1) What do I need to start a business?
If you consider the business environment in Ireland, a large number of new businesses were set up during the last ten years. Ireland has a strong infrastructure for businesses, robust technology and easy credit availability. These are the fundamental requirements for running a business, and most of them are already in place. All you need to do is take a chance and see what you can make of your business.
Although each business is different, they all have the same four basic requirements. These include the following.
- Finance: Easy availability of finance and credit facility is a must for starting and running a business
- Human Resources: A business required a mix of skilled and low-cost workers to carry out operations
- Technology: This includes product/service specialisation and the network that helps support the business
- Managerial Expertise: The operational know-how and skills of the management is crucial to determine the fate of the venture
Before you start anything, make sure that you know where you can get these necessary resources for your business. Some of them, like managerial expertise, will probably come from you. Anything out of your expertise – like accounting – can be outsourced to professionals. This will give you more time to focus on parts of the business that need your attention.
2) Do I have a business idea?
The business idea defines the central product or service that your business will sell to others. It can be anything from a physical product, such as food or books, to a service like education or transport.
The business idea can even include something abstract, like the use of your brand name to others for royalty. Just consider celebrities. Many of them sell their name and collect royalties from businesses that put the celebrity name on their products.
You are probably not as famous as a celebrity, but there are bound to be some skills and talents that you can sell through your business. Find what you are good at and build a business around that idea. Have you thought about setting up an online business on the side of your 9-5 job? There are a lot of options you can take to make your business idea a reality.
3) Do I understand the market?
The next step is to assess the market demand for your business idea. You should do this before committing any substantial funds. Failure or incorrect assessment of the market at this stage will cost you a lot of money, time and resources.
Many business entrepreneurs thought that they had the next best product. They invested a lot of money into creating thousands of units of their product and launched it into the market to very low demand and zero sales. The businesses eventually had to file for bankruptcy within the first six months of operations. Research the market before you spend any major funds on your idea.
Suppose you have created the next best mousetrap, a new mobile app or the best home delivery service in Dublin. Test your product or service with friends, colleagues, neighbours and other businesses in your local area. Consider their feedback for improvement and assess whether there is a commercial demand for your services.
If the idea clicks with enough users and there is a recurring demand for it in the market, you can take the risk to commit some funds to it.
Thorough market research will give you a fair idea about the probability of success for your venture. You should even consider writing a business plan to help get your idea out on paper. The lean canvas model is a one-page template that will help you think through you business idea.
4) What business structure should I choose?
Once you are committed to starting your business, you will need to determine what form of structure it will have. You have three choices here.
You can go with a Sole Trader business. You provide complete funding for the business and have full ownership over its profits. There is a lot of control with this business structure; however, it can be very limiting in terms of business growth. Since you are the sole owner of the business, you are personally liable if your business falls into any debt. This is a risk many entrepreneurs aren’t willing to take. So talk to an expert about what structure you should choose.
The second type of business structure is a partnership. Here, you combine your resources, expertise and knowledge with another individual to form the business. A partnership allows you to get more funds and better expertise for running the business. The partner covers your weaknesses while you cover theirs. Partnerships are generally two Sole Traders coming together. Both business partners are still personally liable for any debts of the business and it could be risky to get into business with someone with no legal structure in place.
The third type of business structure is a Limited Company. A company is a legally created entity that is distinct from its owners, who are called shareholders. A company has the best growth and expansion possibility, but control of shareholders is limited. The management (Directors) control the day-to-day activities of a company, and the shareholders appoint it through company meetings. However, in Startups, it is very common for Directors and Shareholders to be the same people so you don’t often have issues like this in new companies.
You can start your business with any of these structures. However, most businesses eventually transition into a Limited Company to continue growth.
How to choose a business structure?
Choosing a suitable business structure can be a difficult task – but speaking to an expert can help you make the right decision. At the end of the day it is your own choice which one you choose. We can certainly answer any questions you have about the processes. Our Company Team can also take care of the whole company formation process.
5) Do I have a marketing plan?
The marketing plan is crucial to the long term success of your business. It identifies how you will build your products, what price you will charge, which regions you will target, and how your products will be marketed to customers.
When you start offering your products and services in the market, there will be three types of potential customers you will find. The first type will like your product as it is, and they are the core customers. The second type will like your product but expect changes, like a lower price, better availability, different varieties etc. The third type will demand significant changes to the products before they start buying them regularly.
The key to business success is to focus on the first and second group of customers in the short term. If you have enough core customers, you may be able to run your business without making any adjustments to the products at all.
Once your core customers have been satisfied, you can introduce more varieties of products to grow your customer base.
6) How will I compete with competitors?
Wouldn’t life be so much easier if there were no business competitors? Sadly, that is not the case in the real world. If you are selling something that has a demand and if you are making a good profit from it, someone else will start selling the same product sooner or later. If you don’t have a patent, others could start copying your design. Similarly, if you are selling a service, others will charge a lower price for the same service.
One of the biggest challenges for new businesses is to out-compete other businesses that are selling the same or similar products. As the business manager, you must continuously scout the market to see what your competitors are doing. If they are undercutting your prices or selling better quality products and services at the same price as you, then you need to improve your products and services.
Some competition is good for businesses. It incentivises us to improve products or find ways to cut our costs or train our employees better. Ultimately, it benefits customers.
However, aggressive competition is detrimental to the sector your business operates in. Do not start a business in a sector that is already crowded with a lot of competition. It will be a constant headache. Trust us when we say that you don’t want that.
7) Do I have a support network to help me?
Creating a business is not just about constructing the best building or producing goods. It is more about the support network that you put in place that keeps the business going through thick and thin.
The support network includes your suppliers, producers, landlords, equipment leasing firms, delivery personnel, marketers and other stakeholders. These people and groups are not the direct employees of your business. However, they have a high stake in the success of your business because you are their customer. If you succeed, then they succeed.
It is important to build a good, strong relationship with these groups. Fostering good relations with your support network will allow you to get favourable discounts, better credit terms and higher customer service quality. Your support network may prove to be the most important factor that helps your business move past its initial set-up stage and stabilise.
What do I need to do next?
If you have decided to start a new business in Ireland, talk to our Client Services team about what you need to get started. We are always happy to talk you through the services you need to open a Limited Company in Ireland.
You can register for our free, live Startup Webinar led by Chartered Accountant Jennifer Harrison FCA. We host these webinars every month for new business owners and entrepreneurs who are thinking about starting a business.