or How to Turn Your Business
Idea into Reality!
Learning Outcomes
This presentation will cover:
The success factors in start-ups and the motivation and skills that
are required to run your own business
How to start thinking about your business idea and to decide
whether it is a practical proposition
The information that goes into a good Business Plan
Some key messages to take on board
There is an accompanying handout ‘Starting Your Own Business’
which can be found on the Further Activities and Resources section
of the Business and Commercial Awareness segment of the
LearnHigher website
Reality Check – Starting a Business!!
If it was easy everyone would do it!!!
70% of start ups close down within 3 years but remember not all closures
are because of business failure. People often sell businesses or take up
paid employment.
Running your own business provides you with great learning experience
in terms of:
Leadership and Team Working
Communication and Networking Skills
Commercial Awareness
Planning and Organisation
Adaptability, Flexibility and Resilience
Independence
Business Success Depends On ?
Seriously considering your motivation (including appetite for risk!)
Being aware of your own ability, skills and capabilities!
Realistically thinking through the business idea and start-up options
And, if you are starting straight from university, perhaps at the outset,
not having too complex a business model!
The MAIR Model
Research the
Motivation
market &
plan
marketing
Write
Your
Ability
Potential Gather team Business
& plan Plan
for operations
Success
Idea
Explore
funding Negotiate
& plan
finances Yourself
Into
Resources Take lots of Business
advice &
network
To be successful in business you usually
have to offer:
Something that is better in terms of quality, process,
delivery , service and/or cheaper…
OR
just you and your team being plain nicer to deal
with…
…than the competition!!
Serious Questions to Ask Yourself
How committed are you? What are your driving forces?
Are you prepared to work hard and to take risks? What are your goals?
Does self-employment match with personal/family needs? (it’s definitely
not a 9-5 job)
Have you the right skills?
Do you know your own strengths/weaknesses?
Are you really good at the core skill required?
Have you a feasible idea or can you find one?
Does the idea fill a gap in the market: will it sell???
Can you find premises, tools/suppliers, staff required ?
Have you a funding need (not easy to get for start-ups!!)?
Can you survive initially on what may be a low income?
Can you build networks for support and development?
Entrepreneurism
No agreed definition but a good one is perhaps:
‘An entrepreneur is someone who has the ability to
recognise or grasp an opportunity and the ability, skill and
commitment to manage risk in order to achieve success’
Do you have to be an entrepreneur to run
your own business?
No !
Not all business people are like Richard Branson or Bill Gates
Entrepreneurs tend to be involved in novel start-ups, new products or
services or new routes to market and with fast growing businesses.
They often switch sectors.
Most start-up businesses are not novel or fast growing: they are
plumbers, hairdressers, small retailers, web designers etc.
Most start-ups are just undertaken by ENTERPRISING people
Enterprising Attributes
Initiative Calculated risk-taking
Flexibility Independence/desire to
Teamwork control one’s own destiny
Leadership Desire to achieve
Hard work
Creativity Note that many of these are exactly
the competencies required by the
Planning/organisational leading graduate recruiters.
skills
Problem-solving ability If you have a go at running your own
Negotiation skills business it will add to your CV and
your ability to answer tough
questions on application forms.
Ideas into Reality – the Idea
It might be:
A ground breaking invention (usually extremely high risk)
A brand new product or service (very high risk)
A new solution to an everyday problem (high risk)
An enhancement to an existing product/service (less risky)
A gap in an existing market that you can fill (less risky)
An interest or hobby that you can turn into a business, possibly
part-time at first, and using known contacts (low risk)
Make sure that the idea fits with your needs as
an individual or your family
Test Your Idea
Get feedback, bounce your idea off others, preferably those with some
commercial experience (friends, family, the bank, business advisers
etc.)
Remember, above all, there has to be a MARKET and an end
CUSTOMER who will pay real money for your product or service.
Identify any weaknesses in your plans and consider the best strategy to
overcome them.
Beware ‘Product Infatuation’. It seems a good idea, you think people
are bound to buy it, but they don’t. Yet you keep on going and going,
throwing more time and maybe money at a likely failure.
Do the Outline Sums
Nearly every new business needs some money for :
Premises, equipment, vehicles (capital items)
Stock
Advertising/marketing
Rent or lease payments, business rates
(If working from home do you need planning consent?)
Utility costs (heat, light, power)
Transport costs
Your salary/drawings and maybe other staff costs
Remember sales are often slow to build up and, unless they are for cash,
you might not get paid for 1, 2 or even 3 months.
Suppliers to new businesses often want cash! How your cash will flow in
and out is the key to survival!!
Write a Business Plan ???
WHY:
Makes you think through the idea in some depth!
It is a test to see if your idea will stand up to scrutiny!
Usually essential if you want to borrow money !
Provides an ongoing reference point for when you are in business!
Some More General Points !!
If you need funding then your knowledge and experience (and that of
other members of your team) are key:
Management/Management/Management is the investor
mantra!!!
If you have no experience think about getting it first!!
Choosing the right legal status needs careful thought.
I would recommend Sole Trader or Limited Company. Partnerships can
be fraught when things go wrong.
Funding
It is better to have 70% of something than 100% of nothing.
People will not invest risk capital without a reasonable stake and
return.
Commercial lenders like to see you invest some real money into a
project before they will lend. That ties you into the business and
means you are less likely to give up if the going gets tough. It
used to be £ for £ but with schemes like SFLG it can be 20/80 or
30/70
Don’t try and fund long-term purchases
(property/equipment/cars etc.) with short-term money
(Overdraft/Credit Card)
Customers are King!!
Customers can be difficult and sometimes expensive to find, make sure
you look after the ones you have!
Just printing a few leaflets or having a website is not enough. People
have to find that website and you need to know about internet search
engines.
If you are planning to sell to large companies such as the major
supermarket chains there is a long and rigorous process that has to be
followed. Products are often trialled in a small number of outlets
before being sold across all outlets. Can you gear up production?
Remember your customers are your best sales brochure!!
Business Planning
The following slides show, in more detail, the areas to be
covered by a Business Plan
Product or Service and Marketing
Provide full detail of your product or service.
What specific market are you targeting?
Details of any major customers/target customers groups
What market research have you undertaken, why will people buy your
product/service?
How will you cost/price your product/service?
Who are your competitors?
What makes your product/service better, faster, cheaper or nicer than
the competition? Effectively what is your USP!!
Operational Requirements
How will the product be made and sold or how will the service be
delivered?
What premises and equipment will be needed at the outset and as
the business develops?
What staff will be needed both initially and as the business builds
up?
Can those staff of the right quality be found and trained?
Financial Information
Monthly profit and loss, balance sheets and cash flows are usually
required for 3 years
You must fully understand these figures even if you get specialist help
in their preparation
Detail the assumptions made in the preparation of the figures (E.G. in
sales growth, in profit margins, in payment terms)
You must understand those assumptions
If you need to borrow to fund asset purchases then assume that
borrowing is available and bring the finance costs and repayment
projections into the plan/forecasts
Risk Evaluation – SWOT Analysis
Outline Strengths and Weaknesses of the business and yourself.
How can any known weaknesses be overcome?
What opportunities exist and how can they be exploited?
What are the threats, including the competition, and how can they be
overcome or mitigated?
THANK YOU
