It’s a real rush, starting a business. You feel energised, your head is brimming with ideas, and you just can’t wait to get started.
In fact, you’re so excited, you’re tempted to jump straight onto your social media platform of choice and announce your new venture to the world. Who knows, you might even land your first sale by the end of the day!
However, before you start chasing that first sale, there are a few essential things you can do right now that’ll make the start up phase go far more smoothly and ensure your business starts off on a stable footing.
Tick these 5 boxes and you’ll be well on your way to business success…
The 5 things you should do when starting a business
1. Refine your business idea
When it comes to your business idea, there are a couple of key things to consider.
Firstly, think about the potential longevity of your business. All going well, you’re going to be living and breathing your business idea for the foreseeable future; it’s going to require not just a considerable amount of your time and money, but a considerable amount of your headspace too.
Are you sure that you’ll be able to sustain your passion for what you’re selling, particularly during difficult periods?
Secondly, you need to be sure that you aren’t the only person who thinks your business idea is a good one. So do your market research!
Find out whether there really is a demand for what you’re selling. Talk to potential customers and ask them what they’d like to see in a product or service like the one you’re developing. Consider where there might be a significant gap in the market and how you might be able to fill it.
2. Choose your legal structure
As a business owner there are no tax implications for the first £1000 you make but beyond that you’ll have to register with HMRC and complete an annual self-assessment. You’ll also have to take care of your own National Insurance Contributions.
You can register with HMRC either as a sole trader or as a partnership (if you run your business with someone else) and we always recommend that you get your tax ducks in a row sooner rather than later.
Alternatively, you might want to think about forming a limited company, in which case you’ll need to register your business with Companies House and pay corporation tax, as well as file a company tax return.
Each legal structure has its benefits and drawbacks so it’s important to consider your current situation, as well as your future plans, before deciding whether registering as a sole trader, a partnership, or a limited company is right for you.
Other legal considerations
Beyond tax considerations, depending on the nature of your business, there may be other legalities to think about. For example, you might need a specific license to play music on your premises, or if you’re planning on selling food you’ve created at home, you’ll have to get in touch with the Food Standards Agency.
3. Buy business insurance
Again it’s important to take care of this sooner rather than later — ideally before you win your first customer.
There are several different types of insurance to consider, depending on how your business operates.
If you’re going to be welcoming customers to a physical premises or if you work with clients on their premises, public liability insurance is essential to cover you and your clients in the case of an accident. And if you’re planning to hire employees, employers’ liability insurance is a legal requirement.
For anyone offering professional services like business consultation and strategy or design, it’s worth securing professional indemnity insurance to cover you in the event that a client loses money as a result of your work together.
And since statutory sick pay may now be a thing of the past for you, it’s also a good idea to explore health cover that’s specifically tailored for business owners.
4. Create a business plan
When starting a business there is so much to think about it’s easy to become overwhelmed.
Creating a comprehensive business plan is an excellent way to help you clarify your future goals, your marketing plan, your sales forecasts, and your budget.
It’s also an essential document to have if you want to secure funding to get your business off the ground.
And don’t worry if you don’t know exactly where you want to be in five years’ time; your business plan isn’t a static document, it’s absolutely fine to make revisions and tweaks as your business evolves.
5. Secure funding for your business
Having worked on your business plan, you’ll now have a really good idea about how you’re going to fund the start-up phase of your business.
And it could be that you need very little in the way of capital to get going. Service-based business owners working from home may need nothing more than a laptop, insurance, and the price of web hosting.
However, for many business owners, start-up costs will be far higher, making self-funding impossible.
Here you have multiple options. Younger people can benefit from funding from organisations like the Princes Trust, while there are often small business grants available for those of you starting eco-friendly businesses or organisations that will benefit your local community. You might even want to look into crowdfunding options or angel investors.
Of course, it’s always worth considering a loan too. If you’re willing to secure any assets you might have — such as business property, machinery, or equipment — against a loan, you could look into the options for secured loans. If you’ve chosen to form a limited company, a secured loan protects you, as Company Director, from having to personally guarantee the funds and you’re likely to be offered a lower interest rate too.
Unsecured loans are another option for anyone who doesn’t have the assets to put up as collateral; the interest rates here are typically higher, and you’ll likely be asked to personally guarantee to repay the loan if the company defaults.
In all cases, be sure you’ve completed a comprehensive business plan before you get to this stage and talk to a trusted small business accountant to seek their expert advice on the risks and benefits of the available options.
We know it sounds like a lot to think about but by dedicating a little time now to covering your bases, you’re giving yourself the very best chance of creating a stable, sustainable, and successful business. And we can’t wait to see where it takes you!
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