Starting your own business can be an extremely rewarding experience, but it can also prove a significant challenge.
Many small businesses fail in the early stages, which is why it is essential to plan your venture carefully. You should start by including us in your initial planning.The more forethought you can give to the task of running your business, the more likely you are to succeed.
BEFORE YOU BEGIN
Before you begin, you’ll need to consider such questions as:
Are you suited to running your own business?
While being your own boss certainly has its advantages, it also brings extra responsibilities, hard work and probably long hours, especially in the early stages of the business. There might also be an element of personal finance risk. To be successful, you will need dedication and determination.
What are your key objectives?
You should define the main aims of your business, including what you hope to achieve. This might be fulfilling a personal ambition, or providing a range of new services to a particular target market. What is the nature of the business, and what needs in the marketplace do you aim to meet?
What are your expectations?
Many small businesses do not make significant profits in the first two years. Before you begin, make a realistic estimation of your expected profits, and the potential rate of growth of the business.
How much finance will your business require?
Have you and funds you can put into the business, and do you need help raising finance for your business?
STARTING A BUSINESS PLAN
Creating a business plan is one of the most important things you will do when starting up. An effective plan will help you to gain funding from potential investors, but it will also help you to clarify your business objectives.
Your plan should include:
A business description and a mission statement – Identifying your primary business objectives, and a basic explanation of how you intend to meet them.
Management and people profiles – potential investors want to know that your people are competent and can deliver results.
A financial portrait and strategy – it is important to provide details of funding sources, and projections of such things as cash flow and potential profit, as realistically as possible. We will be pleased to help you with this.
Sales and marketing objectives – describe in detail your intended market and how you will bring your product or service to it. Research your competitors – their products, pricing service and market penetration.
An executive summary – potential investors may initially read only this, so provide a concise overview of the essential points from each section of the business plan.
A business plan should be honest and realistic. Research your market thoroughly and avoid over-optimistic forecasts. Do not ignore competitors and potential risks. If you do a ‘SWOT’ analysis, pay as much attention to your threats and weaknesses as you do your strengths and opportunities.
Your presentation should be professional and clear, with graphic and charts where possible. The plan should be comprehensive, but concise enough to maintain the interest of the potential investor.
Which business structure?
You will need to decide which business structure best suits your needs: Sole trader/Sole practitioner, partnership, limited liability partnership or limited company.
There are both advantages and disadvantages for each trading structure in terms of control, perception, support costs and tax implications. Care needs to be taken, and we can help you through this important decision making process.
CHOOSING A YEAR END
It is important to choose the right year-end for your business. To what extent is your business seasonal? Is there a time of year when it will be more convenient to close of your accounts, ready for us to prepare your financial statements?
From a tax viewpoint, the choice of a year end early in the tax year for an unincorporated business often means that an increase in profit is more slowly reflected in an increase in tax bill.
When you are starting a new business, the likelihood is that you will need to raise finance from an external source. Like everything else, this requires careful planning and a knowledge of lending sources.
It is often advisable to consider a number of finance sources, to afford greater flexibility in the long term. Some of the more common sources include: overdrafts; loans; mortgages; share issues (for companies); assistance from government-backed schemes and from regional authorities; and venture capital. We can help you identify the costs and tax implications, before making a final decision about who to approach.
Most lenders will require some form of security from you, such as a fixed or floating charge over your business assets. If the lender requires personal guarantees, you should proceed with caution, as important personal assets may be at risk.
OTHER THINGS TO CONSIDER
As your enterprise grows, you will need to consider a whole range of issues. These will include:
Trading name or style – have you checked that your trading name does not conflict with that of another business?
Premises and location – should you be working from home, or renting or buying premises?
Keeping records – you will need to keep adequate business and accounting records. This is the starting point for plans to minimise taxes and manage cash flow.
Patents and trademarks – do you need to protect your idea, invention or brand name?
Production – are your suppliers and manufacturers offering the best deal? What needs do you have for plant and machinery?
Marketing and branding – how are you raising awareness of your product or service in your target marketplace? Do you have strong enough differentiation from your competitors?
Insurance – are you covered for such things as disaster, loss of profits, product liability or loss of key staff?
Managing finances – can you manage your cash flow effectively? Can you cope with outstanding debtors?
Taking on Staff – having the right people working in your business can mean the difference between success and failure. As well as ensuring that your recruitment and interviewing systems are effective, if you are employing staff you must observe a raft of legal and tax rules.
If your reading this, then your lucky as you're talking to a friendly advisor who has seen it all before, therefore you know that you will be in safe hands.