Identify a need
Can you imagine a world without Uber? Before this concept came about, taxi rides were just an unavoidable nuisance. If the taxi was late, you never knew when exactly it would show up – was it stuck in traffic, when should I expect it to arrive, if I go back inside will I miss it? This uncertainty meant we couldn’t relax, say, when out with friends and ordering a lift. It was an area that required a re-think. Fortunately, the technology that would allow the concept to flourish was already available. What was necessary was a psychological insight connected to pre-existing technology. The result has exceeded all expectations. What is missing now? What psychological insights can you connect with technology to provide something that people would love to have? A great way to explore this question is to ask yourself: What is missing from your life now?
A good sense of timing
Choosing the best time to launch a new company can be a tricky. It is a delicate balancing act involving many different factors. For example, look at your competitors. Are they succeeding or struggling? What about funding? The availability of funds can make or break a startup but it is far from being the deciding factor. Getting your business ready is a time-consuming task but like in everything else there is a cut off point. Many startups fail simply because they wallow in early development and never even get off the ground.
A squeaky clean budget
One common mistake that many startups make is to concentrate on getting as much funding as possible. While money is certainly the great enabler it would be misleading, to put it mildly, to think this is the only way forward. Before spending a penny it is much more important to have a highly detailed budget: the devil is in the detail. Self-control in administering and sticking to a particular budget is central to future success, which brings us to the next point…
Self-discipline and saying “no”.
Running a business, particularly in the early stages, requires a strong amount of discipline in many different areas. Deciding on goals and objectives for each day, week, and month rather than concentrating on the amount of time spent in the office may be a more useful, and ultimately, productive exercise. Busywork can be a trap that distracts from real productivity, and it takes a great deal of self-disciple to say “no” to the tasks that aren’t the best use of your time and energy – but saying no every day is vital.
Find co-founders you trust
People are the important part of your startup. It’s people who will turn your idea into reality. An uncommitted or irresponsible co-founder is a major risk. Good founders know how to pivot and adapt when the situation calls for it. Ideas are pointless if execution is faltering.
HMRC is not just about tax collecting. This government organisation is keen to promote new business and opportunities. One such scheme is the Seed Enterprise Investment Scheme (SEIS). This scheme encourages investment in qualifying new seed-stage startup companies by providing individuals with 50% of their investment back in income tax relief.
For investors who realised capital gains during the 2013-14 tax year, SEIS reliefs allow you claim up to:
- 78% of your investment back if the startup succeeds – and you pay no CGT when you sell your shares; or
- 100.5% of your investment back if the startup fails – allowing you to invest in startups with the potential of full downside protection.
If you realised capital gains during the 2014-15 tax year, SEIS and related reliefs allow you claim up to:
- 64% of your investment back if the startup succeeds – and you pay no CGT when you sell your shares; or
- 86.5% of your investment back if the startup fails – significantly reducing any losses you incur when investing in startups.