Are you dreaming of starting your own business? Has COVID/lockdown made you re-think your options and want to be your own boss?
Going it alone is a very exciting time, but it can also be hard to know where to start.
Here’s a six-step guide to starting your very own successful business:
Get Clear on an Idea for Your Business
You might already know exactly what you want your business to do, but maybe you simply have the drive to be your own boss without yet having a specific idea in mind.
If you already have an idea, that’s great – skip to the next step. If you haven’t got an idea yet, don’t worry.
To think of ideas for a new business, consider the following:
- What are you good at and what do you like doing? Are you great at something that other people struggle to do? Do you have a hobby you can turn into a business?
- What is there a demand for? What’s missing from your local area or the sector you currently work in? Can you spot a gap in the market or a golden opportunity?
- How much can you afford to invest in your new start-up? Be realistic about how much money you can put in to get the business off the ground.
Research the Potential Demand for Your Business Idea
A great business idea is just an idea until you have paying customers, so make sure there’s demand for your service or product before you get carried away.
Don’t panic, it’s not as complicated as it sounds. In summary, you’ll need to know who you want to sell to, whether those people are likely to buy and whether they’ll be able to pay.
There’s plenty of useful information online. Spend some time researching & determining the following:
- The size of your target market
- How many people within your market who are likely to become customers?
- How much your potential customers will be willing to pay?
- Who your competitors are
- The strengths, weaknesses, opportunities, and threats for your business (known as SWOT analysis)
These insights will help you plan effectively for the future and write a strong business plan.
Write a Business Plan
The idea of writing a business plan (especially when you’re in the early stages of your business journey) can seem very daunting. But it doesn’t need to! Your business plan simply describes how you intend to run your business.
A solid business plan is especially essential if you think you’ll need to find funding for the business (see next section).
When you start planning your business, think about the following questions:
- What? Are you selling products or services? Why will people want to buy them? What is your unique selling proposition (USP)? What will you be able to charge?
- Where? Where will you promote and sell your product or service? Will you promote your business online but sell from a physical shop? Will you do everything online? Will you need office space or a warehouse?
- How? What will your day-to-day operations look like? What are your processes for stimulating demand, processing orders and fulfilling them? Will you need third parties such as suppliers or distributors? How will you fund everything until you start turning a profit?
- Who? What staff will you need to run your business? What management structure do you need? What skills do your staff need to have? How will you recruit, retain and train them? How much will staff cost?
- When? Think about a realistic timeline to arrange everything you need to launch your business successfully. For example, finding premises, recruiting staff, manufacturing or sourcing products, building a website.
Explore Funding Options
If you think that you will need funding to get your start-up off the ground, there are a number of ways to fund a new business, from traditional business loans and specialist government-backed Start Up Loans to angel investors and crowdfunding.
If you need an injection of cash to help fund your business, you’ll need a strong business plan to share with potential lenders or funders.
Do remember though that not all businesses will require thousand of pounds to start & it’s okay to start small. This might mean that you will be able to fund your start-up from your own pocket, known as bootstrapping.
Register Your Business
You’ll need to decide on a legal structure for your business and register it with the relevant authorities. In the UK, most businesses are registered as one of the following:
This is the simplest business structure. You pay personal tax on your earnings through a Self-Assessment tax return and need to register only with HMRC, not Companies House. However, you need to be aware that if things go wrong with the business, debtors can pursue you personally for anything you owe.
This is a more complicated business structure than a sole trader but it does provides more protection if your business fails, as debtors can’t pursue you personally. You pay corporation tax on profits and personal tax on any money you take out of the business. You’ll need to register with HMRC and Companies House within three months of starting trading. Or get in touch with us here at Dead Simple Accounting and we could do this for you.
A partnership is when you run a business with another person. It’s like being a sole trader but you’re sharing the business with someone else. You will need to register with HMRC and complete a partnership tax return as well as a Self-Assessment tax return.
Limited Liability Partnership (LLP)
‘Limited liability’ refers to the fact that this structure is a separate legal entity that protects the partners’ own assets if the business is sued. An LLP is treated the same as a partnership for tax purposes, plus it must register with Companies House and file accounts every year.
Stay On Top of the Essential Admin
There’s a certain amount of admin that’s needed when running your own business. Whether you decide to manage the admin yourself or outsource it to an administrator/PA, its important to stay on top of it to save a lot of stress at the end of the tax year! Here are some things to be aware of are:
Keeping tax records
You’ll need to keep records in order to pay the correct amount of tax, so make sure you record all your income and expenditure. There’s plenty of accounting softwares that are quick & easy to use, and Dead Simple Accounting can help you to decide which of these softwares would be best for your business.
Keeping VAT records
If you’re registered for VAT (you have to if your income is over £85,000 for the year), you’ll need to keep VAT records too, to work out how much you owe HMRC (or whether you’re eligible for a rebate). You have to submit VAT returns every three months. Again, here at Dead Simple Accounting we can help you with your VAT records as well as the quarterly VAT returns.
To protect yourself, your employees, your customers and your staff, you should have adequate insurance. Types of business insurance include:
- Public liability insurance: to protect you from claims from the public
- Employer’s liability insurance: to protect you from claims from your staff
- Professional indemnity insurance: to protect yourself if you make a mistake
- Income protection insurance: to protect you if you can’t earn due to illness
You also need relevant insurance for any assets in your business:
- Building and contents insurance
- Stock insurance
- Vehicle insurance
- Home-based business insurance
So now you know the basics of how to launch a new business, it’s over to you! But if you’re feeling you need a bit more help along the way, then get in touch with Dead Simple Accounting to find out how we can help support you & your brand new start-up!