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MY FIRST YEAR
Anyone can start a business. Especially an e-commerce venture. However, not everyone is successful. What’s worse is that those who have a genuinely unique product or service can still fail. Now, business failure can be due to a number of factors, but what trips many entrepreneurs up is missing one or more crucial steps.
The last thing we want is to see your hard work and passion go to waste. Which is why we’ve written this article on the five things a new startup shouldn’t miss. And if you’re reading this article, you’re already doing one vital thing – research.
Perhaps you’re ready to leave full-time employment? Or you’ve finished your degree and want to jump straight into self-employment? Regardless of why you want to become self-employed, setting up a small business is still a courageous decision, but it isn’t the easiest journey either.
The digitally-driven world that we live in today has transformed the business world. It’s opened doors for budding entrepreneurs like you, who are starting a new business. The UK has seen a substantial increase in new startups over the past five years. According to the Telegraph, 660,000 new companies are registered in the UK every year. This figure might be a surprise, as it means there’s going to be a lot of competition (don’t worry, we’ll be covering this later).
Now, the Telegraph also highlighted the fact that 60% of new UK startups cease operation in their first three years. Sadly, 20% fail in their first year. That’s a lot of failed businesses.
So, you need to ensure you’re prepared, properly equipped and have the drive to succeed as a new startup. Making this decision alone is daunting, but exciting as well. Then, actually opening your new business brings even more excitement and stress. But naturally there’s a lot more to success than just this…
Of course, there are plenty of things you need to consider before establishing a new e-commerce startup. However the most important one, we think, is timing.
As with most things in life, time is everything. But especially so in business. There’s no denying that making the decision to become self-employed is extremely brave. However, you need to assess if now really is the right time. Not only that, you need to be confident that your product or service can stand the test of time.
If you’re sure, you feel driven and you’re ready to take full control of your income, then it’s certainly worth the risk. At the same time, even if your idea is fantastic, now might not be the right time for any number of reasons. Which could include finances – how long can you support yourself with no income?
So yes, before jumping in feet first, ask yourself is now the right time?
Besides timing, here are some other critical factors you need to consider:
Do you have a viable and unique product, service or skill?
What sector of e-commerce do you fall into?
Do you understand your industry, including your customers and competition?
What makes your service different?
Are you going to start as a sole trader or limited company?
Do you know the legal requirements, including HMRC, taxes, etc?
Do you know how to register a company (especially if you plan to operate as a limited company)?
Do you have a great business name?
How will you sell? Via a webshop, Shopify, eBay or Amazon?
That’s just a few examples. But as you begin to cross each of these off, you’ll begin to realise if this is the right decision. As the saying goes, trust your gut.
You also need to understand that it can become very stressful, quite quickly. You need to be prepared for the highs and lows, the seemingly endless to-do-lists, paperwork and legal requirements.
Undoubtedly, there’s a lot of hard work involved as a new e-commerce startup. However, getting everything right from the outset will save you time, stress and money.
We mentioned earlier how many new startups fail in their first three years. It’s unfortunate, but it doesn’t have to be you. Hopefully, our five top things that you shouldn’t miss when starting out can help you build a secure foundation.
Research is key. We’re going to assume you’ve already begun your research, which is why you’re reading this article. However, if you want to remain relevant (meaning profitable), you need to be frequently researching things like your competition, market trends, your customers’ needs, the best way to communicate with your customers, and new technology.
So the first key factor is that you should never stop researching. Moreover, when you do your initial research, don’t skimp on the details.
It’s often said that the reason behind so many failed startups is that the owner didn’t understand a crucial aspect of their business. But if you do your research thoroughly, you’re far more likely to have a clear and thorough understanding of your business.
Not only that, you may identify a gap which your competition isn’t aware of that you can exploit. For instance, you can read up on your competitors’ reviews to identify a common issue. Then, you can integrate a solution for this into your business plan.
However, researching doesn’t just involve reading articles or looking up statistics, it can be speaking to fellow entrepreneurs. Leading nicely to number two….
One of the things many new startups miss is seeking effective, relevant guidance. It’s brilliant if you have a supportive family or friends. They’ll undoubtedly boost your confidence. And, yes, they might have some useful advice.
However, unless they’ve been in your shoes it’s going to be subjective advice. Likewise, even if they own their own businesses, they might be in a completely different industry.
So yes, do seek startup advice from those you trust – but focus on those in the same industry as you. And look further than this as there will be business advisors, mentors and even accountants who can give you relevant assistance.
Here’s an example. On LinkedIn there are groups for niches, industries and topics, just to name a few. Joining relevant network groups may provide you with invaluable insights as well as highlight recent trends in your niche.
Do you know what’s involved in bookkeeping for an e-commerce business? Are you considering hiring an accountant? How will you manage your books – online, paper or Excel?
We could go on… So, the third thing you shouldn’t miss when you start out is bookkeeping. More specifically, make sure you have a system in place before you start operating. So add researching startup accounting basics to your to-do list.
Having a good, or even basic understanding of the key aspects involved in bookkeeping prior to making sales will be invaluable. Why? Well, because bookkeeping is fundamental to a business’s success.
E-commerce allows new startups to profit quite quickly. At the same time, it can make or break you. But you can avoid this uncertainty by being prepared (do your research) and understanding how to manage your finances.
Poor bookkeeping can lead to costly results and the failure of your e-commerce startup. Fortunately there’s tons of help out there – both online and in person.
Digital commerce has changed many aspects of how we do business, from how we reach our customers, to selling worldwide. It’s also provided e-commerce businesses with accountancy solutions. There are several cloud-based bookkeeping and accountancy solutions, such as QuickBooks. This innovative software is specifically for e-commerce businesses, so it can be integrated with various platforms.
For example, QuickBooks allows Shopify owners to integrate with their store, inventory management and sales. So we’d recommend that if you’re not confident in bookkeeping, do your research, but also consider cloud-based solutions.
On the same theme, we recommend choosing an accountant. Even if you’re confident about the initial steps of setting up your business, (such as registering with HMRC), still consider hiring an accountant to help you with your taxes.
Just like when you seek advice, look for an accountant who understands your industry. There are plenty of e-commerce accountants out there, but we recommend that if you’re going to be using cloud-based accountancy solutions, look for QuickBooks Pro Advisors, who will work with you to gain the insight you need into your business.
And if you choose an accountant who is a “Firm of the Future” runner up like Pearl Accountants, they’ll not only help you file your taxes, but help you set up QuickBooks properly as well.
A big misconception with e-commerce is that you don’t really need a business plan. Even if you’re using a platform like Amazon, eBay or Shopify, you still need to plan. Why? Well, a startup business plan gives you drive, motivation and inspiration.
Now, you don’t have to stick to your plan 100%, as there will certainly be times when you find you need to change it. More importantly, you need to write a business plan for your own benefit - the process of writing it will help you identify issues you may not have been aware of otherwise.
Your business plan is essentially arranging the pieces of a puzzle to create a beautiful picture. Or in your case, a successful e-commerce venture. Now, we’ve intentionally left the business plan until the end. And that’s because following the steps we’ve already laid out will help you create a solid, accurate and achievable business plan.
Hopefully, this article will help you lay the foundations for a successful e-commerce business. You’re already on step one, doing your research. However, the bottom line is that when you’re first starting out, you need to have belief.
And since your time is precious when you’re starting out, you’ll make your life a whole lot easier if you automate your admin up front with QuickBooks.
Did you find this advice for successful startups useful? QuickBooks helps you take control of your bookkeeping, leaving you more time to concentrate on growing and developing your business.