SPECIAL REPORT | Business Start-ups
Evaluating your idea means market research. Completing a feasibility study is vital to both researching how likely your idea is to succeed, and to plan for its success. It should include a complete analysis of your proposed products or services, customers, competitors and suppliers, and should also look at pricing levels and what marketing efforts will be necessary. When completing a feasibility study it’s a good idea to compile a list of likely business customers and circulate a short, simple questionnaire to them to ascertain that the market you defined has a need for your product. A feasibility study will also show potential investors that you are prepared and committed to your idea, and have thoroughly studied the market in advance of seeking funding. This is also a good time to decide on your business structure and how your business will be managed. You can set up a business as a sole trader, as a partnership, or as a limited company. The type of structure you choose depends on the kind of business you are running, with whom you will be doing business, and your attitude to risk. It is advisable to get the advice of a solicitor or accountant when considering the structure for your business, and also look to government agencies such as Enterprise Ireland, the ESRI, the CSO, CEBs and Chambers or Area Partnerships who will be more than happy to give you information. They will also be able to advise you on registering your company with the Companies Registrations Office (CRO) and your tax and PRSI requirements.
RAISING CAPITAL
At this stage you should be actively looking for sources of funding and support. Set-up expenses can be significant and will often exceed initial estimates. Finance for business comes in three different forms: equity (money invested in your business by you or by others), grants, and bank finance. Once you have organised either a grant or equity, you are more likely to be successful with an application to your bank. For start-up businesses, there’s a rough rule of thumb that suggests the optimum finance mix for getting your business off the ground is: one third equity, one third grant funding, and one third bank finance. Equity spreads the ownership, and possibly the control, over more parties. Banks generally like to see business
72 InBusiness May 10
FAIL TO PREPARE…
A business plan is a written document that describes a business, its objectives, strategies, the market it operates in, and realistic financial forecasts. Banks, investors, grant providers and potential business partners will all request a copy of your business plan so it is vital that your plan answers any questions that they may have about your new business. A good business plan should:
• Detail the business name, address, owners and legal status;
•
Clearly outline your business idea, aims and goals;
Ann Horan, CEO of the Ryan Academy.
promoters investing their own money in their business. It shows their commitment and reduces the overall level of bank debt needed to kick-start the business. Grant assistance has become very important to new start-ups, particularly in these times of economic instability. Enterprise Ireland and the CEBs should be your first port of call. To support the development of High Potential Start-Up companies, Enterprise Ireland offers the ‘Innovative HPSU offer’ providing a financial contribution towards the company’s business plan to develop products, services or processes which are technologically new or substantially improved when compared to others in the industry. The CEBs have just recently replaced their
Capital, Employment and Feasibility Grants with a new suite of grants ranging from Priming Grants, to Business Expansion Grants and Feasibility Grants. Bord Bia, Bord Iascaigh Mhara, Failte Ireland, Fás, Teagasc, Údaras na Gaeltachta, and LEADER also offer funding and grant options to new start-ups. Lastly, research what various banks have to offer in terms of value for money, range of products, understanding of your business, and other benefits. To get bank finance you will need to sell the concept of your business idea and provide a detailed business plan in advance of any meeting, including financial projections comprised of a cash flow projection and a break-even analysis. Securing bank finance can sometimes be a lengthy process but the easiest way to fast track your proposal is to be well prepared and honest from the beginning.
• Provide detail on the marketing plan and strategy, including target market, unique selling proposition and competitor information;
• Demonstrate the viability of your business through sales targets and objectives;
• Outline operational requirements including premises, equipment, staff, suppliers, etc, and;
• Included a breakdown of your current financial position and your financial requirements. It is important to bear in mind that your business plan is a living document and requires updating as your business grows. This can help you to identify potential pitfalls before they happen and help you to focus on what you need to do to develop your business. Ann Horan has one piece of advice for budding entrepreneurs. “Seize the opportunity and make use of the many supports available. Take one of the many ‘start your own business’ programmes on offer in your local area, contact your local CEB and contact university incubation centres such as DCU Invent. Take a look at what is on offer at the Ryan Academy. Now is the right time to try out those great ideas.”
The Ryan Academy at Dublin City University.
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