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| Business Start Up Trends |
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People start businesses for different reasons. Many simply want to be their own bosses and a lot of these people start businesses in sectors that they've previously worked in. Others have an idea or spot a gap in the market and try to exploit it. A small number look to join growing sectors in a bid to get rich quick. Whatever your reason for starting a business and whatever sector it's in, you'll need to do some market research before taking the plunge. Even if you've 100 per cent confidence in your business idea and capabilities, a downturn in the market could mean there's simply not enough demand for you to succeed. Alternatively, a struggling market might help you realise you'd be better off targeting a niche rather than mainstream audience. Anyone investing in your business will also expect you to have considered the market you're about to enter and your business plan will look stronger for having considered these aspects. The last official startup statistics, published by the Department of Trade and Industry, offer the best insight into the types of businesses that are on the increase or decline (see Table 1 below). Source: Small Business Service Statistics Team, DTI. When looking at the sector you intend to enter, consider not only how many businesses were started in 2004 but how it compares with 2003. Is it a growing market? If so, has that now been fully exploited and will it drop in 2005/6? If it's less than in 2003 why is that? Also consider the changes to the total number of businesses that occurred during 2004. For instance, while nearly 10,000 new manufacturing businesses were started in 2004 the total number of manufacturing firms fell by 4,100 (the total loss of stock for 2003 was 3,300). If you're looking to enter a market that's losing so many businesses, you'll need to consider why this is and research which particular firms are suffering and why. Statistics don't mean that you shouldn't enter into a sector that is shrinking but it should alert you to the fact that there are important changes afoot. Additionally, you should try and consider the outside influences that are likely to have affected startup and stock business figures. For instance, how much have the fish and agriculture and hotel and restuarant trades been affected since the 2001 Foot and Mouth epidemic? Local businesses for local people National startup statistics are important to consider, but are by no means relevant to every situation. For instance, trends may vary in different parts of the country and at different times. The local economy will also affect your chances of success. Unless you're about to launch on a national scale, probably the most valuable research you can do is to research what need exists for your business locally. Look how many other similar businesses are in the area and target places with little competition or where there's room for competition, either in terms of better quality service or on price. Making trends not following them There's also the argument that trends should be made and not followed, and there's some truth to this. The telecommunications industry is full of very young bold, and now wealthy, individuals who proved a lot of sceptics wrong, and it can pay to be at the forefront of the latest movement. However, over-confidence can also be perceived as arrogance or naivety, and it's always worth checking the state of the markets even if you then choose to ignore them. Anyone walking into a bank confident about launching in manufacturing but oblivious to the current difficult market in the sector won't be taken seriously - bear this in mind. TABLE 1 Just over 181,000 VAT registered businesses started in the UK during 2004, the breakdown by industry was as follows:
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