With women accounting for 80% of the "new" self-employed in Britain, more and more of us are ditching the day job to embark on independent adventures.
From unleashing creative potential to flexible working hours, the perks of running a small business are obvious. But with around 50% of start-ups failing in their first few years, it's also a risky process.
In an increasingly crowded and competitive arena, only the most savvy companies flourish, propelled by a combination of good business practise and great ideas that capitalise on gaps and trends in the market.
We turn to the experts over at startups.co.uk, the UK's leading service for starting a business, to glean their advice on launching a start-up.
Below, they talk through the ideas and strategies behind Britain's most successful enterprises, along with common mistakes to avoid and three big start-up trends of 2015 that every entrepreneur should know about:
Six key ideas behind successful start-ups
Editor Ian Wallis names the start-ups that have taken the business world by storm in the past few years, and the ideas and strategies they have in common:
1. Quality, independent subscription services: Following Naked Wines (which invests in independent wine makers) we’ve seen rapid growth for the likes of Pact Coffee (similar to Naked Wines but for coffee), fresh food delivery and meal planner service Gousto, craft beer-focused Beer52 (there are a few in the craft beer space that are doing really well), and quality goods service Flavourly.
2. Cloud solutions to make things faster: Iwoca offers loans for small businesses using a proprietary algorithm to automate approvals, Currency Cloud offers an automated international payments service and you can access on-demand local services in three taps via Bizzby.
4. Cloud solutions to make life easier: Hassle, Mopp and Housekeep all find house cleaners by local area, while Lovespace collects and stores belongings in boxes, for as little as £1.95 per box per month.
6. British design and/or manufactured: These include 4eco's energy management device to keep the energy generated from solar panels (rather than it going into the National Grid), Eyespace Eyewear’s sleek designed eyewear for independent opticians and British-made bespoke furniture from Seriously Sofas.
Three big start-up trends for 2015
1. 'Free from' food
Writer Natasha McGowan examines why the free-from food market is booming right now:
"According to Kantar Worldpanel, the free from food market is worth £238m in the UK – and its growing – with leading supermarket Waitrose’s Food & Drink 2014 Report acknowledging that sales of dairy free and wheat free food products jumped by 22% last year. According to Allergy UK, the highest food allergies are in wheat, gluten and dairy – so these offer promising markets to tackle.
The key to a successful free from brand is quite obviously great taste and launching a food production business gives you the opportunity to start out in your kitchen, where you can really refine the perfect-tasting product. However you’ll need to consider health and safety regulations as well as any equipment you might need to purchase.
Alongside taste, the most important element of launching a food business is to get your product stocked in retailers. Freefrom Matters director, Michelle Berriedale-Johnson, suggests starting out at a market or pop-up store, to garner feedback and to get your product noticed without the presence of some of the bigger free from brands."
Who's made it work? Successful start-up stories that have been built on the back of this trend include vegan and gluten-free company Focaccia Per Tutti, gluten-free popcorn brand PROPERCORN and Rebel Kitchen, which provides a lactose and dairy-free alternative to milk.
2. On-demand service apps
Writer Lucy Wayment explains why on-demand service apps are on the rise:
"From domestic services to health and beauty and even parking – there’s still an opportunity for online platforms and apps to capitalise on this popular trend and transform previously laborious tasks into instant, low-cost solutions (particularly outside of London).
Natasha McGowan on the growing appeal of ethical and sustainable fashion:
"According to Mintel’s UK consumer trends report for 2015, both the ethical treatment of workers and environmental implications were two of the top concerns for customers when considering shopping with a particular brand.
Big retailers are reacting to this, with fashion houses like Topshop, Marks & Spencer and ASOS getting behind ethical and sustainable brands – indicating both a growing market and an opportunity for you to potentially get your fashion line into a high street store.
An opportunity for start-ups launching on a budget is to use recycled and reclaimed materials, meaning you can use materials such a human made fibres like polyester without the eco-headache. The most important thing, according to industry reports, is the quality of your designs and the manufacturing of your brand. Manufacturing in Britain is increasingly popular for ethical brands as it allows you to monitor quality control while also ensuring your brand remains ethical."
Four common mistakes to avoid
Ian Wallis again, on the four common errors that could leave your business on the brink:
1. Lack of focus: By this I don’t mean effort, as that’s a given. It’s the sense that a business is trying to be too many things to too many people. Customers need to be able to understand very clearly what it is a business is offering. From an operational point of view, a lack of focus also leads to it being over-stretched and distracted by the next idea and thus not delivering on its promises. It’s true small businesses are capable of adapting quickly and that hedging their bets with a number of possible revenue streams could lead to the one that really works, but the chances of that happening diminish if the solution to the customer’s problem isn’t apparent immediately.
2. Managing cashflow: Too often businesses associate rising revenues with success – and it’s true this is one important marker. However, it’s surprisingly common for business owners not to truly appreciate whether they have built in enough margin to pay for everything. The net profit is key, once all the company’s costs have been considered. Financial forecasts and budgeting are essential.
3. Over-trading and late payment: Another aspect of managing cashflow is the risk of over-trading if there are longer lead times on delivering your product. You can have too many orders and not enough cash in the bank to pay your suppliers’ bills before your customers’ money comes in. Not all customers pay promptly, which is why there are solutions such as invoice finance for this, where most of the value of an invoice is advanced by a lender up front. You pay a relatively small fee for the service.
4. Spending unwisely: Pride comes before a fall and lots of start-up businesses want everything to be ‘just so’ before they launch. They spend the start-up funds they’ve pulled together through personal savings and friends and family, on things that could come later once money is coming in. There are necessities, but it’s often best to start small – or ‘lean’ – by not taking on the costs of a leased or serviced office, not hiring people, and get the product or service to market as quickly as possible.
There are so many mistakes we see time and again in creating start-ups. I’d say it’s essential to have a web presence, a minimum viable product or service, a clear business model, start-up funds (although this could be just a few thousand pounds), knowledge of the market, and the right personality to be ready for the long-haul. Once you get to the point where you can afford to hire people, do so carefully as this will be one of if not the biggest cost for business and you need to be able to delegate confidently.
For more information and tips, visit startups.co.uk
Words: Anna Brech, Photos: Rex Features, Getty Images and websites' own