Business Start-up Advice for Turning Make and Bake hobbies into a Business
As used by MSN Her
1) Know what you want to achieve. Do you want a hobby that brings in some extra cash, or a business that will hopefully generate significant funds and may lead to world domination? The approach to these two extremes is very different.
2) Absolutely do your research. You need to understand:
- How long it takes you to make 1 product.
- How much it costs you in materials/ingredients.
- How much your competitors charge, what extras they offer and how they advertise.
- How you are going to market your products and how much is that going to cost you.
- How much you are going to charge (price for the value you deliver and not necessarily “cost plus”).
- What other overheads you may have, such as renting space, utilities, vehicle costs, staff costs, accountancy fees etc.
- Taking all of this into account you can now work out how many products you need to produce per day/week/month to a) cover your costs b) actually make a profit.
- Check that the price you will need to charge to make a profit is still competitive, and that you don’t need to produce so many that there is no time for friends/family and sleep!
3) Work out who your ideal customers are. This will help you tailor your products to them and understand how best to market to them.
4) Market yourself effectively. Too many businesses remain a well-kept secret and fail to fully capitalise on the potential of their business. For example having a website in itself won’t necessarily generate you any business so you need an effective online marketing strategy; word of mouth referrals are a great way to gain new customers but this is unlikely to generate you the volume of customers you need.
5) Don’t try and do it all yourself. Know where your strengths lie and where you add the most value to your business and find ways of delegating the rest.
If you can ace these 5 areas you will be well on the way to a great business.
Where should people look for funding? There are numerous funding options available to startups but most are for certain geographic regions, demographics, sectors etc which can make it difficult to obtain. If you type “funding for business startups” into an internet search engine you will find several websites that can help you work out if you are eligible for any support. Charities are also a potential source of funding and often overlooked. Again they tend to offer funding for very specific business needs. They also have a website (www.charitycommission.gov.uk, choose the “search for a charity, advanced search” button) which will allow you to search through and see if there are any charities offering funding to for your type of business in your geographic area.
Could you give an estimate for the amount of money it takes to launch a business? This is very variable and depends on the type of business. Most make/bake style businesses can probably operate from home initially so this is a great way to get yourself established before taking on significant overhead costs of premises and staff. This will definitely help to manage your cashflow in the early days.
What are the most important marketing channels for start ups? This comes back to focusing on who your ideal clients are. You need to think of ways to find them in large numbers and inexpensively. For example if your target market is families with young children then indoor play areas, nurseries, pre-schools & schools are all great marketing targets for you so you might want to look at the cost of having a stall at a school fayre, or asking to put some flyers out in the local indoor play areas etc. If your business model is “business to business” then LinkedIn could be a goldmine and can be used very effectively without having to buy the premium membership. There are lots of ways to market your business effectively without spending loads of money doing so. Another great way is to find a business that is synergistic to yours and has a similar target market, as you can then cross-refer customers to each business (basically it’s like having an unpaid sales force!). Too many businesses spend significant amounts of money on marketing without thinking clearly about who they are trying to target and the best way of doing it. Get clear on your marketing strategy first (put yourself in the mind of your ideal customer).
What is the most difficult thing about setting up your own business? This comes down to mindset. It’s very common for business owners of small businesses to let their own limiting beliefs hold them back from really pushing their business forward and making the kind of money they dreamt about when they started the business. For instance, it’s very easy to talk yourself out of making important phone calls because “they’ll already have an incumbent supplier”, or “there’s no point as they are bound to say no”. Now it is fair that you will sometimes get those kinds of unwanted reactions but sometimes you’ll get the positive outcomes too, and it only take a few positive calls to totally change your sales volumes.
What’s the one thing new start-ups often forget about but should think about? I find the element most often overlooked is how long it will take to ramp your business up so you are making reasonable money, coupled with making sure you have enough personal financial reserves so you can still pay your bills in the meantime. For everyone the amount of time and money needed for this varies but invariably it will take long than you think. Ultimately you hold the key to this as the more effectively you market your business the quicker you will ramp it up. You have the power!