When is the best time to start your business?

Deciding to start a business is far from a small decision, there are umpteen factors which all have to be considered, from how you’re going to name your business, where it is going to be based, in what format is your business registered, how will it be financed, and even more importantly what your business does or is going to do.

But then there is another small factor to also consider.

Timing. 

So why should you consider timing as a factor?

Here’s an example, lets say you want to set up a retail store which will sell gift type items. When would the best time to launch be?

The January sales, the short month of February, March you might catch the easter market, the same with April. By May things have started picking up a bit, money is more free flowing and most of the christmas debts have been paid off. Your customer base however is starting to save for their big summer holiday, the same will run through June, July and August. Then September comes and it’s the panic over buying the new school uniform and extra school supplies. October sees the launch of the christmas gift market which runs right through to the panic buying the night before christmas.

Last year (2014) Asos reported a 38% rise in profits over the christmas period. That is a huge chunk of profit. The funds a retail business raises in this period are highly important, they fund the quieter months of January and February.

It also means there’s no surprise that retailers want to try everything they can to extend the christmas season.

So if you were to set up a retail store, you wouldn’t be likely to launch it in January or February due to those being quiet months for retail spending and by the same token you also don’t want to launch into a mass of advertising around the christmas season either.

They trick is to launch at a time where it’s busy enough to sustain your business and create a presence in the mind of your customers. This also gives you the opportunity to create a relationship with your customer base. Having a good relationship with your consumers leads to more loyal customers and to word of mouth recommendations one of the most powerful methods of advertising.

Deciding the month to start your business is only half the battle, the second crucial part is in regard to your life, in particular financing.

Finances

Do you have the finances to back up your plan? Are you old enough to get a bank loan to start your business? Are you young enough to be able to access grants?

We’re told we should have three months to three years worth of savings in the bank to be able to pay all of our bills.

We’re advised to reduce down all of our spending to reduce the reliance on those savings.

And it’s also suggested that we start our businesses whilst in education, living with parents, or working.

By this token it would suggest that you need to be in an age bracket that allows you access to grants and loans, young enough that you still live at home with your parents and have a job to help sustain you.

Unfortunately not everyone has that luxury, nor even the desire to start a business at that age.

Redundancy, disability, unable to find work after education are also other reasons that people want to set up their own business even when their finances suggest it will be a challenge.

Limited funds however do not mean you can’t set up a business.

It simply means you have to get more creative.

Finding ways to reduce your outgoings, and cheaper way to produce your goods and services.

It also means that you look for other ways to reach your target audience. Through craft fairs, Sunday markets, car boot sales, pop up shops, space sharing, social media groups and so forth

Additionally limited funds also means you have a greater understanding of how fragile a business is and your growth will be slow an manageable. You’re also more likely to have a financial plan in place for what your profits will be spent on and when. Every decision will be purposeful and thought out.

Age

We’re told you need experience to set up a business? Along with needing the finances as mentioned above.

But at what age should you start your own business? Is there an age limit to starting your own business?

Well in all fairness it doesn’t matter. Experience you learn from doing and if you can’t get a job directly out of school how are you supposed to gain that experience.

Equally if you’re 10 or 100 and have a fantastic business idea why not set it up. It’s not the end of the world if it doesn’t work.

Okay so the 10 year old probably has more time to learn from mistakes than an 100 year old but still you get the gist.

The only suggestion with regard to age is the assumption that in your older years you have some finances to support yourself and are more likely to take advice from someone else.

Support

There’s a couple of issues regarding your age is the access to professional support, mentors cost money, some you can get on a grant basis, others want to be paid out of the success of your business and others just want paying upfront.

I’m no expert in mentors, I don’t have one, however I have found another way in which I can gain important insights and learn more about business without a mentor. Those resources are blogs from likeminded people who have walked the entrepreneurial road before me. Sites like Olivia.co and ByRegina.com are two which I recommend and use myself.

The key advantages to having a mentor is the specific advice you will get for your business and the accountability measures you also have.

Using online support you have to create your own accountability and find the advice you need, which sometimes can be difficult if you’re not exactly sure what you need.

Recession or Growth

In an ideal world there would never be a recession, but unfortunately this is part of the financial cycle.

So out of these two which is the best time to start a business?

Recession

Your customers don’t have as much spare cash to spend

Due to a lack of funds you learn how to reduce costs without cutting corners

Reductions in the number of businesses means more units are available for hire at reduced rents.

Your suppliers are cheaper to try

Access to loans is tougher but they also have lower interest rates

You will be more stable than a business started in growth during another recession

Growth

Customers have more spare cash to spend

High demand for units raises the rental prices

More options for suppliers but costs are also likely to increase

Loans have become more expensive from increased interest rates

You will also have more competitors for the same customer base, equally you can team up with some of your competitors who are similar but not exactly the same with your marketing efforts

Final Thoughts

Essentially the best time to set up a business is when you are ready, there are opportunities and challenges no matter when you start your own business. Age is far from a factor as successful businesses can be owned and run by anyone of any age who has an understanding of business.

And finally

If you are considering setting up a businesses I have a handy and very helpful printable business planner which includes pages for a business plan and many other useful sheets to help you run your business.

businessplannerIf you found this article useful feel free to share, and leave a comment on your thoughts and questions.

taking your hobby to the next stage

You have a hobby, whatever it is for the sake of argument we’ll call it needle felting but in all honesty it can be anything, and you want to go from hobby needle felting to earning an income from needle felting.

You’re products are beautiful, friends, family and even random visitors to your home compliment your wonder works of art, maybe some have even asked if they can buy one or two off you. Perhaps you said yes and then freaked when they asked how much because you didn’t have an answer. It could even be they wanted your favourite piece for five pounds but you know the amount of felt that went into making that piece was more like ten and thats even without the hours labouring over it.

As with any piece there is a value attached, this value is based upon how much you want to be paid an hour for your efforts and how much it has cost you to actually make the item.

Now as a hobbyist you can probably afford to sell that ten pound decoration for 5 pounds, but you want to run a business so it’s time to get serious. Sorry about that.

Research

Ideally you need to make products for many price points, you also need to know who your target market is and how much this market would truly want to pay. It’s time to start asking questions.

Avoid family for this, with the exception of those who are brutally honest and I mean so honest it is practically a personality flaw. Complete strangers will tell you the truth for the simple reason they don’t know you and really don’t have to care about hurting your feelings.

From how much people are prepared to pay you can either

1. Find a way to make items at that price similar to what you showed you target market, remembering to include both your time and your profit in that price.

2. Partially ignore the target market and charge how much the item actually cost you to make plus the profit you want.

3. Make numerous products from the larger more expensive and more intricate to the smaller and less detailed versions.


The story of a product

There is a trick to commanding a higher price. This trick is not to spend more hours working on the product, or adding even more fine details. No instead it’s adding a story to the piece.

Here’s an example, out of the two which would you prefer to buy

Option 1

A needle felted fox, which took two hours to make

or

Option 2

A needle felted fox, Inspired by a mother fox who gave birth to her six cubs in our back garden, this fox represents both her strength and her protective nature as she quickly huddled them into a makeshift den under the shed.

Having said that don’t create a lie about the origin of the piece, but equally being so brutally honest and simply saying I was bored and just felted until this happened won’t really help your sell it.

Basic costings

The horrible maths bit. I say horrible but I actually don’t mind it and if you’re spreadsheet savvy you can always get the computer to figure it all out.

Lets say the needle felted fox took you two hours to make, we bought a £20 bag of wool and can make four products out of this. We also want to get at least the minimum wage of £6.50 an hour.

Labour costs = How much you want to be paid per hour x How many hours it took to make

£13 = 6.50 x 2

Supply cost = Cost of materials / amount of products which can be made

£5 = 20 / 4

Total cost to make the product = Labour costs + supply costs

£18 = 5 + 13

Then you need to add on the profit, at this stage it’s worthwhile doing two, one for wholesale and the other for retail. It’s unto you how much profit you want to make from the product. But for the sake of argument lets say you want 20% profit for wholesale and 35% for retail.

Wholesale profit at 20%

Cost of product / 100 x percentage profit = amount to be added

18/100 x 20 = £3.60 needs to be added to the cost of making the product

This would mean at the wholesale price the product would cost £21.60

Retail profit at 35%

cost of product / 100 x percentage profit = amount to be added

18 / 100 x 35 = £6.30

So the retail cost of the product would be £24.30

Presentation

Presentation also helps increase a price point too, the more professional the display the more likely your customers will be thinking your product is a quality item, think in both terms of packaging, do you have a fancy box you can have the item hoping out of, will it have some padding and if so is it bubble wrap or tissue paper.

Even the way you showcase the price will also say a lot about the quality of your piece and your business.

Every aspect of this product, it’s packaging and story have to consider your brand. If your brand is earthy in nature a brownish cardboard box with shredded cardboard would be effective to display your products.

If you brand is more homely a box with a bow and filled with tissue paper or a padded cushion will be the better option.

The pricing labels have to match this brand too, as does your signage, even the outfit you wear has to incorporate the brand and it’s personality to truly start making your mark as a professional over a hobby.

Often at craft fairs there is a mix of the hobbyist who is selling items so they can make more because they enjoy making them and there are others who are there because they want to start a business. It is the branding which sets these businesses apart.

It doesn’t even have to be a craft fair, it can be a market, a stall at an event or even some shelves within another companies shop.

Perhaps you are selling online through the likes of Easy, Folksy or even your very own website, again these need to be branded in a way that means it is clear this is the same company you saw at this or that place. I know that Easy allows you to change your header image and your profile picture, and you can do the same on Folksy.

Equally you can host your own site, and have even more features without the need to redirect people to another website where they can quite easily find a rival who is possibly cheaper.

It is also worthwhile investing in some form of social media which links to your shop, website your contact details. Social media is also a good way to connect with people and help spread your brand and your products through shares. It takes hard work and determination to do this but when it works it can be worth the effort.

Your key thing to remember when turning your hobby into a business is you need to charge for the hours you put into your work and your business also needs profit in order to grow.

If you need or want an illustrative element to your logo it defiantly worthwhile hiring a professional to do this for the simple purposes of ensuring the image can be scaled up or down without any loss of detail or quality, equally a professional will also know how this visual element can work with the rest of your logo concept and how the target market will perceive your logo design.

Over time your brand will develop even more and you may have to take on the additional help of a graphic designer to help your brand reflect this through all of the available ways in which your customers can interact with your brand.

Your designer will or should know exactly how to capture the attention of your potential customer base. They will be able to advise you on marketing opportunities which will hopefully pave the way for you to go forward and grow into an even more profitable business.

Why not share your thoughts.