Lots of different types of business are run from an office such as consultancies, agencies and other service providers. Check out our practical guide for help with starting and running your own office-based business.
- Research your target market
- Decide which services to offer
- Estimating fees
- Image and promotion
- Establish your client profiles
- Buy an existing business
Research your target market
When you plan your business it's very important to think about who your customers will be and why they will choose your business over your competitors. Doing some market research will help you with this.
You'll want to confirm that there is going to be room in the market for a business like yours. First of all check out the competition. Count how many firms there are already in your area (or, if applicable, nationally) which are similar to yours. Note how many of these are independents and how many are part of a major national or regional firm.
If you plan to attract local businesses and members of the public you should note down the different types of potential client in your immediate area. Will the area produce a big enough flow of clients to support your business or will you need to draw custom from further afield.
It may be that the immediate catchment area is not particularly relevant and that yours will be the sort of business that clients will be prepared to travel to. In this case you should consider the area from other points of view. For example:
- is there adequate parking nearby
- is access easy
- are there other businesses nearby which will attract people into the area
- is the area presenting the right image for your type of business
It may be that, while your business operates from an office environment, clients never visit your premises because you do all your business online or over the phone. If this is the case your catchment area could include the whole country - and perhaps other countries too.
Why will clients choose your business
You'll want to make sure that enough clients will choose your business rather than any existing competitors.
If you expect to obtain much of your work from referrals you should approach the firms or organisations that you would expect would refer work to you to find out:
- if they would need your specialist services
- if they already use the services of a competitor
- what they would consider to be a reasonable fee
- what volume of work they would expect to put your way
- if there is a particular service they would like you to provide
Check out any competitors in the area to see:
- what services they offer
- what fees they charge
- what type of client they are attracting
- if the premises are smart and modern
- if the staff are helpful and polite
This might immediately show you that there is a gap in the market for certain services that your business might offer.
Find out what people want
It can be a good idea to talk to potential clients in your area about your proposals. You could ask them:
- if they would require the services that you propose to offer. If not, is there any other service that they would be more interested in that you could provide
- what opening hours would suit them best. There might be a demand for evenings and weekends
- what, if anything, don't they like about existing businesses like yours
Research current trends, plus legal and tax issues
- Sector trends for office based businesses
- Legal issues for office based businesses
- VAT rules for office based businesses
Decide which services to offer
A number of factors will influence the range of services your business will offer:
- the skills and qualifications held by you and your employees
- the extent to which you will be relying on freelancers, external consultants or self-employed sub-contractors
- the sector of the market you will target - are you aiming at members of the public in general or at a more specialised market
Your market research will have helped you to identify whether or not there is likely to be a demand for the business you have in mind. Be prepared to remain flexible - once your business is up and running it may become apparent that there are additional services that your clients would like you to provide if you have the skills, qualifications and experience to do so.
For example, you might decide to set up as an IT consultant, advising clients on a range of computer solutions. Your clients may then ask you to take responsibility for purchasing the computer hardware, software and peripherals they need, because they don't feel confident that they would select the best products for the job. This would provide your business with an opportunity to add a mark-up onto the cost of the goods supplied.
'Drawings' means the amount of money you will take from the business to cover your personal living expenses. Some people refer to this as their 'wage' but correctly it should be referred to as Drawings. Base this amount on what you need to cover your personal expenses.
Make a list of all your regular expenditure and then add to that things that you only spend money on every now and then, such as birthdays and Christmas.
Be realistic with your estimates - don't be tempted to underestimate your living costs just to make your cash flow work!
Image and promotion
Whatever the nature of your proposed business you should be aware that clients will expect high standards, so it is important that your business:
- provides a good quality service
- projects a smart and professional image
- is seen to work efficiently
- is staffed by well trained employees
- offers a high standard of customer service
There may be an appropriate nationally or internationally-recognised quality certification standard that you could consider working to achieve.
If your clients are going to be visiting your premises it's important that all public areas and meeting rooms are smartly furnished, clean and tidy. It's also important to provide a pleasant working environment for your staff.
Advertising your services
Whichever services you decide to offer, it's very important that your potential clients know about you.
There are a number of things you can do to promote your business:
- make sure your business name is prominently displayed at your premises and wherever else would be appropriate
- have a brochure printed outlining your services and distribute this to your target market, including those people who might refer business to you
- advertise in your local business directory and newspaper - you could also try to obtain some editorial coverage
- build a website advertising your services, qualifications, details of some of the successful projects you've handled and your contact details
- use social media and networking services to promote your business and stay in regular touch with clients, partners and contacts
- produce a useful free leaflet or booklet on a topic of interest to your clients - make sure your business details are prominently displayed on it
- blog online about hot industry topics and other topics of interest
- join forces with a related business to carry out a joint marketing campaign
- put on seminars, workshops or discussion forums, or have a launch party
Establish your client profiles
You might have different types of client, including members of the public ('business to consumer' or B2C) and businesses ('business to business' or B2B). These could be local, regional, national or even international - and they could well be a mix.
Depending on your location and the nature of the business you might build up a personal relationship with many of your clients, or you might rarely see the same client twice. However many times you deal with an individual client, the best form of advertising is word of mouth recommendation, so it is very important that your business provides a first class service to every client, no matter how small.
How will clients pay
For many office-based businesses it is still normal to receive payment by cheque. It's fairly unusual for most office-based business to receive regular payments in cash, although some will receive cash from time to time. Where this is an unusual occurrence it is important that systems are in place to ensure that the payment is correctly recorded and that the cash can be stored safely.
You may decide to accept debit and credit card payments, including payment through Paypal or similar services - this is becoming increasingly commonplace in professional firms. If you provide services for large clients on a regular basis you might also accept electronic payments.
Buy an existing business
You might decide to buy an existing business rather than start your own venture from scratch. Buying a going concern can mean that:
- the premises and equipment are already in place
- there are established customers
- the business can generate income immediately
- suppliers have been identified and relationships established with them
- the business has a reputation and a track record, which can help if you are looking for finance
- staff may already be in place
However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.
Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.
Other matters to consider include:
- the state of the premises, equipment and so on. Will you have to spend money refurbishing or replacing assets
- existing staff rights
- the reputation of the business
- how to retain key personnel once you've taken over
- does the business owe money that you will be responsible for
- if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller
Look carefully at what you are actually getting for your money. In many small office-based businesses, the really valuable assets are the proprietor/s and a few senior staff. Ask yourself how much value is left in the business without them. In some businesses a client list or contacts book plus a trading name can be very valuable, but in others it may be cheaper and at least as effective to start up from scratch. What guarantees are there that the proprietor/s won't just set up in business elsewhere and poach some or even all of the existing clients?
Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.