Two is better than one

150420 two better than one

Most businesses are based on a single type of income model. Garages, electricians and restaurants all rely on selling their services for a one off cost. If you need your car fixed, you pay the garage a one off fee for doing it. Fancy a meal out? You'll need to pay a lump sum to do so. These businesses rely on large one off purchases to keep going.

Other businesses, such as internet providers and T.V. services (think Sky Sports or Netflix) are subscription based. They rely on a large number of customers paying a little each month.

Each business model has its own benefits. A normal business generally requires a lot of work for each new customer. For example, if you're a mechanic, you fix a car and charge the customer £200 for this. That's a lot of income in one go but what happens tomorrow? What happens if no cars break down, how will the business survive?

Read more ...

Go forth and multiply

After 10 months of setting up my first business, I started thinking about how I could grow the business even more.

After some thought, I decided that the best way to do things was replicate what I was already doing and put the prices up. Simple! Raise your prices and double your income! Well, not quite.

My original business was based on low costs and simplicity. Let's imagine I was running running a bed and breakfast. It's cheap, just £30 a night for a double room. You can imagine the type of business model and the type of people that the B&B would attract - people looking for a cheap weekend away and purely basing their choice on cost, there's no customer loyalty so people can easily walk away at any time.

Now, to improve our business we could continue to do what what we're doing. The business is growing steadily and we're doing well but we want to increase profits a bit quicker. What can we do? Putting up our prices would turn away exactly the customers that we have been attracting up until now and this may put the whole business model at risk.

Read more ...

Business plan - smusiness plan!

150208-business-plan

I can see why banks would want you to provide them with a business plan if you were asking them to lend you money. They need to do due diligence and make sure that you have thought about things seriously but...

... I hate business plans, formal ones at least and think other than if you absolutely have to do it because you need to borrow some money, they are a waste of time.

When you're starting your business, of course you need to do some thinking but do not bother filling in a business plan template. There are lots available on the internet but try to avoid them! They are general purpose and make you start thinking about things that may not even be relevant to your business.

The most important question you need to ask yourself, is 'can the business make enough money for me to survive?' For example, let's say you would like to start a taxi company. For simplicity, let's say that you do airport runs to the local airport, at £50 a journey and the journey time is 30 minutes.

Read more ...

Fake it until you make it

150208-fake-it-til-you-make-it

Starting in business can be a scary prospect. All of a sudden you do not have a 'real' job to fall back on with its minor benefits such as a regular salary, sick pay and the notion that you have that job because other people believe you know what you're doing.

Unfortunately, when you start your own business none of these benefits exist any more.

Added to this is the issue of self confidence. Can I really do this? What happens if I don't make enough money? What will I lose? How embarrassing will it be if I have to go job hunting and tell my friends that I failed!

All of these thoughts constantly go through your mind and this can affect how you behave in front of other people.

When I started my first business, I was lucky enough to get invited to a business breakfast meeting. There were about eight other small business owners in the room, mostly one-man bands but also some people who were employing 10+ people.

Read more ...

Subcategories