Recent estimates suggest that up to 40% of the adult population in the UK have started or are seriously considering starting their own businesses. With so many new ventures launching each year here's a checklist of essential steps to take when starting up in business.
You may think you have a sure-fire idea for your business, but before committing too much time and money undertake as much market research as possible. Ask yourself:
If necessary, look into suppliers and distributors. Use every available resource (such as the internet, local chamber of commerce, and business clubs) to glean as much information as you can on whether or not there's a market for your product or service, and how much people are likely to pay. Talk to potential customers and gauge feedback on your business idea.
If all the indications from your research are good and you're convinced that your business idea has potential, find a Chartered Accountant to help with the crucial next steps. Too many people starting out in business make the mistake of not engaging an accountant sufficiently early. A qualified accountant can provide practical advice and a reliable, unbiased second opinion from the outset and prevent you making costly mistakes early on. Look for a Chartered accountant who has experience in your field of business, or at least has a good knowledge of startups and the many challenges they face.
Drawing on what you've learned from your market research, put together a comprehensive business plan with the help of your accountant. Perform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) and draw on your accountant's knowledge and expertise, certainly when it comes to the harsh reality of profit and cashflow forecasts. Try to map out the first year in as much detail as possible, month by month.
Before you start trading you'll need to register the business with HMRC or Companies House depending on the type of business. Your accountant will have advised you on your optimal business structure. Whether you choose to be a sole trader, partnership or limited company, for example, will impact on tax planning and other statutory responsibilities. Many startup businesses don't realise fully the range of options open to them, each has its own advantages and different accounting methods for tax.
You can use your own name or register a business name once you have decided on your trading structure. If using a business name, do a search on the internet for similar names and URLs, and perform a search through Companies House. You don't want to find that you have copied a trademarked name or have a competitor with the same name
Many new businesses need finance at an early stage. With over 80% of businesses failing in the first year, think long and hard about remortgaging. There are a number of ways of raising capital, ranging from a high street bank, business angels, or even crowd funding. Your accountant will be well placed to advise you on the best options.
Many startups spend the first few years operating from a home office, or using the services of a virtual office. Unless it's really necessary an office can be an expensive drain. If you do need premises straightaway, negotiate your lease carefully. If possible avoid an initial long-term lease and responsibility for maintenance and repairs, and make sure you're clear what business rates are payable. Ask your accountant to look over the lease as he or she will have a good idea of prices in the area. You may also need to consider networking the building for internet access, and you'll certain have computer and software needs. Setting up good management account, payroll and other systems early will save money in the mid term. Ask your accountant what systems would be appropriate.
The precise requirements will depend on your business.
Develop a comprehensive sales and marketing strategy that covers all the appropriate channels such as a website, advertising, PR and social media. Now it's time to start trading. Regular meetings with your accountant can show if you're on track or whether you need to make adjustments to your business.