Setting up your business: The fundamentals
By Neil Petch, chairman of Virtugroup.
October 3, 2013 5:23 by kippreport
We’ve heard this for decades now: Entrepreneurs are born, not made. However, this is not entirely true.
Gifted geniuses, such as Steve Jobs, Anita Roddick, Richard Branson, or to name a few from the latest generation, Mark Pincus, Pete Cashmore and Jack Dorsey, are in every single one of us, although only a few of us ever awaken the entrepreneur that lives within.
It all boils down to making choices and connecting the dots – seizing the opportunities we come across and taking the leap.
However, how exactly do you go about making it happen and setting up your business?
Start with the big picture
Firstly, you need a purpose, vision and mission. Get a piece of paper and ask yourself: What do I see for my business and me in the future?
If you can write this down, you have a strong start, because clarity is the foundation of building a company.
Think of why people need your business. ‘Why’ and ‘for whom’ should be the key questions. For example, our purpose at Virtuzone is to transform the state of company setup in the UAE and become the go-to partner for start-ups and small businesses. Our vision is to make the process of establishing a company in the UAE simple, fast and hassle free, and at the most competitive cost in the market. In the past three years, we’ve helped to launch more than 2,000 companies.
Putting into words the vision you have in your mind is the first step. You don’t need to use any fancy words; keep it simple and real. Once you have defined your big picture, you will have roused the entrepreneur within and there’s no stopping you then.
Get down to planning
Setting up your business is not an easy feat. It involves a lot of planning, making countless decisions, from its legal structure and securing financial viability, to hiring, advertising and marketing, and so on.
The first important thing you need when setting up your company is to obtain a business license and other relevant documents and permits.
There are many business structures – sole proprietorship, partnership, limited liability company (LLC), corporation – and jurisdictions – on-shore, offshore, free zones – to choose from.
The business structure you choose will impact many factors, from company name to liability. Make sure you understand what each entails and choose a business structure and jurisdiction that is most advantageous and that allows the greatest flexibility. You may choose an initial business structure for now, however, after one year re-evaluate your needs and growth trajectory, and consequently make changes. Think of the future too.
You also need to pick and register your company name within the jurisdiction the business will operate in. Lastly, don’t forget to register the domain name, once your company name is official.
Paperwork is a big part of the process when you start your own business. My recommendation is to look for specialist support at this stage, to help you find the way and bring more insights to your decision making.
Cash flow and financing
Now that you have a company – license website, logo and business cards – make sure you have a business too and that means customers. It’s essential to attract a customer base from the very beginning, because your first goal should be to establish consistent cash flow as quickly as possible.
Most start-ups and small businesses begin by financing themselves, or by getting funds from family and friends, but that may not work in the long term. That’s why you need to create a cash flow first and then look for other financing options. You need to know what venture capitals (VCs) and banks look for to make your business attractive to them. VCs typically look for start-ups with the most potential for rapidly increasing sales and substantial profits. Securing funding from banks typically involves providing financial statements and documents to establish creditworthiness, so make sure you maintain your accounting books from day one.
Last but not least, hiring
Growing your business implicitly means growing your team too. But hiring for your business is not as simple as hanging ‘help wanted’ signs on the window. For example, do you need to employ administrative staff from day one, or is it more beneficial to appoint someone that can help generate sales and new customers? Do you need full-time support or is there something you could outsource? Make sure you identify what areas you need support with, what kind of skills you’re looking for, what level of commitment you want and when is the right time to hire.
Once you have completed these steps, you will have covered all of the fundamentals.
So roll up your sleeves and get to work. Your business is not going to take off by itself.
Neil Petch is chairman of Virtugroup, the holding company behind Virtuzone – one of the fastest-growing company set-up operators in the region.