THE ESSENTIALS FOR STARTING A BUSINESS

Carol Bolger, Regional Director for Greater Dublin, Ulster Bank

There has never been a better time to start a business in Ireland. Carol Bolger identifies the fundamentals of success for those thinking of taking the plunge.

There has never been a better time to start a business in Ireland and small business is booming. Approximately 20,000 new businesses are set up each year. But the failure rate is still relatively high.

Unique Selling Proposition

The first step in setting up a business is to identify your product or service proposition and scope your territory. What is your Unique Selling Proposition (USP)? Ask yourself what is it that makes your product or service unique and most importantly how will you persuade people to buy from you. The key headings used by marketing people are very useful in helping to identify your USP. Firstly look at the product and its features and benefits. Then consider the delivery channels and how the product or service is actually brought to the customer. Then how your business is promoted? Also what are the carefully considered pricing points?

A new product or service needs to attract the attention of the purchaser. If you are in a business where there is not much difference between products, or you market the same services as other businesses do, your USP could be better service, more convenience, faster delivery, more competitive price points, superior after-sales service or a wider range of product or service options.

Plan for Sucess

Planning is a critical part of establishing a business. Meticulously plan the financing, location, marketing initiatives, staffing, in fact the whole business process from concept to delivery to customers. Focusing on the financing element is important. Carefully establish how much capital is required. It is wise to over-estimate the amount required and be conscious of having contingencies in place.

As part of your planning it is helpful to liase with business associations such as IBEC, ISME, the SFA, Chambers of Commerce, Business Innovation Centres, Enterprise Ireland and County and City Enterprise Boards. Also it is important to review Government regulations as well as legal and compliance requirements in your field of operation.

Consider Alternatives

With compliance, health and safety regulations, cost of premises and so on, it is probably now more complex and costly to establish a business in Ireland than ten years ago. So seriously consider alternatives before you start. You might investigate the franchising route where a lot of the headaches, regulatory and compliance issues are already worked out. But do make sure you read all the small print in the contract and take outside professional advice. Another alternative is to look at buying a business. This can sometimes be an easier approach than starting a company from scratch, particularly if there is an already established client base.

Hire a good acountant

You may be a top sales person or technology expert with a great idea but make sure you build into your business plan the cost of a good accountant. For a start-up this will probably be outsourced. Whatever your business, a reputable accountant is vital. They will help you prepare your first cash flow forecasts, handle your business forms, income tax and VAT, giving you the time to get on with your business.

Cash Flow is King

The main reason for the low survival rate of many SMEs is not sales, profits or ideas, but cash flow. You must put procedures in place to ensure you are paid on time. The Revenue, PAYE and VAT will have to be paid even if your customers don’t pay you. A major problem is slow payment. Small businesses are sometimes forced to wait months for payment, even though legislation is now in place to support them. It is important to be tenacious in issuing and collecting on invoices. Customers respect for a well-run and efficient company, even where invoices are concerned, can not be underestimated. It is a positive illustration of the company’s overall capability if this is carried out effectively.

Experience the business

People working in IT or financial services might have the dream of opening a restaurant or an organic food store. Being passionate about your interest is important but it is essential that you have some experience of the actual business if at all possible. There is no such thing as a sure thing, but ‘tried and true’ is a sound philosophy for the new businessperson seeking to reduce the risks. If you can, there are clear benefits in sticking to what you know. Many successful business people make a point of learning the nuts and bolts of retail or manufacturing, working in shops and factories, because they see the needed to fully understand every element of their new business.

Work out price

One of the most difficult challenges for a new firm is working out the price to charge, whether that is for a service or product. From a service perspective, you need to determine the price for your time and allocate your time based on the best return you can get for it. Initially you may not sell every day so you need to be conservative in your estimates.

Evaluating the pricing for a product is probably more straightforward, using the fixed and variable costs associated with delivering the product and weighing that against competitor offerings. In any case, understanding the market is critical. It goes back to USP, understanding the value to the customer of your product or service and what they are prepared to pay. If the price you come up with does not cover your overheads including a profit than its back to the drawing board.

Contact: Ulster Bank is known as the bank which best understands and is keenest to assist small businesses. Each branch has its own Enterprise Adviser to help you through the startup procedures. If you would like to discuss a new business idea contact the Commercial Manager at your local Ulster Bank Branch or Business Centre. Registered office: Ulster Bank Group Centre, George’s Quay, Dublin 2. Calls may be recorded.