CC image courtesy of jakeandlindsey on Flickr
New Year – New Business? You could set-up a business today. The UK is one of the best, cheapest and quickest places in the world to start a business. If you’ve been thinking about it for ages, you’ve read the books, done the courses… then maybe now is the time to ‘do’ it? Follow those seven simple steps and you could be up and running in no time:
- Contact HMRC to tell them you’re becoming self-employed and get the right starter pack for you. You can do this all online, or phone, and it will get you started as a sole-trader (for other legal structures see ‘part two’ below). We’d also recommend signing up for HMRC’s free local workshops which will give you straightforward practical advice on record-keeping, filling in and filing your tax return – and what to do if you take someone on.
- Assess any insurance cover you may need. Use the Business Link insurance tool to check insurance your business must have. Shop around for the best deal. Specialist brokers can be great for niche businesses and Trade Associations often arrange big discounts for their members.
- Choose a business name. Search Google and Companies House to see if the name you want is available. If you can’t decide, go with your own name for now – eg. Jane Blogs Cakes – but don’t invest in printing and brand materials until you’re sure. Buy the website domain name as soon as you’re fixed.
- Set up a business bank account if you are setting up a Company. This is optional if you are operating as a sole trader – but you must keep clear accounts.
- Do a compliance check on your business, to ensure that you satisfy all regulatory issues eg. health & safety, licensing, data protection. This only takes 5 minutes and is straightforward for most start-ups.
- Appoint an accountant or set-up your own simple book-keeping system. As a minimum keep records on all sales and costs.
- Sort out your work space. Your Local Authority/ Council should be able to provide information about business premises and rates in your area. If working from home, make sure you understand:
- how to include a percentage of household bills as business costs;
- possible Capital Gains tax implications if you are using one particular room/area in the house for business (best avoided by using parts of rooms);
- planning permission – if you expect regular business visitors or to employ someone who’ll be working from your home, ask your local authority planning department for advice.;
- if you rent, check your lease to see that home-working is allowed.
Maybe a little bit of a push, but you could certainly do most and maybe even all of that, in one day.
Part Two – Starting with firm foundations
So getting started isn’t all that difficult and needn’t take long at all. But, of course, you are much more likely to be successful if you start with firm foundations:
- Decide on the best legal structure for your business. For most this is a choice between being a sole trader and a limited company. However if you are setting up a social enterprise there’s more to consider.
- Write a business plan, including a marketing and sales strategy and financials. This is vital if you need to raise finance. It’s important regardless and should be a living document, regularly reviewed and updated. A good template is available from HSBC. If the thought of putting together a business plan makes your skin creep, then check out the visual and creative business plan approach in the Right brain business plan book.The Right-Brain Business Plan: A Creative, Visual Map for Success
- As part of the business plan, start a Cash flow forecast and update it with actual achievements very regularly. A simple spreadsheet is usually adequate. Even if you need a book-keeper to do this, do make sure that you personally understand it and review it very regularly.
- Keep costs as low as possible until your business model is established and you are making good sales. (5/6 businesses fail in the first year).
- Get your business kit in order, including IT equipment and furniture. Beg, borrow and shop around!
- Organise communications, including phones, email and any relevant social networking presence and updates.
- Get your business image in order. Develop a brand identity, set-up a website and order business cards and stationery.
- Get your support in order. Assess your own skills and identify how you’ll fill the gaps. Don’t employ others until you really must. Lots of small businesses start by sub-contracting or collaborating with other freelancers or small businesses.
Most importantly make sure you have someone you can talk to regularly about your business. There will be high days and also days when things go wrong and your motivation slumps. So find a good mentor, a business adviser, or others in the same position as you, who you can share those successes and challenges with.
A really good starting list… I’d also like to see market research have a point all of its own (rather than included only as part of the business plan). So many start-ups put their time and effort into doing any or all of the above items without ever having done some serious market research. When anyone asks me whether they should start, I always say, ”Are you *sure* that people want to buy what you have to sell… for a price that will give you a comfortable profit? And I don’t just mean asking your mum and your friends…”
Starting a business without a clear idea of whether anyone will buy what you want to sell is a recipe for disaster.