Many people dream of running their own business. More commonly people are finding themselves redundant with the capital and time as resources behind them to finally recognise that dream. Others start up because they want to freedom and financial reward of being in charge.
Things to consider in the beginning
You need a lot of enthusiasm, determination and the ability to put in the long hours required to start the business.
If you don't have the managerial, financial, technical or marketing skills to start-up with there are many businesses out there designed specifically to help you.
Get into the right frame of mind
Every entrepreneur struggles at some point, usually at the beginning of the journey. Are you the right kind of person to work for yourself? Think about whether you can give up your spare time to work the long hours required. Are you good with criticism? Does the lack of certain financial income every month give you too much cause for concern? Would you quite if it became a struggle in the early stages? All of these questions need a lot of thought before taking the plunge.
Research, research research!
Find out as much as you can about the market you are going into, with a specific focus on your potential competitors. It’s a good idea to talk to potential customers, competitors, distributors and suppliers to get a feel for what you are getting yourself into and the obstacles other people in the market face. That way you can plan how to overcome barriers before you have even begun.
Be aware of your weaknesses
Think about what you are good at and where you might need help. It’s unlikely you will be strong in every area of the business so think about who you could ask to help you with those areas.
Business Plans are key - see our listing on how to develop your own.
The four main types to look at when starting up are Sole Trader, which doesnt require legal formality to start trading.
Partnership - this is similar to a sole trader but with more than one person involved.
The third option is a company. This means the business affairs and personal affairs are completely separate, but there are more lagal restrictions that the company owner(s) must comply with. Finally, a social enterprise which is becoming increasingly popular.
There are minimum requirements for the information which needs to be on certain stationery such as letterheads and email footers. This will depend on the business structure but a company registration number is often required.
Books and records
All companies regardless of their structure need to keep records. This should contain information such as payments, receipts, credit purchases, sale, assets and liabilities.
The books and records will produce your annual accounts. These are legally required by HMRC. For help with thise see our section on What you need to provide the HMRC and tax, covering Taxation on profits, National Insurance and VAT.
If you employ staff you will need to deduct income tax and national insurance, also student loans if applicable. This should all be then transfered to HMRC. Make sure you are familiar with employment law.
When choosing a home for your business you should consider the following:
- Suitability for its purpose
- Complaince with legal regulations
- Local by-laws
- Physical restrictions such as access
- Flexibility terms, i.e. how quickly can you move in and out of the building if required. Think about a workspace provider that will allow you to change the size of your office depending on how successful your business is without penalty.
It is a legal requirement for business vehicles to have comprehensive insurance and you will also ned employers liability insurance. There are other types of insurance which you may want to look at depending on the nature of your business such as public liability, consequential loss, business assets, Keyman and bad debts.
Pension schemes are a great way of saving for retirement due to favourable tax rulings. All UK employers are now required to automatically enrol all employees in a pension scheme and make contributions on their behalf.