One positive of the lockdown is that it may have ignited people’s desire to get away from the daily grind and take control of their lives by opening their own business. In this article, we examine some practical issues to consider if you are thinking of going out on your own.
“What am I doing with my life?” That’s a question many people may have asked themselves during the lockdown, and for some, it has been the catalyst for taking the plunge to set up a new business.
The next question once this decision has been made is usually “What do I do next?”.
To help you answer this question, we have outlined below some guidance we have used to help countless start-ups over the years. This is by no means exhaustive, and much will depend on your particular circumstances.
1. What’s your unique selling point (USP)?
Make sure you are clear about what the main activity of the business is, plus any related side activities. Research the market for competitors, how big the potential market is, how price sensitive it is and what your competitors are charging. In particular, determine what you are offering that others are not, ie what the USP of your business is.
2. Prepare a business plan
A business plan should include a narrative of what your objectives are and specify:
- your break even figure
- direct and indirect costs
- recommended sales price
- gross profit
- cash flow
- other immediate requirements
Consider your objectives, how you can measure your achievements and how you can review your progress or otherwise on a consistent and ongoing basis. Remember just because you start small, it doesn’t mean you don’t have to assess your performance regularly.
Preparing a business plan will inevitably focus your mind on money and what funding you require. Do you have a supportive bank (or investors) willing to help you or sufficient finance in place to see you through, especially during the early period when you are establishing yourself?
4. Business structure
There are several different ways in which you can set up to trade, for example, self-employed, a sole trader, a partnership, a limited liability partnership (LLP) or limited company. It is important to understand the benefits and disadvantages of each and what your ongoing obligations will be depending on which you choose.
How are you planning to market your idea, and how much is it going to cost you? Have you factored in the cost of setting up a website (assuming one is necessary) or other means of reaching your potential customers? Putting together a marketing plan for at least the first three months is an excellent way to start.
6. Business records, VAT and taxation
Do you know what business records and accounts you need to keep and what is needed to comply with ongoing taxation obligations, such as VAT and PAYE (if relevant)? Consider whether you should sign up with an online accounting software provider such as Xero.
7. Licences, trade bodies and insurance
For some businesses, it is necessary to register with trade bodies and obtain special licenses. Do the required research into this right at the beginning so that there is no delay getting your new entity off the ground.
You may also need to arrange specialist insurance (although almost every business should have some business insurance cover).
8. Find a good accountant
You would expect us to say this, but this really is good advice. We can save you both time and money by helping steer you through the early days and avoid the pitfalls that trip up so many start-ups.
If you are thinking of setting up a new business, please contact us now to discuss how we can help.