Starting a business can be a nerve-wracking process. Regardless of your industry or level of experience, it can be fraught with insecurity and doubt.
That doesn’t stop people doing it of course. 65% of adults in the UK want to start their own business ‒ that’s almost two thirds of the British workforce! 77 new businesses are founded every hour1.
But one of the reasons that holds people back from making the leap is not knowing where to start, so to help you on your way, here are a few things to consider before you launch.
Writing a Small Business Plan
So imagine you’re explaining your new business to a friend or associate, they’re going to have lots of questions like the following.
Firstly, what does your business idea look like? Why are you launching your business, is it a passion project or have you spotted an under-served market? Have you carried out comprehensive research into your customers and competitors? What will your objectives be, and how do you hope to meet them? What timeframes or deadlines will you work towards?
This is where a business plan will come in. It will help you answer these types of questions by helping you:
- Pinpoint your business idea.
- Spot potential hiccups.
- Align your goals.
- Measure your progress.
And we can’t forget about the finances. Forecast your profit levels and keep them realistic to help you understand upfront costs and profitability. Having information on your current or predicted outgoings, and any financial history will help with your credibility. If you need funding to get your business up and running, you’ll need a business plan as part of this process. It will also help you understand how realistic starting your own business is at this current moment.
So, if you’re pulling the structure of your business plan together then it should be complete when you have your basic concept, business goals, USPs and how you’re going to get there. This would also be the time to add in a brief marketing plan.
By setting this all down in writing, you will have a clear focus and strategy to get you on the road to owning and running your own business. However, make sure you continually review your business plan on a regular basis, as it will change!
Forming and Registering Your Small Business
So you have decided now is the time to actually do this! You are ready to embrace the creative freedom, business autonomy, job satisfaction and financial gains. But, what are the next steps?
You will need to set up your company formally, by registering with Companies House. Put simply, Companies House is the UK registrar of companies. Most businesses register as a limited company or partnership. In doing this, you will receive your VAT number and company number if your company and income makes you liable for VAT.
You will need to register an online account with gov.uk and complete your registration using your Government Gateway details, as well as information like your trading name and contact details. You need to register so that HMRC knows how much you are earning and can calculate your tax. The best way to register a limited company is online for just £12.00. It is £40.00 to register a limited partnership but some third parties may do it cheaper.
If you are setting up as a sole trader you don’t need to register a company. You can still give your business a trading name but will need to follow certain rules on naming and running as a sole trader. You need to register for self-assessment on the gov.uk site. This essentially lets them know you are becoming self-employed.
There is also the ever important name for your business! Do you want to use your own name or something a bit different? Click here (How To Name A Business. What Makes A Good Company Name? | smei (smeinsurance.com) for some ideas if you are struggling to think of a trading name that will make you stand out from the crowd. You also need to make sure there are not any other businesses with your chosen name. Make sure you’re happy with your name before registering with Companies House as there’s a fee to change it.
Once you are registered, there will be a number of obligations and responsibilities such as completing your self-assessment tax return annually.
You’ll need to keep accurate records of sales and outgoings connected to your business, which will make things a bit easier when it comes to completing your tax return by 31 January every year.
Financing Your Small Business
The average UK start-up spends £22,756 in their first year up and running. So knowing how you are going to get your business off the ground is important. Not every start-up will require a large outlay at first, but if you do need funding there are several options open to you.2 From council grants for small businesses to enterprise investment schemes. It is also worth looking into tax breaks that might be open to you, such as the Employment Allowance.
Break-down the costs you need to be aware of:
- Costs to get your business trading ready.
- Fixed assets needed prior to trading.
- Daily, weekly, and monthly outgoings.
- Expected income.
- Pricing and costs to customers.
When it comes to banking, look around and see which is the best bank for a small business. Don’t be afraid to look at the challenger banks out there. Your chosen bank will provide you with the necessary tools as needed, such as card readers for making payments, chip and pin devices for taking payments etc., and can advise you on lending options, should they be required. A good accountant may also be a worthwhile investment and could save you a lot of time.
Business Stock and Premises
So you’ve got your business plan ready, trading name is registered and your finances are in order, so what next?
Have you considered where will you work from and where you’ll store your stock?
This could be your largest outlay, depending on your profession. You need to ensure your premises are large enough to cover operations and growth ‒ and in the right location to suit your audience as well as your needs. You may also need to look into licences and permits. If you are looking to use a residential address as your business address to save on costs, then look into steps to ensure your privacy as this address will be publically listed.
Shared and flexi workspaces are now in their thousands around the UK. Their main benefit is they provide a community for start-ups and are often in city-centre locations, yet offer competitive small business rates and flexible contract arrangements.
It’s also worth noting that whether you have premises or not, you will still need the right business insurance in place. As well as small business insurance, you may need to look at policies for general liability, cybersecurity, public liability and employers liability.
The last 12 months have shown us we never really know what is around the corner, so speaking to a professional broker will help you ensure all your needs are covered.
Quotes from well-known and specialist insurers, including: