Starting a business may appear quite simple on the surface. However, the complexities of establishing and running a business can be both demanding and challenging. Establishing your business successfully requires an understanding of the market, buyer personas, pain points, unique selling points and the SMART objectives of your brand. There is also the matter of how you want your business to be organised administratively and financially.
What follows is a brief overview setting out how to set up your very own business in seven simple steps.
Organisation
There are three common forms of small business organisation - sole trader, partnership and limited company. Sole traders and partnerships have a quite similar format. The main difference between them is that the sole trader will be the sole owner of the business whereas a partnership involves two or more owners working in partnership. Sole traders and partnerships are taxed through self-assessment and they must prepare an HMRC self-assessment return, balance sheet and profit and loss account each year. With the automation of self-assessment comes a range of benefits. For example, HMRC's self-assessment includes a specialised calculator which helps the sole trader and members of a partnership to assess and record expenses. In addition, it calculates the amount of income tax owed on profits and Class 2 and Class 4 National Insurance contributions. HMRC offers a free online training programme that gives practical guidance on completing self-assessment tax returns and the discipline of record keeping.
The limited company differs from the other two forms in that it must be registered with Companies House. Also, this form of company organisation comes with certain rights and responsibilities. The owner(s) is not personally liable for losses or debts and they have limited liability for losses and insolvency, their personal assets being protected. There are also tax advantages to limited company status which can benefit the owners(s) financially. Limited companies must file annual accounts with Companies House.
Business insurance
Each workplace has its particular hazards and no one can anticipate when sickness or accidents might strike, costing time and resources. Business insurance is a necessary defence to protect business owners from loss, fraud and legal fees. When purchasing business insurance it pays to shop around using price comparison sites and to seek advice from people you know who run their own successful businesses. This approach can help ensure that a measured and robust decision is arrived at. The AXA business insurance quote wizard is also a useful tool for sourcing quality insurance cover.
What’s in a name?
Deciding on a brand name must be given careful consideration when establishing your business. A business name that people comprehend and identify and connect with will communicate confidence and innovation, firmly establishing the company in their minds. In addition, brand names should convey a positive message. Two syllable words are most memorable and seven letters or less in a title are ideal. When it comes to establishing a website for a company, available domain names that might resonate with consumers should be sought. Several effective software products exist to help a business owner to identify an appropriate name for their business; Shopify business name generator, Oberlo, Webhostinggeeks and Name Mesh are all great places to begin. Once you've decided on a name for your company, check that the name is available on the Companies House Website.
Set up a business account
Opening a business bank account is an important step in establishing a brand new business. Shop around to discover the bank and accounts that suit you and your business most. Keep your personal bank account entirely separate from your business account and never mix the two. This will help you to track your business profits and expenses accurately. Limited companies and limited liability partnerships are legally obliged to have a business bank account. This is because both are separate legal entities from you as an individual.
As your business matures and thrives, it can be time-efficient and cost-effective to source and employ an accountant or to set up bookkeeping software to keep on top of your sales and expenses, recording all of these in your account accurately.
Policies and procedures
Research all relevant regulatory issues related to our business, such as health & safety, licensing, data protection etc. Become familiar with all policies and standards. Gov.UK provides advice and information on all of the essential details startups need to understand for conducting safe and legal operations.
Your workplace
Organise a workspace that is best suited to your style and the needs of your business objectives and processes.
Working from home has become an increasingly popular choice for both self-employed and remote working teams during the Pandemic. The use of space in your home to work in can be claimed as a business expense along with the associated household bills.
If your premises are rented, ensure home working is allowed in your rental agreement. Your local council can provide information about what business rates you would be liable for in working from home. If running your business from home means that the use of your premises changes fundamentally or that business proceedings impact the area where you live, you may need to apply for planning permission from your local council.
Create a brand identity
Research your audience value proposition and competition, so that you are informed and aware of your buyer characteristics and requirements. Next up, design a logo, either commissioning a design agency or a platform such a Canva to conceptualise marketing materials and social media assets. Finally, create a brand language dictionary conveyed across the team, used to post on social media, discuss the product or service with clients, and conceptualise advertising assets.
Establish a business plan
There are at least seven fundamental sections within a sound business plan.
Company Description and Mission Statement. These should give a clear idea of what your business does, it does it and the market segment it is aimed at.
Market analysis
This section describes your target audience in terms of its demographic, segmented by size, age, sex, geographic location and sociology-economic status. The preferences of your target audience should also be assessed. The analysis also assesses the competition and how you can differentiate your product from that of your competitors in positive ways. The barriers to entry for new competitors also need to be assessed with an evaluation of how significant they are. A good business plan will include all of these considerations and others specific to your business. An analysis of the information generated through its development will be invaluable in helping you to appeal to your audience on many levels including quality, price, follow up, customer support and much more.
Organisation and management
Be organised about how your workforce is structured, arranging speciality and function in an orderly fashion. Some of this is subject to trial and error, so be open-minded about adjusting elements of your organisation as you proceed to ensure that your organisation remains fit for purpose and relevant.
Service or product line
This section highlights your brand values, why the market needs your product and how it will compete effectively with other businesses selling the same or similar products and services.
Marketing and sales plans
Use this section to identify your business's target market and how you plan to create strategies for reaching the customers which constitute your market. Your Sales Plans detail the strategies your business will adopt to sell its products and services and how it will optimise revenue.
Funding requests
Your business may need capital to start up and commence operations. You must identify potential sources of business funding and select a shortlist of those lenders which look most likely to fulfil your needs. Your long list will include a range of potential funding sources including traditional banks, private investors, angel investors and venture capitalists.
Financial projections. The financial section of your business plan should include a sales forecast, expenses budget, cash flow statement, balance sheet, and a profit and loss statement.
Organise cash flow
By forecasting the business cash flow, profits and losses are easier to track and chart in relative terms. Spreadsheets help business owners to visualise the highs and lows of financial trends. Even if you require an accountant to do this, ensure you fully understand their outputs and ensure you get an updated profits review on a regular basis. Until your business model is established and your sales volumes are rising healthily, keep your spending as tight as possible. You can achieve a great deal with ambition and a modest amount of money.
