop your Prepare for the successor’s skills final handover

❯ Train your successor in the new ❯ Start to allow your successor ❯ Review and assess successors’s

skills required, exposing them freedom to operate. performance before your final exit.

to all business areas. ❯ Phase your exit if your ❯ Avoid the temptation to interfere

❯ Provide ongoing mentoring successor expresses a need once you have left—let your

to build their confidence. for ongoing support. successor make the key decisions.

Resources

In general, you should start with the US

federal agency or information center Starting a nonprofit organization www.usa.gov/start-nonprofit for a topic, but then look at the Canada commerce and small business offices Creating a not-for-profit corporation

for your state, which often have www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04970.html

extra and necessary information Creating a business plan and regulations. A business plan forms the foundation of a business.

Templates can help in the efficient writing of a plan.

Registering your business name Write your business plan—information and business

Check that your proposed name is not too similar to templates

an existing business by searching company registers www.sba.gov/business-guide/plan-your-business/ in the relevant state/region. write-your-business-plan

Canada

Choose your business name. market research, and writing a business plan US Assessing your readiness, choosing a business structure,

www.sba.gov/business-guide/launch-your-business/ www.canada.ca/en/services/business/start/planning.html

choose-your-business-name

Choose and register your business name. Local and national permits and licenses may apply to Canada Business licenses and permits

www.canada.ca/en/services/business/start/choosing-a-

your business.

business-name-3.html

Registering your business Apply for federal and state licenses and permits. You may have to register your business with the www.sba.gov/business-guide/launch-your-business/ government to make it a distinct legal entity. apply-licenses-permits

Canada

US Permits, licenses, and regulations Register your business. How and where you need to www.canada.ca/en/services/business/permits.html register depends on your business structure and

business location. Business insurance requirements www.sba.gov/business-guide/launch-your-business/ There are no national general requirements for register-your-business business insurance, so check state and local Canada requirements as well as requirements or suggestions

Register your business with the government. by industry association. www.canada.ca/en/services/business/start/register-with-

gov.html US

A guide to types of business insurances

Setting up nonprofit organizations www.sba.gov/business-guide/launch-your-business/ Nonprofit organizations may have different set-up get-business-insurance requirements from conventional businesses.

HOW TO START YOUR OWN BUSINESS 212 213

Resources

Canada Intellectual property (IP) rights There are no general requirements, but this is a Trademarks, copyright, design, patents good breakdown of the types available.

www.ibc.ca/on/business US

The Office of International Intellectual Property

Income tax Enforcement (IPE) The percentage of tax paid on income varies www.state.gov/intellectual-property-enforcement according to income and local law. Canada

Canadian Intellectual Property Office

US www.cipo.ic.gc.ca/eic/site/cipoInternet-Internetopic.nsf/

Taxes—filing, small business taxes, state and local taxes, eng/home tax return status International

www.usa.gov/taxes World Intellectual Property Office provides a list of all

Canada national IP offices. Personal, business, corporation, and trust income tax www.wipo.int/directory/en/urls.jsp www.canada.ca/en/services/taxes/income-tax.html

Labor laws

Goods and services tax (GST) Legal aspects of taking on employees or hiring Taxes added to the sale price of goods freelance help—types of employment contracts. and services. Legal responsibilities to your staff—advice on giving

notice and avoiding wrongful dismissal.

There is no set national sales tax; sales tax is added at US

state level. Labor laws and issues search.usa.gov/search?affiliate=usagov&query=sales+tax www.usa.gov/labor-laws Canada Canada Goods and services tax (GST) and Harmonized sales tax Federal labor standards (HST) www.canada.ca/en/services/jobs/workplace/federal-www.canada.ca/en/revenue-agency/services/tax/ labour-standards.html

businesses/topics/gst-hst-businesses.html

Avoiding discrimination in the workplace

Importing and exporting Employers have a duty to prevent and tackle Licenses and permits may be required for exporting discrimination at work. and importing goods.

US US Equal Employment Opportunity Commission Learning the basics and obtaining licenses and permits www.eeoc.gov/employers www.usa.gov/import-export Canada Canada Rights in the workplace Guide to importing and exporting www.canada.ca/en/canadian-heritage/services/rights-

www.canada.ca/en/revenue-agency/services/tax/ workplace.html

businesses/topics/registering-your-business/import-export-

program-account.html

RESOURCES

Health and safety Cybersecurity Ensure that your workplace meets the legal If your business handles personal data, you have

safety requirements set by your government a legal responsibility to protect that data from

and local authorities. cyber attacks.

US US Workplace health and safety Stay safe from cybersecurity threats www.dol.gov/general/topic/safety-health www.sba.gov/business-guide/manage-your-business/

Canada stay-safe-cybersecurity-threats Canadian Centre for Occupational Health and Safety Canada www.ccohs.ca/oshanswers/legisl/intro.html Cybersecurity for small business

cyber.gc.ca/en/guidance/cyber-security-small-business

Retail law

Retail laws vary widely by state and local Environmental law municipality, and the best resource for You must follow local environmental standards

following laws to sell retail is a local lawyer and laws. who specializes in small retail businesses.

Consumer protection/rights US Environmental Protection Agency Understand how local consumer law affects www.epa.gov/laws-regulations your business. Canada

Acts and Regulations: Environment and Climate

US Change Canada The Bureau of Consumer Protection prevents www.canada.ca/en/environment-climate-change/

fraudulent business practices and educates corporate/transparency/acts-regulations.html businesses about their rights and responsibilities.

www.ftc.gov/about-ftc/bureaus-offices/bureau- Getting green accreditation consumer-protection Look into the requirements for your region and

Canada industry-specific accreditation. Consumer protection legislation in Canada

www.ic.gc.ca/eic/site/Oca-bc.nsf/eng/ca02965.html US

Green America

Data protection www.greenamerica.org/green-america-green-business-

There is no one law protecting data and businesses, certification but there are many industry- and state-specific Canada protection laws. There is no central Canadian accreditation agency

for general business but there are many industry-

US specific ones. The Federal Trade Commission oversees compliance International with privacy and data protection laws and regulations. Green Seal—global but headquartered in US www.ftc.gov www.greenseal.org Canada

Privacy laws for businesses

www.priv.gc.ca/en/for-businesses

HOW TO START YOUR OWN BUSINESS 214 215

Resources

Market research Canada Information on conducting market research and Canadian industry statistics obtaining relevant statistics www.ic.gc.ca/app/scr/app/cis/search-recherche?lang=eng

Conducting market research

US www.canada.ca/en/services/business/research/ Market research and competitive analysis conductingmarketresearch.html www.sba.gov/business-guide/plan-your-business/

market-research-competitive-analysis

TEMPLATES AND TOOLS

Hundreds of free and reasonably priced templates your social media campaigns, but also consider

and software programs are available for small stand-alone programs such as Hootsuite, Later,

businesses, which can save you time and energy. or Tailwind.

As soon as you begin planning your business,

join local business owners’ groups on social media, Search engine optimization (SEO)

and ask for recommendations for the programs and Programs like Google Search and Moz can help you

templates that will be the most useful to you. Here improve your SEO to get more targeted traffic to your

are some programs that apply to a wide range of site and help you plan content and ad campaigns that

business types: combine with your static site content.

Analytics

Graphics Google Analytics is a free program that can track

If you need to make graphics, you can use a program where your website traffic comes from and what

like Canva to create professional-looking graphics people do when they get to your site. Even if you don’t

and marketing materials with a consistent look. For have much traffic to your site, it is worth installing so

themed memes, the WordSwag app lets you create you have the numbers as you grow.

consistent, clean memes from your phone.

Bookkeping

Marketing and social media marketing QuickBooks, FreshBooks, and NetSuite are three

You will need to market your business by email, common, easy-to-use small business bookkeeping

using a program that can collect opt-ins from systems that will keep you organized.

your customers. ConvertKit, MailChimp, and Kartra

are popular programs that maintain your lists and Market research

send emails. If you are selling to consumers, you If you are doing market research, you can use survey

will need to do social media marketing, too. Your programs such as Survey Monkey or Google Forms to

email marketing program may be able to integrate collect and organize responses.

Index

main entries. (B2B2C) 38, 39

A business-to-consumer (B2C) sales 38 bait and hook model 35 businesses: buying 27, 192 balance, work-life 52–53 defining your business 36 Ban Ki-moon 101 expanding 192–93 accelerators 85 banks: bank loans 82, 89, 161, 196 growing your 190–91 access, workspace 113 investments 84, 85 improving Page numbers in bold refer to business-to-business-to-consumer B

accountants 51, 88, 90 182–83 setting up business accounts 92–93 selling 208–209 accounts 15, 77, 88–89 taking customer payments 72, 73 working with other 150–51 achievement, culture of 171 behavioral factors 40, 41 buying: buying businesses 27, 192 action plans, writing 106–107 belonging, sense of 12 buying habits 131 “add-on” products and services 192 Bezos, Jeff 13 buy-sell agreements 55 advances 207 billboards 138 buzz, creating a 136–37 advantage, creating competitive 22 black swan events 203

advertising 35, 105, 190 Blanchard, Ken 177 C action plans 107 blogs 135, 141 choosing your channel 138–39 books: balancing 88–89 costs 79 bookkeeping 158 key performance indicators (KPIs) bootstrapping 82 capital 193

154 boundaries, setting 52, 54 capital gains tax (CGT) 90

promoting awareness 67, 118 Brand, Stewart 187 carbon footprints 100 on social media 119, 141 Brand Identity Prism 61 cash flow 159, 179, 191, 196 targeted campaigns 199 brands and branding: boosting your forecast 105 advocates 149 62–63, 136 managing 160–61 affiliate businesses 35, 115 choosing names 58 projections 83 after-purchase support 149 creating 60–61 repayment schedules 83 agencies 35 franchises 30, 31 statement of 89 agents, paying 73 generating interest in 136–37 cash payments 73 algorithms 68, 118, 187 mission statements and 25 causes, supporting good 200 Allegro 34 rrademarks 59, 61, 96 certification 19 alliances 150–51, 156 Branson, Sir Richard 137, 151, 167 challenges, new 168 Amazon 13, 66, 69, 161 bricks and clicks 34 change: anticipating and managing analytics tools 141, 152, 187, 198, 201 broad targeting 119 204–205 Ansoff, Igor 194 brokers 35, 208 changing direction 202–203 Ansoff Matrix 194 budgets 14, 160–61, 196 reasons for change 204 anti-discrimination laws 129 Buffet, Warren 89 characteristics, personal 14 anxiety 172, 173 buildings insurance 95 charities 27, 32, 33 Apple Inc. 15, 59 burn rate 161 charters, family 28, 29, 55 appraisals, performance 176 business angels 85 checklists, “good idea” 16–17 apps 147, 186, 187 business cards 142 checks 73 artistic abilities 14 business culture 162–63 childcare 53 assessing yourself 14 business essentials, buying 76–77 Chopra, Manish 66 assets 78, 82, 89, 90, 158, 159 business format franchise 30 Christensen, Clayton 132 attitudes, positive 162 business interruption insurance 94 cinema advertising 138 avatars 41 business models 34–35, 38 circumstances, changing 202–203 Avon 34 business plans 104–105, 107, 197 clients see customers awards, applying for 157 business-to-business (B2B) sales 38, cloud services 186 awareness, promoting 67 39, 82 Coca-Cola 16, 59

HOW TO START YOUR OWN BUSINESS 216 217

Index

code of conduct 102–103 cookies 119 relationships with brands 61

collaborations 150–51, 156, 175, 199 cooperatives 27, 32 retaining your 200–201 commission 159 copyright 96, 97 selling process 66–67 commodity 64, 65 corporation tax 59 sticky customers 149 communication 15 costs 64, 65, 76–79, 80 targeting 40–41, 66

building customer relationships 148 business essentials 76–77 , 159 understanding consumer rights

conflict and 55, 175 and cash flow 161 108–109 customers and 64, 65 estimating 78–79 customization 153

dealing with crises 185 fixed costs 158, 160 cybersecurity 120–21, 186 e-communications 130 improving performance 183

good managers 127 initial 78, 79 D harnessing technology 186, 187 investment and contingency 80 maintaining 150 ongoing 78, 79, 161 networking 142 understanding 158–59

data: customer data systems

staff well-being 130–31 172–73 personalizing communications 200 Coughter, Peter 87

community: code of conduct 102 data analytics 131, 153, 187 courier services 75

community events and projects data management platforms 119 creative thinking 15

commuting 12, 44, 45 deadlines 106, 174, 175 credits 89 debit cards 92 competitions 135 crises, preparing for 184–85 debits 89 competitors 19 134, 200 data protection 120–21, 186 credit scores 196 credit cards 82, 83, 92, 161

assessing 22, 42, 47 debt 82, 83 cross-border payment platforms 73

comparing yourself to 19 deficit 161 cross-selling 201 competing on perceived value 36 delegation 193 crowdfunding 82, 83, 84

identifying USPs 23 20–21 demand, assessing 42–43 customers: attracting new 141, demographic factors 40 198–99 denial of service 121 learning from 70 building customer relationships deposits, security 47 finding gaps in the market deliveries 49, 75, 77, 102, 108 162–63 culture, establishing a shared

pitching for investment 86, 87 146, 148–49

remaining competitive depreciation 159 182–83 calculating customer retention rate

strategies and 36, 190 design, branding 61 (CRR) 201

as threats to your business 155 desk research 42 code of conduct 103

writing business plans 105 development 12, 156 customer acquisition cost (CAC) 152

complaints 130, 154, 201 digital wallets 73 customer data systems 120–21 , components, sourcing direct mail 138 48–49 130–31 , 148

computers 76, 78, 186 direct sales 34 customer feedback 154

concepts 60, 157 direction, changing customer lifetime value (CLV) 152202–203

confidence, making the big leap disability 113, 125, 128, 129 customer relationship management

12–13 discipline 177 (CRM) 130–31

conflict, managing and resolving 55, discounts 71, 147, 198 customer satisfaction 19, 148, 154

174–75 customer services 37, 51, 71, 147, 149, dismissal 177

consumables 77, 79 165, 201 disputes 54, 174–75

consumers: business-to-consumer feedback 146, 147, 152 distributors 48

(B2C) sales 38 finding target markets 20–21 diversification 192, 195, 202, 203

consumer watchdogs 108 fulfilling orders 74–75 diversity 128–29

contacts 131, 134, 142, 156 identifying 40–41, 42, 46, 131 dividends 80, 81, 89, 90, 91 contingency 80, 161, 180 increasing your customer appeal double-entry bookkeeping 88–89

contractors 26, 61, 78, 79 198–99 dreams, pursuing your 13

contracts 50, 51, 76, 122 loyalty 146–47 , 200–201 drive 14, 171

control, increasing 12, 13 marketing campaigns 119 Drucker, Peter 19, 179 convenience 64, 65 promoting growth 190 due diligence 208

INDEX

E well-being 52, 172–73 business essentials 76–77 work-life balance 52 chasing payments 160 working with friends and family data protection 120–21 e-commerce 34, 50, 68–69 , 115 54–55 due diligence 208 search engine optimization (SEO) 69, employers’ liability insurance 94 estimating earnings 80–81 114, 116, 118, 199 employment: pros and cons of 12 financial forecasts 105 e-communications 130 side hustles and 13, 15 financial health 78 e-fulfillment companies 74–75 entrepreneurs, social 33 financial risk 13 e-payment systems 72 environmental issues 100–101 , 102 financial security 12 earnings, estimating 80–81 epidemics, planning for 184 financing business growth 196–97 eBay 66, 69 equipment 18, 76, 99 finding investment 84–85 electricity 99 funding your business 33, 82–87 , equity 89 electronic payments 72 104, 197 equity funding 82, 83, 84 elevator pitches 86, 104 key performance indicators (KPIs) ethics 33, 49, 102–103 email marketing 50, 153, 154 155 Etsy 69 employees: attracting candidates 123 making predictions 159 European Union, legislation 108 brand stories 63 managing budgets and cash flow events 137 career development 102 160–61 executive summaries 104 charters 28, 29, 55 managing your 158–59 , 165 exit strategies, planning 211 code of conduct 102–103 pitching for investment 86–87 expanding your business 192–93 contracts 51 start-up costs 78–79 expectations: exceeding 71 cybersecurity 121 types of financing 196–97 high 21 disability 113, 125, 128, 129 understanding business costs identifying and managing 70, 74, 147 discipline and dismissal 177 158–59 setting 170, 173, 176, 177 diversity and inclusion 128–29 vacation and sick pay 12, 13 expenditure 89 employers’ liability insurance 94 writing business plans 105 expenses 79, 90, 92, 105, 155, 158 empowering 171 fintech (financial technology) exporting goods 49 encouraging flexibility 167 organizations 92

expanding your business 193 fires 94, 98, 113, 184 F

finding the right talent 122–23, first aid 99, 113, 173

170–71 fit for purpose 109

hiring a manager 126–27 fixed costs 158, 160 identifying skills 164 Facebook 59, 140, 141 fixed-term contracts 122 induction plans 125 Facebook marketplace 69 flexibility 12, 52, 167, 183 investing in your team 166 failures, responsibility of 13 flooding 94, 184 job descriptions 124 fairness 172 flyers 137, 152 key performance indicators (KPIs) family: investments 84 focus groups 133

155 promotion through 134 food industry 38, 98

managing and resolving conflict work-life balance 52–53 forecasts, financial 105

174–75 working with family 27, 28–29, forums 16, 135, 141

managing change 204, 205 54–55 franchises 27, 30–1, 35 managing staff performance 176–77 fast-food chains 30 Franklin, Benjamin 107 ongoing costs 79 faulty items, consumer rights 109 freelancers 26, 61, 122 payrolls 51 feedback 71, 152, 154 freemium business models 35 rapid company growth 191 acting on 146 friends: investments 84 recruiting 51, 124–25 collecting 147 promotion through 134 retaining talent 168–69 monitoring 199 working with 54–55 rewarding 177, 205 staff 170 fulfillment management 74–75 running a sales team 170–71 target audience 132 funding your business 33, 82–87, 104, safety procedures 98–99 fees, online selling 69 197 valuing your 168 finances: accountants 51 fundraising 33 wages 158, 159 balancing the books 88–89 furniture, office 78, 113

HOW TO START YOUR OWN BUSINESS 218 219

Index

G I invoicing 160 isolation, self-employment and 13 IT 15, 76 Gandhi, Mahatma 175 ideas: borrowing from rivals 156 data protection 120–21 gas 99 capturing 162 equipment 78 Gates, Bill 25 clarifying 42 failure of 184 gender 128, 129 developing 14, 16–17 , 42, 43 management of 79, 165 General Motors 202 organizing and rationalizing 162 outsourcing 50 Generation X 40 successfulness of 16 workspace requirements 112 geographic factors 40 unprotected 96

giveaways 135, 136, 137 identity, brand 61 J global presence 193 IKEA 58

goals 106 illustrations, protecting IP 96

achieving your 13 importing goods 49

communicating your 36 job boards 123 inclusion 128–29 job satisfaction 13 change and 204 Jefferson, Thomas 81 incentives 71

motivating staff 54, 177 Jobs, Steve 15 estimating 80 journals, recruiting through 123 defining 24–25, 55, 171 income 89

reviewing 157 financial security of 12

SMART 166–67 income statements 89 K Google 59, 69, 118 income taxes 91 Google Alerts 136 income versus investment 80 Google Analytics 152, 198, 201 recording 158 Google Hangout 142 required income 81 Kapferer, Jean-Noël 61 Google Trends 141 self-employment and 13 Kaplan, Robert S. 37 governance 33 incorporated (Inc.) companies 59 key performance indicators (KPIs) government: consumer rights incubators 85 154–55

108 inexperience 15 keyword targeting 118, 119

grants 85 influencers 41, 136 Kilmann, Ralph 174

legal safety requirements 98 brand stories and 63

grants 85, 197 working with 135, 139, 141, 142, 198, L green issues 100–101 199

growth: expanding your business infringement, licensing 207 language skills 14 192 Innocent 16 gross profit 91, 105, 155 information: security of 120–21, 186

growing your business 190–91, innovation 17 Lauder, Estée 171

194–97 Instagram 140, 141 launch, preparing for 132–33

scalability 17, 19 insurance 75, 77, Lauterborn, Robert F. 65

94–95, 109, 158 leadership 15

H intellectual property (IP): licensing leads 131 206–207 leases 47, 76

protecting 96–97 ledger books 88–89 interest, creating 67 legal issues: consumer rights 108–109

hardware, portable 186 interest rates 84 intellectual property (IP) 207

Harvard Business School 132, 200 International Consumer Protection and legal advice 51 headhunting 51 Enforcement Network (ICPEN) legal protection insurance 94

health and safety 112, 155, 173 108–109 legal requirements 77, 79

home, working from 44, 46, 52 inventories 50, 51, 74, 75, 78, 155 staff well-being 173

horizontal alliances 151 investment: business plans 104 trade secrets 97

horizontal diversification 203 finding investment 84–85 legislation 36, 177 Hotmail 59 income versus investment 80 LEGO 59

human resources 164 investors 82, 84, 161, 179, 196, 197 lenders 197

hygiene 98, 113, 184 pitching for 86–87, 197 liabilities 89

INDEX

licensing 35, 49, 77, 95, 158, 206–207 generating publicity 137 N lifting and moving objects 99 investing in 152 limited (Ltd.) companies 26, 59 names 58–59, 61, 96 154 lighting 99, 113, 173 key performance indicators (KPIs) limited liability companies (LLCs) 26, management of 165 narrow targeting 119

LinkedIn 35, 123, 125, 140, 156 64–65 marketing mix near-field communication (NFC) 187 liquidity 161 27 marketing cycle 152 natural disasters, planning for 184

living costs 80, 81 outsourcing 50 196 organic marketing 134 needs: assessing your 50, 76, 79, 122, mission statements and 25

loans 84, 79 prelaunch checks 133 understanding clients’ needs 71

logistics 50, 51 Netflix 35, 59, 161, 205 marketplaces, online 69 Lombardi, Vince 149 network structure 165 markets: analyzing 157 loss 159, 161 networking 45, 48, 134, 142–43, 156, attracting new customers 198, 199 loyalty 190 190, 199 changing 43 creating 71 newsletters 139 finding gaps in 16, 17, 20–21 , 37 customer 146–47 , 200–201 newspaper advertising 138 knowing your 38–39 loyalty programs 149, 157 Nielson, Jakob 117 market development 195 lunch breaks 52 Nike 59 mass markets 38, 39, 65 nondisclosure agreements 208 niche markets 37, 38, 39, 65, 105 M legal safety requirements 98 spreading the word 134–35 net profit 91, 105, 155 understanding publicity 136 taxes 91 net promoter score 131 websites and 119 location, importance of 47 net worth 161 writing business plans 105 grants 85 nepotism 27 social media 198 negotiation 14 local authorities: consumer rights 108 researching 15, 16, 20, 153 nonprofit organizations 27, 32–33

segmenting 40, 41 numeracy 14

target 20–21, 36, 131, 132, 153 O

McDonald’s 30 testing 157 Ma, Jack 22 writing business plans 105 machinery, safety 99 material costs 79, 159 McKinsey & Co. 128 McKeown, Max 203 offers 147, 157, 160 magazine advertising 138 Mead, Margaret 165 office hours 12, 13, 44, 52, 173 Mahesh Yogi, Maharishi 127 media coverage 135, 136, 137 office politics 12 mailings 137 meditation and mindfulness 52 online selling 34, 68–69 Makihara, Minoru 205 mentors 85, 168, 191 advertising 139 malware programs 121 merchant service providers 72 e-payment systems 72–73 management: hiring managers 126–27 Microsoft 25 reviews 146, 147 managing your business 164–65 Microsoft Teams 142 search engine optimization (SEO) 69, staff performance 14, 176–77 milestones 205, 211 114, 116, 118, 199 teams 166–67 millennials 40 open days 137 manufacture 30, 34, 48, 51 mission statements 25, 36, 33 open-source software 187 marketing 190 mistakes, responsibility of 13 operations 103, 105, 155, 164 analyzing marketing responses 131 Mittal, Lakshmi 17 operations manual 183 building customer relationships 148 mobile technology 139, 187 opportunities 12, 16, 17, 36, 155 business-orientated 64–65 momentum, maintaining 156–57 options, considering your 12 consumer-orientated 64–65 money orders 73 orders, fulfilling 66, 74–75 costs 79 Monster 123 organic marketing 134 creating marketing plans 157 motivation 12–13, 25, 30 Otto 34 digital 187 MUJI 137 outsourcing tasks 50–51, 122 effectiveness of 152–53 Multi-Ply Components 169 overheads 45, 155, 158 environmental considerations 76 Myers, Vernã 129 owners’ council 55

HOW TO START YOUR OWN BUSINESS 220 221

Index

PQ design 64 razor blade model 35 developing new 37, 157, 195 reconditioned items 76 diversification 195, 202, 203 recordkeeping 158–59, 193 packaging 51, 61, 77, 101, 102 expanding your business 192 recruitment agencies 51, 123 paid search advertising 139 franchise 30 recycling 101 parenthood, juggling 53 fulfilling orders 19, 74–75 referrals 69, 122, 123, 146–47, 157, 199 partnerships 59, 150 importing 49 refunds, no-quibble 71 collaborating with partners 199 key performance indicators (KPIs) registered designs 96, 97 expanding your business 193 155 regulations 19, 51 identifying 156 marketing 64–65 , 105 reliability, providing 149 informal 26 product-based businesses 18–19 renewal options 47 tax and 90, 91 product liability insurance 94, 109 rent 47, 158 passing trade 47 promoting 130 repairs, consumer rights 109 passion 70 sales channels 66 reports, financial 89 patents 96, 97, 206, 207 scalability of 19 repurposed items 48 pay-per-click display advertising 139 selling process 66–67 reputation 30, 123 payments 71, 72–73 sourcing supplies and components research: bringing customers to life 41 PayPal 73, 115 48–49 franchises 30, 31 payrolls, outsourcing 51 supply chains 180–81 into gaps in the market 20–21 peer investments 84 testing 132–33 investors 86 Penney, James Cash 193 USPs 23, 196 market research 42, 153 performance: analyzing 154–55 professional liability insurance 95 where to locate your start-up 46–47 appraisals 176–77 profits 81, 90 responsibility 102–103 , 164 improving 182–83 cooperatives 32 retail 34 reviewing progress 205 forecasting 105, 159 retained earnings 81 permits 77, 95 gross profit 91, 105, 155 returns: consumer rights 109 personal characteristics 14 net profit 91, 105, 155 return on investment (ROI) 139 personal protection 99 profit and loss statement 89, 158, 159 reused items 48 personalized services 130 profit margins 155 revenue 90 Peter the Great 90 nonprofit organizations 27, 32 reviews, online 146, 147 Peters, Tom 168 selling your business 209 rewards 149 phishing 121 promotions 64, 65, 105, 130, 135, 136, employee 169, 171, 172 photographs, protecting IP 96 137, 146–47 , 198 reward programs 71, 83, 130, 135, pitching for investment 86–87 , 104, protection: protecting your business 199, 200 197 94–95 Riani, Abdo 35 place 64, 65 safety 98–99 rights, consumer 108–109 politics, office 12 PSP (payment services provider) 73 risk: growth strategies 195 pollution 100, 101 psychographic factors 40, 41 protecting your business 94–95 pop-up events/facilities 47, 132, 137 public liability insurance 95 risk assessing 94, 173 Porter, Donald 109 public relations (PR) 33 taking 12, 15 POS (point-of-sale) system 73 publicity 136, 137 Robinson, Janet L. 146 postage 75 purpose, defining your 24 royalties 30, 207 premises see workspaces quality 19, 23, 108, 149, 182 running costs 80 pressure 175, 185

prices 23, 64, 66, 105 R S problem-solving 15

processes, streamlining 178–79, 182,

183

producers, using local 48 race 128, 129 safety 98–99, 112, 113

production, management of 164 radio stations 138 salaries 80, 126

productivity 112, 130, 172 ransomware 121 sales 89

products: consumer rights 108–109 rates, business 91 analyzing sales data 153

INDEX

direct sales 34 skills 14, 15, 164 stepping back 211 effectiveness of marketing 152–53 Sky TV 35 stock see supplies fulfilling orders 66, 74–75 Skype 58, 142 Stone, Biz 85 increasing 190–91 SLA (service level agreement) 50 storage 18, 45, 77, 113 key performance indicators (KPIs) SMART goals 166–67 stories, telling your 62–63, 136

154 Snapchat 140 straplines 61

management of 165 social enterprises 27, 32, 33 strategies 106, 107 marketing mix and 64–65 social entrepreneurs 33 creating 36–37 mastering 157 social media 15, 59, 105, 119, 148, 190, diversity 128 online selling 68–69 199 growth 190, 194–95 running sales teams 170–71 action plans 107 testing 132–33 sales taxes 91 advertising 139, 141 strengths, identifying 14, 16, 17, 36, 155 selling process 66–67 brand stories and 63 stress 52, 112, 173, 174, 175 tracking 153 CRM systems 130 structure, choosing a 26–27 writing business plans 105 crowdfunding 82, 83 sublicensee 207 samples, free 135 customers’ behavior 41 subscription business models 35 “Sand Cone” model 182–83 forming alliances 151 success 152, 156, 190–91 scalability 17, 19 incentives for sharing 136 succession planning 55, 210–11 schedules 53 influencers 41, 63, 135, 136, 139, 141, suppliers 23 Schumacher, Michael 155 142, 198, 199 code of conduct 103 search engine optimization (SEO) 69, key performance indicators (KPIs) local 48, 100

114, 116, 118, 199 154 managing cash flow 161

seasonal work 47, 122 making the most of 140–41 sourcing 48–49, 151 security 47, 76, 83, 186 marketing 115, 198 supplies 77, 89 segmenting the market 40, 41 outsourcing 50 business assets 78 self-employment 26 prelaunch checks 133 capital gains tax (CGT) 90 self-storage 45 promoting awareness 67 discounting 160 selling: online selling 68–69 targeting 135 limiting 161

sense of purpose 17 customer relationship management supply chains 180–81, 200 service-based businesses 18–19 (CRM) 130–31 vertical diversification 203 business-to-consumer (B2C) sales 38 cybersecurity 120–21 support 149, 187 competing on customer service 37 data management platforms 119 surplus 161 consumer rights 109 investing in 186 surveys 147 creating USPs 23, 196 open-source software 187 sustainability selling your business 208–209 software 76 running out of 19 see also sales accounting 88 stock and contents insurance 95 selling process 66–67 visibility on 118, 119 replenishing 18 developing new 157 Solarkiosk AG 103 switching off 13 100–101

how to create successful 70–71 sole entities, tax and 90 SWOT analysis 36, 104, 155 marketing 64–65 , 105 sole proprietors 26, 58, 59, 90, 91

promoting 130 speed, improving performance 182 T scalability of 19 staff see employees service agreements 76 Stagekings 203 shared spaces 44, 45 standards, ethical 49 shareholders 55, 81, 90 standing out from the crowd 17, 22–23 talent, retaining 168–69 shares 84, 90 start-ups: choosing a business model targets, setting 171, 201 shipping 49, 51, 75, 77 34–35 tasks, outsourcing 50–51, 122 Shopify 69 choosing where to locate your 46–47 Tata, Ratan 55 shows 137 costs 30, 76–9, 80 tax 80 sickness 12, 13, 155 side hustles 13, 15 charities and 33 side hustles 13, 15 stationery 77, 159 corporation tax 59 Sinek, Simon 24 step change 182 expenses 79

HOW TO START YOUR OWN BUSINESS 222 223

Index

and importing goods 49 variable costs 158, 159 WeChat 59

leasing contracts 76 Vaynerchuk, Gary 197 weekends 53

sustainability and 100 vehicles 76, 77, 78, 101 well-being 112, 172–73

understanding business tax 90–91 ventilation 113 white-label platform 73 teams: managing 166–67, 170–71 venture capitalists 85, 197 wholesalers 34

structure 165 vertical alliances 151 Winfrey, Oprah 103

technology 36, 77, 186–87 vertical diversification 203 withdrawal, stress and 173

television advertising 138 video calling apps 187 Wix 69

temperature 113, 173 vintage items 48 Wordpress 117

terms, offering flexible 37 virtual workspaces 45 work-life balance 52–53, 195

territories 207 visibility, boosting your 118–19, 198 workspaces and workplaces: code of

Tesla 161 vision 24, 25 conduct 102

testimonials 67 vulnerable people 99 establishing healthy 172–73 Thomas, Ken 174 leasing contracts 76

time: time management 15 staying safe in 98–99

time frames 107, 133 where to locate 44–47

totals, balanced 89 working from home 44, 46, 52 wages 79, 80–81 , 158, 159 touchpoints 130 Walton, Sam 21, 131 toxicity 98 warehousing 45, 50, 51, 75 trade magazines 16 waste, reducing 100 trade secrets 96, 97, 207 weaknesses in your business 14, 15, 16, Y trade shows 48 36, 155 TikTok 59 setting up 44, 79, 112–13 W

trademarks 58, 59, 61, 96 websites: affiliate businesses 35, 115 Yahoo 69

traits, personal 15 visibility 118–19 transferable skills 14, 15 content 114, 115, 116–17, 119, 135, transparency 200 147 training 18, 19, 168, 169, 170 attracting traffic and improving YouTube 140

trends 16, 105, 131, 141, 157, 191 content management system (CMS) trust 70, 71, 142, 171 Zomato 194 116–17 turnover 81, 90, 91 Zoom 142 customer relationship management Twitter 58, 85, 140, 200 (CRM) software 130 Z

U data protection 120–21 designing and building 76, 78, 79,

116–17

domain names 76, 114–15, 140

Uber 161 finding employees 123

unconscious bias 129 key performance indicators (KPIs)

unique selling points (USPs) 23, 154

105, 196 live chats 147

upselling 201 mapping your site’s structure 114–15

utilities 77, 79, 159 monitoring activity 147

online selling 68–69

V outsourcing design and maintenance 50, 79

planning 114–15

vacation pay 12, 13 prelaunch checklist 132, 133 promoting 199 value, understanding 22, 36, 178–79 search engine optimization (SEO) 69, value-added tax (VAT) 91 114, 116, 118, 199 values, brand 24, 25, 60, 66, social media and your 141 162–63 , 166 types of 115

ACKNOWLEDGMENTS

Acknowledgments

Dorling Kindersley would like to thank Fiona Plowman for

proofreading; Vanessa Bird for the index; and Emma Kennett,

James McAllister, Sally Newall, and Helen Poultney for

technical consultancy; Magda Pecsenye for consulting on

US edition; DTP Designer, Rakesh Kumar; Jackets Editorial

Coordinator, Priyanka Sharma; and Managing Jackets

Editor, Saloni Singh.

Credits

p. 61 Developing your brand, The Strategic Brand

Management, Jean-Noël Kapferer 1996; pp64–65

Marketing mix and 4Ps, Basic Marketing: A Managerial

Approach, E. Jerome McCarthy, 1960; 4Cs, “New Marketing

Litany: 4Ps Passé C-Words Take Over”, B. Lauternborn, 1990;

pp66–67 Sales funnel, Financial Advertising, Elias St Elmo Lewis, 1907; p.155 SWOT analysis, Business Policy, Text and Cases, Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth, 1969; pp.174–175 TKI conflict model , Thomas-Kilmann Instrument Conflict Model, Ken Thomas and Ralph Kilmann, 1974, pp.166–167 SMART goals, “There’s a S.M.A.R.T. Way to Write

Management’s Goals and Objectives”, George T. Doran, 1981;

pp.182–183 The Sand cone model, “Lasting Improvements in Manufacturing Performance: In Search of a New Theory”,

Ferdows, K. & De Meyer, A, 1990; pp.194–195 The Ansoff Matrix, Strategies for Diversification, Igor Ansoff, 1957

Disclaimer

The information in this book has been compiled by way of general

guidance in relation to the specific subjects addressed, but is not

a substitute, and not to be relied on for legal, accounting, tax, or

other professional advice on specific circumstances and in specific

locations. So far as the authors are aware, the information given

is correct at the time of going to press in 2020. Practice, laws, and

regulations all change, and the reader should obtain up-to-date

professional advice on any such issues. The authors and publishers

disclaim, as far as the law allows, any liability arising directly or

indirectly from the use, or misuse, of the information contained

in this book.

Phillips & Leigh, Patent and Trade Mark Attorneys, have reviewed

the IP sections of this book for accuracy, but readers should not

take these sections as constituting legal advice

The author and publishers welcome any comments, corrections

or other suggestions for subsequent editions of this work.