Top tips for Starting a Business (1 & 2)

Top tip One: Enterprise is for life ‘not just for Christmas’!

Sometimes it seems that starting a business couldn’t be easier. After all everyone in the UK seems to be doing it! With a working population of 40 million people, approaching 5 million run businesses. Not so much a nation of shopkeepers but a nation of entrepreneurs!

Understanding how to start and run your own business could be an important life skill. Undoubtedly, the enterprising skills you can gain from running a business will be just as useful in a large international corporate, a charity dealing with a pressing social issue or improving the health of a nation!

Thinking of enterprise as a life skill that can be used for both economic and social impact in a variety of settings is what underpins Enterprise at Leeds and the Starting a Business free online course.

But, where to start? Well at the very beginning of course! We think of entrepreneurs as having 100 ideas before breakfast! Whether this is true or not is irrelevant – what is important is how do you know an idea is a good business opportunity? The quickest way to do this is to launch a business. However, this is both time consuming and expensive.

Top tip Two: Keep it simple

What is the essence, in just seven words, of your business opportunity? Learning to describe a business idea as simply as possible and then to understand the drivers that underpin it is a vital enterprise skill and could save you time and money! The opportunity business model is just one way of doing this. In essence, this is simply about describing a business opportunity as a value proposition in seven words (yes, only seven) together with the people involved, the place it is to be sold, the key processes needed and how a profit will be generated. You can do this for any company or part of a company.

Let’s consider Apple iTunes. At its simplest it’s a ‘proprietary digital media service and technology platform’. In other words, Apple owns the format the songs and videos are stored in and the devices it is consumed through. They own the intellectual property rights (IPR) for both the iTunes store and iPods, iPads and iPhones with listen and watch these songs and videos on. And there in lies the source of their profit – they charge us for this privilege. Just look at the latest financial performance or Apple. In 2014, second quarter revenues were $45.6 billion with a net profit of $10.2 billion.

But what about starting a business? The principles are just the same. When Fraser Doherty learnt, aged 14, to make jam with this grandmother he went through the same challenge of, ‘is this idea a good business opportunity?’

The short answer was ‘Yes’ or rather SuperJam. In 2009 he started production, was interviewed on BBC television and the rest, as they say, is history! And Frazer’s value proposition in seven words?

‘Making super preserves and teas of distinction’ – I’m not sure if he agrees with me!

Frazer certainly seems to understand his market and competitors.

Five ways to test a great business idea?

  1. Can you explain your value proposition in just seven words?
  2. Describe your first customer. What do they do, where do they live and why are they your first customer?
  3. Are there plenty of them in the place you want to sell your product or service?
  4. Speak to a potential customer and talk price.
  5. Is the price they are prepared to pay greater than the total cost of supplying them? If yes, them you might just have a good business idea. Of course the market will soon tell you if you really to have a great opportunity.

Professor Nigel Lockett
Professor of Enterprise at Leeds University Business School

Starting 30th June Starting a Business free online course