Step 1: Planning

• Come up with product ideas
• Evaluate them
• Plan a business around the best
• Set up your company
• Prototype and test your product/service

Step 2: Build the business

• Build your product/service
• Build the website that supports it
• Get payment processing and support systems into place

Step 3: Market the business

• Optimise your site
• Build a list
• Create an autoresponder
• Begin an Adwords campaign
• Use Facebook and Twitter to promote your business

Find out more by downloading our FREE guide to starting a business on a shoestring

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Who’d be a school/college/university leaver today? Well, I would for one as the range of possibilities open to people these days is exponentially greater than when I left school. At that time (in the 1980s), on leaving college you had two choices: get a job or go onto University (at which point you had two choices: stay at Uni or get a job). Although there were, of course, self-employed businesspeople, most people didn’t know one personally and it seemed that there were many barriers in the way. For example, being self employed meant, at that time, selling a physical product or service and that meant either buying expensive equipment or renting a shop and that meant borrowing money from a reluctant bank (or family member).

Today it’s different. It’s possible to get a business up and running for, say, £250. It’s easy to choose a business that you can run part time to supplement earned income. And then, at some point, to add another business or build that one until you have enough regular income to stop inhabiting the corporate rat maze.

And the sheer amount of choice, along with the questionable reputation of the internet and the multitudes of “gurus” all eager to sell you on the dream of easy money is what is leading to confusion and procrastination amongst the next generation of entrepreneurs. With so much choice, what do you do?

Well, you may have come across a book called Crush It!: Why Now is the Time to Cash in on Your Passion by Gary Vaynerchuk. If you haven’t then I strongly recommend it: I had read it within 24 hours and am now systematically applying its lessons to my businesses. Vaynerchuk’s style might be a little OTT for your taste (or mine) but there’s no denying his enthusiasm or his success.

He talks about three rules, in this order:

1. Love your family. As soon as I read this, I knew I was going to like the book.
2. Find your passion
3. Work your arse off

…and there’s a fourth, which is “patience”.

So, to find direction you need to think about this. If you didn’t need to earn money, what constructive activity would you devote your life to? What would get you out of bed early in the morning energised and carry you through the day enthused and excited? Whatever the answer to that question is, that’s your direction.

I get excited about the idea of building new businesses, either myself or helping others to do so. It’s like a puzzle to me, a very creative puzzle. I also love writing and programming. So I spend the majority of my day doing these things. I’m advising one young man to build a blog around his passion for horse racing, another to build a very specific t-shirt business and a young woman to build a business around her passion for history. Can you imagine spending all your time working on something that turns you on? Then do it! Vaynerchuk’s book is a good starting point but you’ll find this advice given by all of the industry’s most respected figures.

The key is not to be in it just for money: be in it because you love it. You might not make more, working for yourself, than you did as an employee. But you’ll have a great time doing it.

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My general recommendation is to include your main keywords in your business name (and certainly in your URL) but there are occasions when you might want to break this rule. In that case, you might want an English-sounding name that has no specific meaning. The website Wordoid will generate such names for you and indicate whether the associated URL is free (although currently only for .com and .net domains).

You can also instruct Wordoid to include any words you want (eg “free”) in coming up with its recommendation as in the example screenshot above.

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One of the most often asked questions is “How do I come up with an idea for my small business?”. Bear in mind, from the start, that coming up with an idea is just the first step in a long process – once you have an idea, you need to research it before deciding to base your business on it. Far too many businesses are started up without this level of research and this is one of the main reasons for early business failure.

Here are some of my techniques for idea-generation:

What do you like doing?

A good business is based around your skills and knowledge. If you like doing something, you’ll naturally be better at it and more informed simply because your interest level is that much higher. This is why boys who are completely turned off by school can explain, in great depth, the off-side rule or list their favourite team’s players faultlessly.
Whilst it is possible to force yourself to learn about a subject you’re not naturally interested in, you’re pushing against the grain when you do that. Make a list of the things you like to talk about and do and see if there are any business ideas there.

What frustrates you?

Don’t expect to come up with business ideas in an instant. You need to turn on your radar and look out for opportunities. Most usefully, you should notice when you get frustrated by something. It might be spectacularly poor service, bureaucratic nonsense from a corporate or just a random thought: anything that seems harder that it should be probably is and if you get frustrated by it, so will a potential customer.
For example, MakingYourOwnCandles came out of a frustration that we couldn’t get a good quality candle making kit – the kits we found were just expensive toys.

Changing Media

Often products and services that are currently offered through one channel could also be offered, more effectively, through a different one. The idea for PassYourTheory came about when I was standing in a queue in WHSmith and the young woman in front of me had a Theory Test CDROM. PYT offers theory tests online rather than on CDROM. Of course, the opposite also applies. All ecommerce shops are, effectively, bricks and mortar shops transferred to a new channel. How could you apply “real world” products and services to the online world?

Current trends in society

For example, during a recession, customers are looking for cheaper, more effective products or services.
Green products are popular at present: could you take a product or service that has a negative impact on the environment and reduce or eliminate that impact?
People feel time poor – how about creating a product or service that frees up their time? Ironing and gardening services are good examples.
The population is ageing: can you adapt an existing service and make it more appealing to older people? Can you invent a new product for that target group? It is, after all, under-provided for at the moment.
People are getting fatter despite food quality and labelling improving: what products or services could help with this?
Some would say that, for many people, life has become more and more shallow as we become more prosperous. People who feel like this will be attracted to low-cost products/services that give them a pleasure kick without feeling guilty.

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If you’re looking for inspiration when it comes to starting and running a business I suggest you download this PDF, flip to a random page, read and consider…

What Matters Now

…by some of the most important thinkers both in and out of business.

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Choosing a name for your business can be one of the most important, and frustrating, of tasks. It’s especially important for internet businesses or businesses where the website is an important part of the marketing effort (in other words, most businesses).

Why? It’s likely that your potential customers will look for you by typing a search phrase into Google, Bing or Yahoo. This results in a list of the websites that are most relevant to the search phrase. Search engines use various ways of working out the relative relevance of each of the matching websites and order the results by relevance, so the more relevant your website appears to be, the higher you will appear. The higher you appear, the more likely it is that customers will find you. This applies both to the “sponsored” listings (Adwords in Google) and the “organic” listings that provide free traffic to your site.

If you look at the organic search results (the blue arrow above) you’ll see that they have three parts:

1. Title
2. Description
3. Web Address

The more often your search phrase appears in these three elements, the more relevant your site will be. Care: this is not all there is to relevance, this is just one part. The other main part is the number of “authoritative” websites that link to you. For now, however, this is one aspect that you can control. You see, your web address (URL) is directly related to your chosen business name.

1. Where at all possible choose a business name that can be used as a web address.
2. Where at all possible include the keywords your customers will use when searching for you in your business name

The benefit of this is that your URL ends up including your main search terms which automatically increases your relevance level. Furthermore, it’s much more likely that someone will simply type your address in to find you by guesswork.

Two good examples: PassYourTheory is my driving theory test website (indeed, it appears to be the only one currently operating that’s making any money and has been doing so since 2005!).  Lots of people type in “pass your theory” or “pass theory” when looking for theory test services and some simply type “passyourtheory.co.uk” into their address bar all of which is free traffic.

The second good example is MakingYourOwnCandles which is the candle making kit supplier run by myself and my wife. It says what it does.

Two bad examples (both mine): NlightN Multimedia and Scribbleit. I’ve had reason to curse the first over the years: it seemed like such a good idea at the time but no-one can spell it, let along type it into a web browser. Scribbleit is hardly any better. I can site only ignorance in my defence: I hope you don’t make the same mistake.

How do you know which keywords/keyphrases your potential customers are going to use? That’s a matter of research using Google’s free Keywords tool – you need to find a series of potential keyphrases and then see which generates the right level of traffic. There’ll be more of this in another article shortly.

So, my strong suggestion is to pick a business name that contains the likely keyphrases (eg “MiltonKeynesPlumbers”) which you can then turn into a domain name: care – before you plump for a name make sure you can get the domain name. The easiest way is to simply type it into a browser address bar and see if anything comes up.

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There are, broadly speaking, two types of business: Sole Traders and Limited Companies.

Sole Traders

Essentially this means that you and the business are one. From the point of view of Revenue and Excise, it is you that owes tax on the income generated by the business – you complete a personal tax return at the end of the year.

You don’t pay yourself via the PAYE system as you would when in employed work. It’s up to you to put aside enough money so that you can pay your tax at the end of the year (beware – put more aside than you expect to need unless you are running a book-keeping system that keeps a running total).

Rather than paying Class 1 National Insurance contributions, you pay Class 2 at a set rate and Class 4 on your profits. If your profits are modest, this is likely to mean you’ll pay lower NI contributions than on the equivalent income in a paid job.

The biggest downside to sole trader status is that the business’s debts are your debts – if someone sues your business and wins, for example, you are personally liable for paying any compensation etc. This one reason is why I never use this company form.

Pros

1. Easy to set up
2. Easy to run: no company returns or accounts to file at Companies House
3. Cheaper to run for the same reason
4. Likely to be lower National Insurance contributions

Cons

1. You and the company are one and the same in the eyes of the taxman and law
2. This form is often seen as less credible to customers and investors than Limited Company.

Limited Company

This is what most of us think of as a company. The Limited Company is, in the eyes of the law and taxman, a completely separate legal entity. You run the company as a Director and will own all or most of the shares in the company. The company pays its own tax, you pay yourself in dividends (if the company expects to make a profit) or via PAYE.

Limited Companies require formal registration with Companies House, annual filing of accounts (so you must hire an accountant) and an annual “return” confirming the company address and other details.

Having said all that, setting up Limited Companies is easy enough to do and can be achieved entirely online using one of a number of services.

Pros

1. It’s a separate legal entity, your business can fail or be sued without taking your finances (or house) with it – unless you have put your house up to guarantee lending
2. You can end up paying less tax – but speak to your accountant about this
3. More credibility
4. You can have multiple businesses, each separate from the other, very simply

Cons

1. Requires formal setup and is more bureaucratic to run
2. You must hire an accountant to formulate your accounts
3. Because of 1 and 2, it is more expensive to run

In most cases, the Limited Company is the form to go for and, indeed, the majority of companies are in that form.

There is one other common form: the Partnership. This has all the disadvantages of the Sole Trader with few of the advantages. Furthermore, if one of the partners defaults (or disappears to Brazil), the others are liable to pick up the company debts. I have heard too many tales of “best friends” setting up in business together only for it to go tits up a few years down the line resulting in the remaining partner(s) being left with a high bill or a demand to buy the other out. Avoid like the plague.

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If you’re hiring serviced offices then networking will be taken care of for you but if you work from home, you’ll need some way of reliably connecting to the internet from your home office/spare room and accessing extra storage. Having additional storage means you can keep project files on that storage device and then access them from more than one computer in the house or this can be used for backup purposes.

There are a number of storage devices such as this: they’re called Network Attached Storage (NAS) devices. Which one to pick? Personally, I used Buffalo’s Linkstation products but whatever you choose, I recommend that you select one that supports RAID. This is a technology that allows two hard disks to be kept synchronised moment by moment. What this means in practice is that if one of the hard disks fails, the other one is a complete copy of it and therefore acts as an automatic backup. There’s no setup required beyond telling the device which form of RAID you want (you should select RAID 1 if you want the backup capability).

Connecting the network together

You’re probably aware that there are traditionally two ways of setting a network up: wired or wireless. Creating a wired network involves running ethernet cable around the house, usually from the ADSL router to each computer and to the NAS device. Wired networks perform the best but they are extremely disruptive to set up at home and it’s awkward to move computers around later.

Wireless networks are the most common form of home network. Once set up they’re fine, although they perform much more slowly than wired networks and you’ll certainly notice this when you connect to another computer or to your NAS device. There are also likely to be places in your house where the wirless reception is poor, making performance even worse. If you work in your shed, for example, you may well only get a very weak signal.

There is a more recent, third option. It’s possible to buy devices that plug into your mains power sockets and use the power cables already laid through your house to transmit the network traffic. Setup is as simple as plugging one of these devices into the mains socket nearest the router and another into the socket nearest each computer. Connect the router, the computer and any NAS device to the plug socket via an ethernet cable and you have an instant network.

Networking through the mains is almost as fast as an ethernet connection, is dead simple to set up and you can reposition the adapters around the house by simply moving them from socket to socket: no further setup required. If you’re working in the shed, simply use your power sockets in there.

I’ve been using the Netgear Powerline range for the past couple of years with absolutely no problems. Other ranges are available but you should be sure to use the same range throughout the house.

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