Ready To Get Down To Business?
Congratulations! Starting a new business is a life-defining moment. Both exciting and terrifying all at once. We have put together this little guide for the brave few who do what most dream of, but few do.
From naming your new enterprise to finding an accountant for a small business, this guide has all the basics covered. Read on when you are ready for our start-up guide for new UK businesses.
Embrace Your Inspiration
The starting point of any new business is that spark of inspiration that sets the whole thing in motion. Not all ideas are worth their weight in gold though! It’s worth your time to do some market research to see if your idea is economically viable.
You might want to start by asking some friends on social media to see if anyone would pay money for what you’re offering. Google Trends is also worth checking, you can search for terms relating to your idea and see if there is any interest. It’s a great tool, you can even search multiple terms to see which gets more interest.
Finding your niche is a term thrown around a lot by business gurus and experts, but it really is important to identify your target market. It could be the difference between starting a brick-and-mortar store or developing an eCommerce website.
What You Need To Start A Business
Now you have your great idea its time to gather all the things you need for your business:
Courses, Training and Education - It's hard to build furniture without the know-how. The internet is full to the brim with courses on any subject mankind has discovered or invented, paid and free training is just a few clicks away.
Licences - A lot of businesses get successful by selling someone else's ideas or products, for that kind of setup you're going to need a license. Some businesses like restaurants need a license to sell food. Check the gov website to check if you need a license for your business.
Equipment - You can't make art without your paints and brushes! Whatever your business needs to operate make sure you have the necessary tools. This could be materials, manufacturing equipment, warehouse shelving, computers or desks.
Products - Stock time. This differs depending on the nature of your business. Obviously, if you are an accountant like us your product is a service so your time and experience produce your service. Physical product businesses like sports equipment or hobbyist equipment will need to purchase and store stock ready for sale.
Premises - If you are selling stock or working out of a shop you're going to need a place to do it. Some small businesses can start out of a bedroom or garage. If you investing tens of thousands into stock you might want to consider hiring some warehouse space instead of filling your house with boxes.
We've covered the what and why now on to the how!
1. Your Going To Need A Name
Every business needs a name. It's worth having a good think about as your business name is an extension of the business itself. Consider the impression your business name will have on a potential client. Make sure it's relevant, there is no sense in calling our business Blue Doors LTD if you only sell red doors! Business name generators can be found online with a quick search, they can provide you with hundreds of potential names for your business. If your business is a website, it's worth putting your website domain as your business name as this will help with SEO for your site!
2. Incorporate Baby!
The next step for your business is to decide its legal structure. The choices are:
Sole Trader - This is the basic structure for any business. A very simple legal structure that doesn't provide any legal distinction between the business and individual.
Partnership - A business that's ownership that is split between different individual
Limited Company - A legal structure that defines the business as its own legal entity, separating the owners from various legal liabilities.
If you are not sure about your legal structure feel free to book a call with us, we are happy to help.
3. Its Planning Time
Failing to plan is planning to fail! If you don't have a clear destination to aim towards how do you know you are heading in the right direction? You need a clear and concise business plan as it will help you organise your goals, ambitions as well as entice investors. Business plans are a complex subject so we put together a little guide for you How To Write A Business Plan. Put all the research you have done into your business plan. Create a budget, forecast growth and work out how many sales you need to stay afloat. Keep it up to date and check it often to make sure you are sticking to your plan.
4. Your Going To Need Some Money
How much money will you need to finance your business? The answer will vary depending on the setup of your business. Sometimes a business can startup with a very small budget under £500. Service businesses for example, such as consultants or freelancers can be started with just a laptop, experience and a phone number. Whereas toothpaste retailers will need to set up shop with a physical location and stock which could easily reach the tens of thousands in costs.
Start-up costs are something that should be factored into your business plan so you should have a good idea of how much cash you will need to get your ball rolling. The problem is more commonly, where to find the investment capital. Small investments up to £10k might be covered by the business owner themselves, paying themselves back after the business is turning a profit. Larger investments will inevitably need to be funded by friends, family or outside investment.
Small business grants are preferable to loans as they usually don't need to be paid back. The government also offers a range of financial support for new and existing businesses. Check out the gov.uk financial support page for more information.
5. How Will People Find You?
After the funding is secured it's time to start finding customers! Marketing a new business can sound scary but it's really all about testing different strategies. Once you find something that works you can scale it up and reinvest your profits into finding other profitable advertising streams.
Start by doing some research on your competitors to see what they are doing, how much they are charging and what their customers are saying. Do this long enough and you will have a good idea as to how they acquire their customers be it Facebook ads, print ads or good old fashioned cold calling. Build a social media presence and brand everything with your logos, colours and typefaces. This goes for your website as well. Make sure your brand is appearing consistently across all channels. Once your branding is solid you can start experimenting with different advertising ideas. You only need to be right once with advertising to get started, but you should still cover all bases to get started.
6. Get An Accountant
Every Limited company needs an accountant to file year-end accounts. Accountants are responsible for a wide range of financial tasks. Some company's use an in house accounting department, others hire independent accountants like us. When starting your own business you might think that you don't need an accountant, especially if you are good with numbers and spreadsheets, but you still need an accountant to file and present your taxes to HMRC. Accountants in the UK receive special training and are licensed to represent a company's finances to HMRC.
Accountants like us also offer bookkeeping services which is a great way to lighten the heavy load of business, with the amount of time spent bookkeeping in small UK businesses being 30% of working hours. If this is something you need help with feel free to give us a call we will be happy to help you get your head around what accounting is and why you need it. Accountants are also handy for the next segment of this guide.
7. Work Out Your Tax Obligations
Running any business comes with legal and accounting responsibilities that can't be ignored. Every business starts with a £1000 allowance to get started but after that, you must register your business with HMRC or companies house. Sole Traders Must:
Register With HMRC Submit an annual Self Assessment tax return Limited companies Must:
Register with Companies House
Pay Corporation Tax on business profits
File a company tax return
Self-employed owners will need to send a Self Assessment
8. Start A Bookkeeping System
You will need to start a system of recording your incoming and outgoings. This is called bookkeeping. It's a never-ending task that all businesses that don't want to be investigated and audited by the taxman are obligated to do. Some companies have very little bookkeeping to do and managed quite fine by doing it themselves. Other businesses are paper-heavy and have a constant stream of invoices, bills, credit notes and payments to keep records of.
Similar to accountants, some businesses have in house bookkeepers, others hire bookkeepers like us. Whichever way you decide make sure you keep a close eye on your numbers. Bookkeeping is a great way to keep your finger on the pulse of your business and find financial discrepancies such as unpaid invoices.
Back in the good old days bookkeeping was done by hand in old school business ledgers. Luckily today we have computers that allow us to automate the most repetitive parts of bookkeeping. But it still needs a human touch. You are required to keep a digital or physical copy of your business records for at least five years in case HMRC want to have a poke around.
That wraps up this guide on How To Start A Business, The Right Way. We hope you have found value in this article and as always, we are happy to help anytime, just give us a call.
We wish you the best of luck with your business.