There are endless reasons to decide this is the year you finally look into starting your own business.
Maybe it was a resolution either made on New Year’s Day or in January when you returned to work and had to start dealing with all the emails you said you would “circle back” to after Christmas. Maybe you have had a lifelong dream of entrepreneurship. Maybe watching all those reruns of Dragons’ Den while staying in from the cold has made you think “I’d like to have a go at that.”
Whatever the inspiration, starting a new business from scratch can be a daunting task.
Search “how to start a business” and you might be inundated with articles, books and podcasts giving all kinds of conflicting advice on marketing, price structures, taxation and even guided business meditations.
It’s easy to get overwhelmed quickly by fiddly forms and complicated jargon so here’s a basic guide to get you started setting up a small business in Ireland. And, unlike Dragons’ Den, we won’t insist on 10 per cent of your business in return.
Decide who your customer is, if they’ll buy what you’re selling and what kind of business you want to run
“You don’t have a business until you make a sale, until then you’re just playing games,” says author, business owner and former adjunct assistant professor at Trinity College Dublin Brian O’Kane.
But to get sales you need customers and to get customers you need to know who yours are.
O’Kane quite literally wrote the book on the subject with Starting a Business in Ireland now in its eighth edition.
“The critical thing is to research your customer and to understand who it is you’re going to sell to, what they really want to buy and why they want to buy it,” he says.
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“If you can answer those three, almost everything flows from that because once you know who buys that stuff then that gives you an idea of value, what you can charge, how often they want to buy. And can you make a living from selling it?”
For example, before opening a horsebox coffee cart, you should figure out if your customers are busy people on their way to work or parents at a football ground or weekend hikers in the car park of a trail. Are they price conscious or happy to pay extra for the convenience of you coming to them? That should help price the cup of coffee against costs.
“You might realise you need to sell 40 cups of coffee per day at a certain price which sounds doable if you’re open 6am to 5pm but your type of customers might not turn up until 8am and not drink coffee past 3pm so that’s not realistic any more,” he says
“You need to understand your customer and what they’re really buying – is it a parent of a young child who needs two coffees a day as pick-me-up or is it someone looking for a bit of interaction who doesn’t mind a queue.”
Understanding the customer then informs how the business should operate. For example, if tired, busy people who are late for something are your coffee customers, it makes sense to schedule extra staff on for the morning rush and invest in a commercial machine that can make multiple cups simultaneously.
Next, O’Kane says to “really look at what you have to put in place to make it all happen” which is writing a list of the physical things you need to get, install, make, fix and apply for to get to open up.
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“I give the example of a restaurant, from a customer point of view, if they walk up to door, what do they see? Are there signs? Does the menu encourage you to come in? Where do they sit? What decorations are on the table? Salt shakers? What glassware do they use? Nice cutlery? Can they pay with card and cash?” he says.
Then after looking in the “front door”, it’s time to have a look at the “back door” inward, which are things that only staff might see but are still crucial to the business – this might mean equipment, health and safety items plus IT, payroll and online ordering systems.
Lastly, it’s important to know why you’re opening a business.
Despite her nail salon Tropical Popical becoming Saoirse Ronan’s favourite, fame and riches was never the goal when activist businesswoman Andrea Horan founded the wildly successful business with her sister Michelle over 10 years ago.
“I knew I didn’t want to take over the world. I wasn’t going to make six figures a week and it was having self-awareness to know what type of business I want to deliver for me and my life as opposed to having those defined the other way around,” she says.
Horan said working backwards from her aim of setting up a business that created a good/work life balance left her with a company that let her enjoy her lifestyle instead of demanding she sacrifice it.
“The main thing is to decide the point of your business – what is it for? Building a life you like or is it the prestige of owning a business and having an image of success for others in your life to admire?”
Work out how you’re going to pay for it all
Do you have enough savings or will you need to get funding elsewhere?
This is the next part of your business plan once you figure out how much it’s all going to cost to get before your fledging enterprise can pay for itself.
But one mistake business newbies can make is not factoring in their own costs and how that might affect funding, especially if they go all in and quit their job to get things going.
“We’ve seen it where guys are looking to take on a €40,000 loan but a third of the money raised was going to go on salaries for the two of them working full time in the business and one has a €4,000 a month mortgage,” O’Kane says.
“If you have expenses that big and no other income you shouldn’t be doing this, that’s going to detract from the business’s long-term profitability because you’re looking to just get enough to cover your mortgage every month.”
In this case O’Kane suggests entrepreneurs should have enough “savings separate that you can live on without taking money out of the business”.
Horan like O’Kane agrees that relying on the business to pay all your bills from the start puts undue influence and restriction on important decisions.
“I kept my job at the time we opened so I had a safety net,” she said
“I didn’t have to chase sales or push clients. I could see that type of business I wanted to be and pursue that without external pressure to make it sustainable straight away because I was sustaining myself in the job.”
As a result Horan’s salon stayed true to its founding principles of “treating everyone like a VIP” and attracting clients with the quality of their service and experience instead of discounts.
Horan did not seek additional loans, instead using savings to fund the business which she said helped to take risks because it was her money, not the bank’s, at stake and helped ease cash flow headaches.
Lastly, it’s important for businesses to consider cash flow which O’Kane describes as “the gap of time between money coming and going out of your business”. For example, can you cover staff wages due this week if a supplier won’t pay you until the end of the month?
“Having a pot of money that covers for a certain amount of time as a reserve helps, as does having a job because that takes yourself out of the equation.”
Ask the experts
Your first port of call should be your Local Enterprise Office which can help from advising what funding grants might be available to filling out applications to signing you up for a free or low-cost course on how to make your business as successful as possible.
John Magee, head of enterprise at Local Enterprise Office Mayo, said while help with funding was possible people should not expect “to walk out with an envelope of cash on their first visit – that’s not how it works”.
Instead, beginner courses which demystify the jargon-heavy world of business and mentorship for experts might offer greater value particularly in areas that carry legal ramifications such as tax and business structure.
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“They can advise on effectively setting up a structure around them and making sense of what is a sole trader or a limited company because getting technical advice limiting exposure to failure is so important, “ he said. “Self-employment is a risk.”
Outside of a grant which helps certain manufacturers with their capital expenditure to get started, Local Enterprise Offices can also help entrepreneurs apply for other financial help including that offered by Microfinance Ireland from €2,000 to €25,000 for companies with fewer than 10 employees.
Enterprise Ireland’s department manager for high potential start-ups and entrepreneurship, Anna-Marie Turley, also encourages all business people starting out to apply to the New Frontiers programme as there’s a misconception the initiative is just for start-ups or those looking to become major exporters soon.
“Anyone can apply, the critical thing is that New Frontiers is open to anyone starting a business.”
According to Turley the programme lets entrepreneurs explore “a kernel of an idea” to see if it’s a viable business with mentor support along the way. If it progresses through stages, certain funding or income supports become available.
If the participant decides the idea won’t work or the stress of owning their own business isn’t for them, she says “that’s still a win”.
“There’s no failures in this process, only lessons.”
So test your idea, know your customer, have a cash safety net and take advantage of government support to give your business the best chance of success in Ireland.
