Top tips for prospective entrepreneurs

A third of British people want to, or have already started their own business according to recent YouGov research commissioned by Intuit.

However, many prospective entrepreneurs have put off their decision due to recession fears. The results of the research show that while many Brits would like to run their own business, the recession has had a damaging effect on entrepreneurial confidence. Around 40% of those that do want to set up their own business blame the recession for delaying their plans.

Establishing a business during a recession is certainly a challenge and one that requires determination and significant support. However those that are built in challenging times are often considerably more efficient, leaner, and better equipped to compete. Catherine Harrell, Small Business Specialist at Intuit UK, provides her top five tips for prospective entrepreneurs who are considering starting up in the recession:

1. Put your plan on paper – At some point in the life of your business, you’re likely to need external funding. Whether you’re approaching a bank or your friends and family, getting a strong business plan in place is crucial to securing funding. Your plan needs to spell out your business idea, and should cover how you plan to attract customers to your business, as well as what your contingency plans are for when things go off track.

2. Cash is king – It’s tragic when great businesses go under simply due to a lack of readily available cash. Awareness of how much is being spent and for what is important, as is tracking VAT and making accurate returns. It is important to keep on top of bookkeeping right from the start, otherwise there is a risk of forgetting crucial costs or, even worse, failing to invoice a customer.

3. Avoid late payments – One way to encourage timely payment from customers is to agree payment terms at the order stage and make them very clear. Do not assume that the business will be paid on 30 days or end of month following; set out terms in writing and try to obtain written acceptance. Printing the payment terms on easy-to-understand invoices that go out on time can also help prompt debtors to pay, as will the clear setting out of penalties if a payment is late.

4. Focus on customers – Do your homework and don’t assume you know the market inside out. Talk to your customers to understand their unmet needs. For example, consumers’ spending habits change during a recession: those used to holidays abroad may opt for more affordable breaks in the UK and people may be more incline to borrow goods than buy them. This type of consideration is especially crucial for those who are in the process of setting up a new business.

5. Market even harder – For as hard and long as it may be, no recession lasts forever. When the economy upturn will finally arrive, the name of your business should be front of mind. Those who are starting out their business shouldn’t forget that marketing and sales activities, if cost-effective, can be of paramount difference to quickly breakeven and build a solid clients list. Word-of-mouth marketing and web presence are more important than ever to ensure that your small business is visible to potential customers.

Catherine Harrell, Small Business Specialist at Intuit UK
For more information visit www.intuit.co.uk or follow our blog at www.smallbizmatters.co.uk