Innovation Future Specialist
Ted's Guide to Start-ups
Hello, my name is Ted. I am a cuddly character, with a simple attitude to life, and well read. I tell it like it is, in simple plain language. So you will not need your encyclopedia of jargon: "Jar be gone".
Instead of lolling around in the bedroom all day I decided to write a few short guides to business and other stuff.
This is one of my guides ...
A start-up is the term used to refer to a new business.
Before an idea becomes a business some market research needs to be done: is the idea viable? See the business guide for more on market research.
Sole-trader, Partnership or Ltd?
Typically, a business springs up from an idea that came from one person, and in the early stages that person might work alone in the new business. In the UK these businesses are referred to as Sole-trader businesses, and the person that created the business is the Owner. The business can still be classed as a sole-trader even when it employs more than one person.
Some businesses start up with more than one person and it could be classed as a sole-trader if only one person is the owner, or it may be classed as a Partnership or Limited Company (Ltd). (See the government web site for the official details.) As a sole-trader business grows and employs more people it may turn into a limited company. In the UK, you will need to inform HMRC about your new business.
Funding
It is important to realise that, typically, a start-up will not generate any income on day one, week one, and probably month one. Indeed, it might take much longer than you expect to generate any income. Therefore, it is important to be sure that you have enough funds available to pay the bills of the business, and the household. For many start-ups this means that the owner needs to have a personal stash of cash.
For businesses that require significantly more money you will need a good business plan, and will have to use this to go begging to a bank for a loan, or an investor (e.g. angel investor, venture capitalist, or crowd-funding). Note that you will need a good business idea and a good business plan before anyone considers your idea, and you will probably have to knock on a lot of doors before you get any funding. Be aware that investors might want a significant chunk of your business in return for the money they give you, and they will partly control your business (depending on what share you give them). Consequently, investors are not for everyone: the price might be too high to pay. Other sources may be available too, such as: a business start up grant, or a grant to support specific business activities.
This topic is covered in the premium innovation training courses as external funding is sometimes required for innovation.
Resources
A start-up will incur costs for the resources it will need, and these go into the business plan. This may include, but not be limited to, the following: business premises, phone, Internet, heating and electricity, stationary, advertising, staff wages, professional services (e.g. accountant), insurance, machinery, vehicles and raw materials. Yep, there is a lot to consider. Not all businesses have to use all of these resources; for example some businesses can be run at home.
Support and sanity
Running a business is a challenge - it is not easy. So, in addition to this free information from your favourite teddy bear, I recommend that you build a support network that includes people with relevant experience and a positive attitude, to offer you relevant advice and encouragement. Consider the following:
» Find some business mentors
» Join a business club
» Take some [short?] business courses
» Use good information sources and forums on the Internet
See also: Ted's Guide to Business