5 Things to consider when setting up your own business

While small business is considered to be the engine for economic growth in developed economies, this market often suffers from a pronounced lack of funding. The current deficit for small businesses in the UK is considered by preventing growth and placing a huge financial drain on the economy, while it may ultimately carry a cost in excess of £2.9 billion.

This is a wider economic issue; however while a lack of funding can hinder your small business it is important that you focus on what you can control and take practical steps to establish a viable infrastructure. These include: –

1.The Importance of choosing the right Business Model

There are a huge number of business models available in modern times, many of which have emerged in line with technological advancement. The freemium business model is the most prominent of these, as it affords customers the freedom of choice and encourages firms to eschew short-term gains for longer-term profitability. This may not be suited for start-ups with minimal resources, however, therefore it is crucial that you select a business model that suits your markets and financial circumstances.

2.The difference between Strategic and non-strategic costs

The next step is to consider business costs, as these can quickly accumulate and eat into any potential profits. From a theoretical standpoint, your main aim should be to distinguish between strategic and non-strategic costs; this will enable you to create a realistic budget and prioritise your spending in a way that drives business growth. Strategic costs relate to any activity that boosts the profitability of your firm (such as sales or marketing), while non-strategic expenses are affiliated with operational processes. 3.The need to Reduce Operational Costs Directly

From a practical perspective, the next step is to target your firms’ operational costs and implement measures that actively reduce these. Reducing the cost of manufacturing processes is useful so long as this does not have a negative impact on quality, for example, while you can also partner with service providers such as United Gas and Power to cut everyday expenditure.

4.The Importance of Organic Growth

With your business costs minimised, you can look forward to increased profit margins during your formative months as a limited company. This lays the foundation for organic growth, as you continue to spend inside of your means while driving considerable margins. This is the only viable way to develop your venture organically and in a way that encourages genuine longevity.

5.The Impact of a positive Reputation

As a business owner, you will come to rely on your reputation over time. So long as you focus on organically expanding your range of clients in line with your infrastructure and prioritise the quality over the quantity of your output, you will be able to rely on a steady supply of work. If not, your business may achieve success in the short-term before ultimately failing.