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Starting a new business can seem daunting, but research   based on Companies House data shows an extra 85,758 new businesses were expected to have been created in 2020 compared to 2019. The trend shows a 12% year on year increase in new business registration. This is in part attributed to the high rate of redundancies due to Covid-19 in 2020 leading to many people setting up on their own.   

Starting A Business

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Got A Great Idea?

Starting your own business is both challenging and rewarding.  Your idea doesn’t have to be complicated, in fact many successful businesses were built on a very simple idea – McDonalds started with the concept of selling burgers for half the price and in half the time of competing restaurants by using a counter service rather than employing waiters/waitresses.  The McDonald brothers didn’t invent the burger - they spotted an opportunity to deliver it in a new way.

New products and services are launched every year that improve or meet a need.  Before you start a business, it is important to be clear about why you are doing it and if running a business will achieve your goal.

 

There may be one driving reason why you want to start up on your own or it may be a combination of reasons:

  • You have a great idea

  • Identified a gap in the market due to lack of competition

  • New market created due to changing technology or social habits

  • Redundancy

  • Need/want to work closer to home

  • Feeling underappreciated at work

  • Want to earn more money

  • Want to convert your hobby into a business

 

Starting a business can appear overwhelming, there are a number of legal requirements to comply with and a great deal to learn in short space of time.  At Styles & Associates we can help register your new business and ensure you are compliant. Please use our resources as a guide to help get you started.

How To Start A Business.

Identify Business Opportunity

Is there a need for your product or service?

There is more to a good business than a good idea. Once you have identified a business opportunity you need to carry out some preliminary research to check if your idea is viable before you embark on creating a business plan.  You may think you have a great idea, but will it appeal to anyone else – is it a viable business?

Firstly, you need to identify your target market, then you need to use focus groups and meet up with local business networking groups to test your ideas.  Researching and discussing your ideas will help hone your proposition to meet the needs of your target market and will tell you if there's an opportunity to turn your idea into a profitable business.  Research will help gather information about potential customers, analyse the market and identify a competitive advantage for your business.

You will also need to consider if your personal goals and drive are compatible with your business. Do you plan to run your business to suit your life (lifestyle business) or do you wish to grow your business nationally or internationally?  When a business owner is passionate about their product or service they are more likely to succeed as they are more likely to spend time building a business they enjoy.  Consider carefully if you have the drive and passion to start and build a business.

Write A Business Plan

A business plan acts as a roadmap for marketing, financial and operational objectives. Writing a business plan is often overlooked but can be key document to help keep you focused on priorities and will also assist in getting funded - investors want to feel confident their investment is safe and there is a potential opportunity to see a return.

Using a business plan can help identify everything you need to do to start and run your business breaking it down into manageable pieces by providing a structured way to organise your ideas, define your goals and plan your finances.  

Your plan will formalise your: business goals, your plans to attain your goals and a time frame in which to reach your goals. Your business plan can be a simple one-page document or an in-depth multi page document depending on your resources.  Most business plans should include:

  • Executive Summary.

  • Objectives

  • Market Analysis. (Competitor Analysis, Target Market, Location)

  • Proposition/USP

  • Service or Products. (Suppliers, Cost, Payment Terms, Pricing Strategy, Production Lead Times, Storage, Shipping)

  • Sales & Marketing . (How will you reach your target market?)

  • Organization & Management. (Business Status e.g. Sole Trader or Limited Company, will you use outsourced services/freelances/contractors)

  • Financial Projections. (Sales & Costs Forecasts)

  • Funding. (Self-funded, Grants, Loans, Investment)

Sales Forecast

Your sales forecast is the foundation of your financial planning – with a sales forecast, you will be able to create your profit and loss statement, cash flow statement, and balance sheet.  However, forecasting sales for a new business is extremely difficult. To be as accurate as possible you should constantly review your projected sales with actual sales and adjust your forecast accordingly. Your sales forecast will also help guide your budget planning and you can use it to help assess what you should spend on marketing, operations, and administration.

You will need to consider the following in your sales forecast:

  • Price – How will you position your pricing in comparison to competitors.

  • Volume - is your product or service high volume, is your product or service affected by seasonal changes or holidays.

To forecast your sales, multiply the price of your product of service by the volume you predict to sell per month.

Budget

There are several start-up costs to consider when launching a new business:

  • Premises: rent, rates, utilities, refurbishment

  • Machinery: For production, movement, storage or service provision

  • Products: R&D, stock, packaging, storage.

  • Sales & marketing: branding, digital advertising, print advertising, networking events, trade shows, signage

  • Travel expenses: visit suppliers, trade shows, potential clients

  • Professional Fees: insurance, accountancy, bookkeeping, payroll, pension provision

  • Salary: what will you need to pay yourself every month cover your personal expenses? Will you employ other people?

In the first year if you can reach your target market without huge investment you will strengthen your financial position and have an opportunity to test the viability of your product or service.

 

"Reduce financial risk by validating your business idea first. For example, you could open a pop-up store first, instead of paying for the fit-out of a retail store.”

Meryl Johnston, Bean Ninjas

Consider the benefits of test trading – For Ecommerce businesses instead of investing in a new website could you use a marketplace platform like Etsy to test out your products first?  Marketplace platforms charge a commission based on a percentage of your sale but will also avoid the risk of investing time and money on creating a new website and they have the added benefit of a large ready made audience.

Many businesses fail in the first year due to a lack of working capital – you may know your running costs but without investing in marketing you will be unable to generate sales, and without sales you have no working capital to pay your suppliers, staff, overheads or professional fees.  You must establish a realistic budget for company operations and see where you can keep costs minimal without compromising your sale.  If you need to invest in products or raw materials you need to weigh up the options of bulk buying to benefit from a more competitive prices but tie up capital in stock, or keeping stock to a minimum, paying a higher price and leaving more capital in the business.

Finance

You have a great idea, you have researched your market, you have identified your customers, but how do you get your business up and running?

Without the finances your great idea might never be able to launch.

There are a number of ways to finance the launch of your business and the ability to finance your idea may come down to a great business plan and a network of contacts.

  • Personal Savings

  • Business Overdrafts

  • Business Loan

  • Government Backed Start Up Loans

  • Asset Finance

  • Crowdfunding

  • Small Business Grants

  • Private Investors

  • Invoice finance

  • Friends & Family

Financial needs for start-ups can vary greatly from business to business – a manufacturing business may need to invest in premises, materials and machinery before starting to trade. Whereas other business may require minimal outlay (such as consultancy businesses or virtual services). Whatever your business structure is it is vital to account for every cost when starting a new business to ensure you manage your cash flow in the first 6-12 months of launch.

Business Structure – Sole Trader or Limited Company

When starting a new business you should decide to become either a Sole Trader or Limited Company. How you decide to register depends on your type of business, where you work and whether you need to employ people.

It isn’t always a clear-cut choice and can be influenced by your personal circumstances and risks within your industry.

 

  • Limited Companies have a wider range of allowances and tax-deductible costs they can claim against profits.

  • Limited Companies have more tax and financial obligations and have to complete: set of statutory year end accounts, a confirmation statement, and a corporation tax return.  Directors may also have to file a self assessment tax return.

  • Limited Companies have limited liability protection

  • Limited Companies can attract investment more easily

  • Limited Companies have a kudos of professionalism

  • Sole Traders are personally responsible for any losses a business makes.

  • Sole Traders have complete control over the business

  • Sole Traders can keep all profits after tax

  • Soles Traders can find it more difficult to attract investment.

  • Soles Traders have less paperwork – only having to complete a self-assessment

Read Our Guide to Decide Whether You should become a Sole Trader or Limited Company.

If you are unsure about whether to register as a Sole Trader or Limited Company get in touch with our experienced accountants to discuss whether to incorporate your business and how to get maximum profitability from your Limited Company, reduce your corporation tax bill and streamline your company's filings and accounts.

Register Your Business

If you have decided to structure your business as a Limited Company Styles & Associates can incorporate the business on your behalf, we will require:

  • Your company name (this must be unique)

  • Personal information (About you and your shareholders e.g.  town of birth, national insurance number, passport number, mother maiden name).

  • Registered office address You can choose your home address or your business address (if you have a separate trading address).

We can also register for Corporation Tax, VAT and PAYE (if applicable). If you appoint us as your accountant, we will deal with HMRC on your behalf.

Open A Business Bank Account

Whether you are a Sole Trader or Limited Company it is easier to keep your personal and business-related expenses separate with different bank accounts. Sole Traders are not legally required to have a separate account, but it will make easier to keep track of your expenses and sales if you do.

With a separate account you will be able to manage your salary, expenses, dividends and monitor your business's cash flow more easily which in turn will assist your future planning. A business bank account will also build your business credit rating which will help you to be able to borrow money, get a business credit card, and take card payments from customers.

Accounting Software

Whether you are a Sole Trader or Limited Company you will need to keep records – cloud-based accounting software will help you keep on top of your financial records, keep track of your expenses and sales, provide invoicing facilities and make submitting your tax records a more efficient process.

At Styles & Associates we work with HMRC compatible online accounting software. Whilst we are a Xero bronze partner, there are a number of accounting software options you can consider including:

  • Xero

  • QuickBooks

  • Sage

  • FreeAgent

  • Zoho Books

  • KashFlow

Find out more about the Governments ‘Making Tax Digital’ initiative for keeping business financial records.

Legal Responsibilities

Some industries have a set of legal responsibilities you are required to meet – ensure you have checked what your business will require:

  • Licences or permits (e.g. example to play music, sell food or to trade in the street)

  • Insurance

  • Selling goods online

  • Buying goods from abroad or selling goods abroad

  • Storing or using personal information

  • Health & Safety

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Start Your Business On The Right Foundations.

If you are starting a new business and want to ensure you get the best advice get in touch with Styles & Associates for a free no-obligation consultation.  We can provide a complete range of accountancy services at a fixed price and will tailor your service package so that you only pay what you require.

Book A Free Consultation.

Where did you hear about us?

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Our address:

Berkeley House, Amery Street, Alton, Hampshire, GU34 1HN.

Call us:

01420 541 554

Mon-Fri 9am-5pm

Starting A Business

Moving our business to Styles & Associates made savings for us on our accounting fees, corporation tax, and personal tax.

Gareth Wilding