01 Dec How to set up a small business and is it right for you?
How to set up a small business and is it right for you?
It can be the most exciting and rewarding experience setting up your own business.You’ll be your own boss, doing what YOU want to do, when you’d like and how you’d like.But it can also be extremely challenging, dauting, scary and overwhelming at the same time.
We’ve been there, and the road is not often easy!There will be lots of mountains ahead to climb, lots of lessons learnt and of hopefully lots of extreme highs to as you begin to see all your hard work pay off.
But where to start?
We thought we’d provide you with a little step-by-step guide on where and how to start.
The actual process of setting up your business is surprisingly quick, cheap and easy, but of course the rest is often not!
Follow these simple steps and then the challenging work begins!
Step 1. Let HMRC know
You can now do this all online (or by phone if you prefer)
Get the right starter pack for you. You can do this all online, or by phone, and it will get you started.
We’d also recommend completing HMRC’s free online training 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.
Step 2. Sort out insurance cover
Do not take this step lightly, insurance can protect you and your business against risks including accidents, sickness, theft and legal fees. The cover you need will depend on the nature of the business and how you run it.Specialist brokers can be great for niche businesses.
Step 3. Choose a business name (the fun part!)
Search Google and Companies House to see if the name you want is available.
Step 4. Set-up a business bank account
You need a business bank account if you set up a company, as it is a separate legal entity to you. It’s not strictly required if you are a sole trader (though it’s usually recommended) – but you must keep very clear accounts.
Step 5. Get compliant
Make sure that you satisfy all regulatory issues e.g. health & safety, licensing, data protection.
Gov.uk has some great tools to take you through this. This only takes a few minutes and is straightforward for most start-ups.
Step 6. Start accounting for everything
Appoint an accountant or set-up your own simple book-keeping system. As a minimum keep records of all sales and costs.
Step 7. Sort out your work space
Will you work from home or do you need to rent out an office space/shop/premises/storage?
Your Local Authority/ Council should be able to provide information about business premises and rates in your area. If working from home, before you shop for office equipment 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.
Step 8. Decide on the best legal structure for your business
For most this is a choice between being a sole trader and a limited company. There are differences between them that may have repercussions so research and choose wisely.
Step 9. Write a business plan
Where will you start?This plan needs to includea marketing and sales strategy and financials.
This document can be continually tweaked, reviewed and updated but It’s important that there is a strategy right from the beginning.
Step 10. Manage your cash flow
To begin with, a simple spreadsheet is usually adequate, but you need to stay on top of this right from the beginning.If you don’t feel confident then perhaps choose a bookkeeper or accountant to get you started.It’s much more difficult to track back if you don’t get sorted from day one.
Step 11. Keep costs as low as possible
Easier said than done sometimes but until your business is established and you are making good sales, keep your spending as tight as you possibly can. There’s a lot you can do with very little money.
Step 13. Organise communications
Make sure customers can find you by phone, email and on relevant social networks.
Step 14. Get your business brand and image in order
Develop a brand identity, logo, set-up a website and order business cards and stationery.
Step 15. 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.
It also vitally important to have people that you can chat with, bounce ideas off and, perhaps more importantly cry on their shoulder and crack open the bubbles when that first sale is made!