Many small businesses will typically make mistakes, particularly in the first couple of years of operation, but with the correct advice these can be overcome. Carrying out market research and setting out a three-year plan are two of the most important things any company should do before they start trading.
1. Getting the right advice
If you have a new business, but don’t understand your cash flow, it could be your downfall. If your company is subject to UK corporation tax then you may be able to claim Research & Development R&D tax relief or credits from the HMRC. Using Innovation Plus will allow you to claim the R&D tax benefits that are rightfully yours.
2. Business plans
Starting up your own company is not as simple as it sounds. Before you start getting your stock ready or printing leaflets you should make a complete business plan. These are vital if you are trying to get a loan or help from investors.
3. Start-ups are on the increase
According to the Guardian 581,173 new businesses were started in 2014. Many of these will be successful, but equally many will fail due to lack of advice regarding loans and the general running of their finances.
4. Over spending
This article by the famous entrepreneur, James Caan, includes a quote asking: ‘Is my idea really a viable business?’ Too many people concentrate on spending money on their idea and forget about the daily running of their company.
5. Hiring staff
Starting up an SME (Small Medium Enterprise) may seem like a good idea, but you will have to work harder than ever before. Hiring too many staff will not only be a drain on your cash flow, but will also make the bookwork more complicated and expensive. Remember that you will have to file online PAYE returns to HMRC.
6. Risk management
Once your plans are in place you should always sit down and think of the worst that could happen to you and your business. Ensure you have the correct tools and equipment and enough stock to cover any large orders. Also what will you do if you are taken ill?
Having the correct insurance is one of the most important expenditures you will have to make. Protecting your stock and staff are just as important as public liability cover. If you lose your goods or someone is injured you could lose everything.
Not having enough capital when you first start your business could mean that you end up borrowing from your savings or even worse, re-mortgaging your home. If you have enough cash at the beginning you should survive.
9. Not re-investing
Once you have been trading for a while and you start to see money flowing into your bank, you should ensure that you re-invest money for the future. There will be times when business is slow so building up a cushion will help.
10.Don’t take too many risks
Setting up and running your own business is a risk in itself, but too many people take chances when it’s not needed. If you want to expand do it slowly and gradually. Setting up a new company could be the best thing you’ve ever done!