The number of new companies registered in the UK rose by 5.7 % to a sizeable 660,000 in 2018. This was a record high and so, in our October Breakfast Club session, we discussed the opportunities and challenges faced when starting a business in the current climate.
Despite the political uncertainty, the UK is often seen as one of the best countries in which to start a business. Indeed in 2018, the UK topped Forbes’ list of top countries to do business. The reasons for this may lie in:
- The ease of incorporating a company in the UK – this can be done relatively quickly and cheaply
- The UK having one of the lowest corporate tax rates among the G20 countries
Getting through the early years
Worryingly though in 2018, early stage investment in UK start-ups hit a four-year low as Brexit uncertainty prompted a drop in funding activity. The total invested in UK start-up companies dropped 15% from £8.27 billion to £7 billion that year. Also, on average, 60 % of new businesses go-under within three years, and 20% will close their doors within just 12 months.
So it’s clearly not easy sailing to set up in the current climate. Our Business Club members looked at 4 different business start-up scenarios and discussed their tips, tricks and advice to help each business get onto a firm footing for growth and success.
Key priorities flagged in the discussion for the business owners were:
- Being cautious and careful with early cashflow – this can be helped by having a tight budget and keeping to it, plus regularly undertaking forecasting to help you staying afloat through different growth phases.
- Conducting research to help you take informed decisions – research areas which would be crucial for fledgling businesses include market demand for the product/service, rival offerings and their pricing (to help you differentiate), fulfilment and distribution infrastructure (particularly for ecommerce offerings), footfall statistics and demographics in the target area for a new retail outlet, customer/user preferences so you can build loyalty.
- Thinking through and planning for different business issue scenarios. This will help the business anticipate and overcome any sudden challenges or changes. Some group members suggested doing a small controlled test of one scenario in order to rule out or confirm whether it is a path worth pursuing for the business.
- Getting professional help and outsourcing initially rather than the business owner trying to cover everything themselves or recruiting a lot of staff.
What’s a good business idea?
It’s often said that if you want to set up a successful business it’s important to have a sound idea and good business proposition. Sometimes, though being a bit off the wall can still mean you create a business that takes the world by storm. To conclude the session we discussed some ‘disruptive’ businesses who found a unique and quirky business proposition and rocketed to success with it. In particular we looked at:
- Wikipedia which develops at a rate of over 1.8 edits per second, performed by editors from all over the world. The English Wikipedia supposedly includes 5,944,588 articles and it averages 582 new articles per day.
- Airbnb which currently boasts 7m+ listings worldwide, 100k cities with Airbnb listings, 191+ countries and regions with Airbnb listings. Airbnb says the average number of people staying on Airbnb per night is over 2 million.
- Ebay – The “Worlds Online Marketplace” has 182 million active buyers and 25 million sellers and 1.2billion eBay listings.
- Twitter which has 330m active twitter users, 500m tweets sent per day and 139 million daily active users. Twitter’s total revenue in Q2 2019 reached $841 million which was an increase of 18%.
Despite uncertainty with Brexit, 2018 showed it wasn’t a year that hampered people’s ambitions to start up in business. The October Godalming Business Club session featured many great ideas, tips and anecdotes from the Group and represented a wealth of experience and specialist areas.
If you would like to further discuss:
- Setting up a business
- Planning for growth of a fledgling business
…do contact the Shipleys’ Godalming team for more information.