11 important factors to consider before starting a business this year

1. Do you have a great idea?

Having a great business idea is like having a solid foundation for your entrepreneurial journey — it helps you stand out from the competition, attract customers, and drive growth. It’s also the driving force that shapes your business strategy, and will guide your decision-making process.

It’s not just about coming up with something completely unique or revolutionary, but rather finding a problem or need in the market and offering a solution.

So, whether you’re an aspiring entrepreneur or an established business owner, remember that a strong and innovative business idea can be the key to unlocking your business dreams.

“No business can develop in the absence of a great idea. A great and a practical idea is the only thing on which the development of your business will depend. Moreover, as a lot of companies are involved in the market, you need to have a unique idea that stands out,” says Graeme Donnelly of Quality Formations.

2. Are you passionate about your new business?

Being passionate about your business idea is absolutely key if you’re going to be working on turning it into a reality for the next 12 months.

When you are passionate about your business, it shines through in everything you do—from developing your product or service, to networking effectively, to engaging with customers.

Your enthusiasm becomes contagious and attracts like-minded individuals who share your vision. It also enables you to weather the storms of entrepreneurship, as your passion provides the resilience needed to persevere during tough times.

“It is one of the most important things that will help you in passing all the challenges and difficulties,” Graeme states. “There will be a lot of risks and hurdles you will face in this process and the only thing that can save you will be your positive attitude. You will have to work hard to develop a company of your own.”

3. Who is your target market?

One of the most important things to consider, even before you spend time fleshing out the business in the next step – is to figure out who your target market is.

Knowledge of who you will sell to makes everything else exponentially easier. For example, once you understand the larger demographic of the people you want to reach, you can figure out their location, their desires, their likes and dislikes and even whether or not the product you want to offer will be within their price range.

You will also be able to discover the potential business competitors you may have in entering your desired market space, relative and adjacent to your industry, who are competing for the same demographic’s attention. This helps you gather intel on how you can maximise your strengths and develop your brand in a way that helps your business stand out from the crowd.

4. What is your business plan?

Most people have heard of business plans through shows like The Apprentice. However, few of us actually know what should go in one.

Graham tells Startups: “No business can develop fully in the absence of a business plan. Writing a business plan can help you determine if your idea is feasible and provide direction. With a business plan, you will be able to know every next step that should be taken.”

Here is also where you’ll want to consider what kind of company structure is best for your business. Each structure has its own benefits and drawbacks, so it would be a good idea to seek advice from a lawyer or accountant. You can visit our business plan template page to get started.

Competitor analysis is a key aspect of designing a business plan that many entrepreneurs jump straight past. But it can come back to bite you down the road.

As Graham says: “You need to know what your competitors are doing and what their strategies are. With this knowledge, you will be able to take appropriate decisions about your company. It will also help you in developing a much more effective strategy for your business.”

If you’re unsure how to carry out competitor analysis, we recommend using project management (PM) software. Some of our top small business project management platforms cost very little and make market analysis simple and easy.

5. What is your business model?

Where your business plan is the “what” of your new company, your business model is the “how”. It determines the core method in which you will be able to make money (and ultimately a profit) from your hard work marketing and selling.

There are many different business models to choose from including those such as the franchise model, the subscription-business model, the software-as-a-service business model or the pay-as-you-go business model.

Your business model also determines how you primarily (or exclusively) do business: for example, the software-as-a-service model can only be conducted online. This is something to think about early so it can help to inform your marketing strategies or save you time if you have a preference for the way you would rather do business.

6. What are your funding and budget options?

Budgeting and finance may not be the most glamorous aspects of entrepreneurship, but they are the backbone that supports your dreams and aspirations.

Budgeting

Think of budgeting as your financial roadmap. By creating a budget, you gain a clear understanding of your income, expenses, and overall financial health. This allows you to make informed decisions and adapt your strategies as needed. Taking the time to outline your expenses and project your revenues allows you to identify potential pitfalls and take proactive measures to mitigate them.

Creating a cash flow forecast is a vital aspect of managing your business’s finances, and of your budgeting strategy as a whole. It involves estimating the amount of money flowing into and out of your business over a specific period, typically on a monthly or quarterly basis.

Finance

“The next important factor that should be considered involves the funding of your business. You need to properly identify the sources through which you will be able to get the funding for your business. Moreover, it is better to have a plan so that the budget of a company can be properly maintained.” Graham states.

Understanding finance and where you might be able to get it is vital for any entrepreneur. While it may seem intimidating at first, grasping the basics of finance empowers you to make sound financial decisions.

Given current high-interest rates, it’s a good idea to shop around. Startups’ 🔍specially-designed online tool is a good way to compare loan provider quotes so you can find the best deal with a realistic and achievable repayment plan.

Financing options include:

• Crowdfunding
• Invoice financing
• Angel investors
• Joint venture partners
• Seed funding
• Series funding
• Incubators

Before you engage in any early-stage finance rounds, it’s a good idea to download accounting software – a way to manage and keep track of funds, and carry out cost estimations through revenue forecasts.

8. Have you prepared all the necessary legal documentation?

The next factor that needs to be considered is the completion of legal documents.

Registering your business is the first step – the evidence of which is known as business formation documents. 

From there, you’ll most likely need:

• Companies house registration documents (based on which company structure you decided on in your business plan)
• Governing Documents
• Intellectual Property Assignment Agreement
• Nondisclosure Agreements
• Shareholder Agreements and Buy-Sell Clauses
• Employee Contracts

Graham says: “For the sale of some specific products and services, there are some requirements for the preparation of legal documents. Make sure you have already done all the legal documentations for your business.”

For more, see our guide on how to register a limited company.

9. Do you have the right equipment for your needs?

Investing in small business software is hugely important for increasing business efficiency. Purchasing it early is a good idea so you can get ahead of what your business goals are.

Here’s some of the top software products that SMEs should consider:

Accounting and bookkeeping software

Startups recommend: Quickbooks

As we’ve touched on, financial tracking and management is particularly crucial for startups. Installing a small business accounting software will make sure you’re on top of your finances from the get-go.

Payroll tools

Startups recommends: Iris

Whilst not the most exciting software, small business payroll tools are absolutely fundamental for paying yourself or staff.

Website builders

Startups recommend: Wix

Particularly for today’s startups, a website can be the face of your entire business. Decide early on what small business website builder you’re going to use, as it will likely have an impact on your next steps.

Ecommerce builders

Startups recommend: Shopify

Online retail has boomed during lockdown. Lots of startups are setting up ecommerce stores – similar to choosing a small business store builder, it’s a good idea to get this sorted early.

CRM software

Startups recommend: monday.com

If your business is going to take any form of transaction, we recommend installing a small business CRM (Customer Relationship Management) system as early as possible for a streamlined sales process that can bolster brand loyalty and awareness.

Marketing software

Startups recommend: HubSpot

Brand building is a key priority for those that have just started a business. You need to immediately work on getting your brand name out there and generating customers – for which we recommend HubSpot.

10. Do you know where to go for help?

One of the most common pieces of feedback we hear from startup owners is that starting a business is a lonely journey.

Mentors and community groups can provide important guidance and experience on the industry. They also might help you to avoid costly mistakes, and encourage you to analyse your progress to gain insight and advice about your business direction.

“The development of a business is not a matter of seconds, it will involve a lot of time that is spent with hard work,” Graham states. “However, in this process, you will be needing the help of some experts. Make sure you already have an adviser who can provide you with the best advice at the hour of need.”

But it doesn’t always have to be so formal – entrepreneurs can find local community or business groups on social networks like Facebook.  These can play just as important a role in helping you to navigate the challenges of running a business.

11. Who will be on your team?

Speaking of people who will support you: who will be on your team? What skills and experience will they have, and what will their strengths and weaknesses be?

There is a quote from Richard P. Feynman where he claims: “If you’re the smartest person in the room, then you’re in the wrong room.”

Many famous entrepreneurs and billionaires can echo this sentiment.

It’s a great tip for when you’re looking for potential business partners, stakeholders or employees.

Ultimately how you choose your team is up to you, your own personal tastes, and some discernment. Gathering a good team around you is one of those rare things where it is better to go by your intuition, connection and assessing the complementary skills of the person (in relation to you) particularly in the beginning stages. For instance, Elon Musk famously claims to “hire talent, not diplomas.”

Thinking back to the first point in this list, one of the most important factors to look for in a team is how passionate they are, and their willingness to help you reach your ultimate goals.