Business innovation in the UK is alive and kicking, with the number of private sector businesses increasing by 3.5% in 2019, reaching a total of almost six million companies. Considering the UK’s—and especially London’s—business-friendly environment and the benefits of starting a company, it’s no wonder that you too might want to launch your own venture.
However, not every startup is primed for success, and sadly only 42% of UK businesses launched in 2012 were still active five years later. As such, ditching your 9-to-5 to become a business owner is a real challenge, and you’re going to have to give blood, sweat and tears to your startup to succeed. Here are three of the most important things you need to know before you get your business off the ground, giving you the best chance of turning your big idea into a big success.
1. Choose a great business name
As the first thing potential customers, clients, and partners will notice about your company, the name of your business is absolutely vital to your chances of success. and could be the difference between making a good impression or not. A weak name might hamper your marketing and branding efforts if it fails to connect with people, and even lead to tricky business and legal hurdles. For instance, a name that limits your company to a particular product or city could be a problem if you want to expand your services later, while a name that’s too similar to an existing one could land you in court.
There are a few things you should consider when coming up with a great brand name. One is to pick something that is short and easy to spell, as this will be more memorable and help people find your business. In the UK, the average length of a company name is 22 characters. Try to think of something that conveys what your business does, as it will ultimately be the main signpost for your brand. Those that are informative yet evocative are more likely to resonate with people, but be sure your name is catchy and unique—just look at Google’s success. As branding experts Novanym note, the best brand names “avoid being descriptive and bland, and instead generate feelings, [which] helps customers to connect with a brand.”
There are certain things you can do to get your creative juices flowing. Consider mashing up two words (think Compaq, which combines computer and pack), making a grammatical mistake on purpose (such as Quora, a fake plural of the Latin quorum, which means public assembly), and adding or removing a extra letter from a common word. Examples of businesses that have successfully done this include Flickr and Tumblr.
2. Do comprehensive market research
Even if you believe your business idea is so good it’s all but destined for success, you won’t get far without effectively targeting prospective customers—after all, they are the lifeblood of your company. You have to know whether there is actually a market for your product or service, who your audience is, and how to successfully sell to them. If not, you risk failing to register with the right people, or even launching a business for which there is simply no demand. In fact, the primary reason startups fail, according to research by CB Insights, is due to a lack of market need.
To gain these all-important insights, you need to conduct extensive market research. This should explore both your target market and your competitors, as investigating the success of others in your niche can inform your own strategies. This best market research is unbiased, and conducted using a wide range of subjects to provide reliable data, rather than just focusing on people you know.
Market research is typically divided up into two categories: primary and secondary research. The former is conducted firsthand through focus groups, surveys or phone interviews, which can help you identify your core customer demographics, and what they’d be most receptive to. There are numerous ways to find participants, such as publishing ads online, or sourcing them on social media. For secondary research, you use this data, and any available public records, to draw conclusions about market statistics, trend reports, and industry content. This is especially useful when it comes to analysing your competitors.
3. Get your finances sorted
After a lack of market demand, the second biggest reason startups fail is financial issues. From operating costs and taxes, to insurance and salaries, there are seemingly a million and one expenses to juggle at once and it can be hard for new business owners to keep on top of everything. Therefore, you can’t launch your business until your finances are in check.
First of all, you need to work out how everything will be funded. Unless you have enough money to bootstrap your business yourself, there are many business finance options, such as loans, crowdfunding and government grants. Then, to avoid running into difficulties later down the line, you will need to plan how you’ll keep a handle on your finances. Some top tips to keep on top of your business’s finances include making use of accounting software, putting together regular financial projections, and having a separate bank account exclusively for your business.
Finally, think about how you can cut business costs, especially in the initial stages. Operating your business from home, buying wholesale supplies, and using low-cost advertising methods like email marketing are a few simple ways to save money when you need it most.