Written by Robert Lomax, author and director of RSL Educational Ltd.
Are you thinking of starting your own business as a student or after you graduate?
Perhaps you’re somebody who likes the idea of being your own boss.
If you’re like I was, you probably also find the idea daunting:
- You don’t know how to go about it
- The complexities are overwhelming
- You’re worried about the financial risk involved
- Perhaps you don’t even know what sort of product or service you might be able to sell!
I started an educational publishing business in my late twenties; but with hindsight, I could have done it much sooner.
In this article, I’m going to share some advice about the best way to start your own business, which would have made all the difference for me when I was a student.
I won’t go into detail about how to do each thing I mention: the internet is your oyster.
Instead, I’ll be delighted if I help you to think seriously about making a start as an entrepreneur.
1) You’re already an expert
It’s normal to assume that you’ll need to work in a sector for many years before you know enough about it to see where the opportunities are.
However, the most creative business ideas often come when people stop scanning the horizon and start examining the ground at their feet.
In other words: What services and products do you already use, and how could they be done differently?
Ideas might also come from work experience during your university course.
You don’t have to begin by wondering how you could do things better. Start by concentrating on the different approaches you could take, and then consider which aspects might offer extra value to customers when you create your own business.
2) Beware of business plans
People talk a lot about business plans. Anybody who has watched Dragon’s Den will have the idea that a detailed plan for your first five years is crucial to being a proper entrepreneur.
However, the reality is that when you launch a new product, you’ll probably have a limited sense of where you’ll be able to take it. It’s only through doing business that you’ll really understand what’s possible.
(Of course, you’ll need a business plan if you want to raise funding – but that’s another story!)
In practice, the beautiful plan you spent hundreds of hours developing will probably end up in the bin within a month or two.
What’s more, if you have a rigid idea of what your business is going to look like in the future, it’s likely that you won’t be as sensitive as you could to the many possibilities which open up as soon as you start engaging with customers, retailers, suppliers and so on.
Instead, you need to have two very clear ideas before you start trading:
- What is the core identity of your brand – your mission, if you’ll forgive the cliché? Can you summarise it in a sentence?
- Who do you imagine as your ideal customer, and how can you serve them better with every decision you take? Some people give this client a name. How will Doris feel about the discount I want to offer new customers, starting the day after she has bought from me? Will she shrug it off, or will she feel cheated and decide not to recommend my service to her friends after all?
Together, these two concepts are your compass. They will help you navigate your way through every decision you take.
3) Keep it VERY simple
Many business ideas never get off the ground, weighed down by their own complexity.
Keep your offering as simple as possible – simpler than you would like it to be – and only add new features when you’re certain that the majority of your customers will appreciate them.
I’ve learnt the hard way that every extra sentence of explanation loses a percentage of customers. This subscription service is well established so the structure would be difficult to adjust without alienating customers; with hindsight, it could have been even easier to understand.
Similarly, a simple brand name which describes your product accurately is a far more effective starting point than something catchy but confusing.
- Of course, there are exceptions. Have you heard of Google?
4) Start small … and be prepared to stay small
If you can develop your business alongside your studies, or while doing other work, and if you can start small with a simple product, it’s quite likely that you’ll be able to fund it yourself for a while.
This way you’ll have complete freedom and no pressure, and as much time as you need to understand your market.
If you worry about revenue and growth in the first few months, you may not devote enough time to getting your core product right – and you’re likely to waste a lot of money on desperate, ineffective marketing campaigns!
Focus on getting the essentials right, and trust that the money will come later.
5) See your website as an asset
Whatever your niche, set yourself the target of writing four or five carefully researched blog articles in the first six months, each of which is the most useful article about its topic on the web.
These articles are very unlikely to hit the first page of Google in the short term; but over a couple of years, they may become your business’s most valuable asset. For example, this list of 11+ resources brings hundreds of highly relevant new visitors to the RSL Educational website every month.
On the other hand, don’t fill your site with content which already exists in another form elsewhere. It’s a waste of your time, and may not attract a single customer.
6) Be generous
Expect to give a lot of your time, and even your product, away for free.
This is the best way for people to find out about you when you start out, and the most effective way to develop word-of-mouth interest in what you offer. We spend hours every week offering free advice to customers who get in touch. It’s more than worth the effort. We also spend a huge amount of time creating free resources (such as school entrance exam guides) which we could sell, but which are much more valuable as a way of attracting search traffic and building a reputation for expertise.
However, don’t give things away for free – even time spent offering pro bono advice – without a clear strategic sense of how this is building future revenue: either through leading directly to sales or simply through strengthening customer loyalty.
This attitude shouldn’t discourage you from being generous, but it should help you to focus the freebies you offer as effectively as possible.
7) Keep good records – and be legal!
Before you start – whether as a sole trader or as a company – make sure that you fully understand your responsibilities, especially when it comes to handling your business’s money.
- If you use a limited company structure, the company’s money is not yours.
- If you operate as a sole trader (the simplest arrangement), your business’s debts are your own debts.
Money spent on accountancy advice before you begin is never wasted, however much you might resent it at the time!
Have proper accountancy software (I use Xero) in place before you start trading. Don’t rely on spreadsheets, ring binders of invoices and folders full of receipts!
- A UK limited company is an excellent structure for doing business. Don’t be put off by the learning curve: once you understand the principles involved, a company is easy to administer and has major advantages.