Starting a business is one of the most exciting moments in your professional career. For many people, it represents a new beginning and an opportunity to be in control of your own life. But it’s not all a walk in the park. Nearly half of all businesses fail within the first year and many more fold in after.
Doing your research and preparing properly is vital if you’re going to make it past this first year. That’s why we wanted to put together a short blog on 10 of the most important things you need to do when starting your own business.
Choose your business structure wisely
Your business structure can have a huge impact on the tax you pay and how HMRC views your business. The three most common types are a Limited Company, Partnership, and Sole Trader. Each of these comes with their own advantages and disadvantages, but it’s crucial that you look at this before you start your business, so you know which one works best for your situation.
Read our detailed blog on choosing the right business structure for more information.
Create a Financial Plan
A financial plan helps you make decisions based on numbers. Ultimately, this is the key to the survival of your business. A solid financial plan allows you to maximise profits, create financial forecasts, and engage in tax planning strategies. It also allows you to monitor KPI’s and your overall business performance. Without a structured and detailed financial plan, you’ll lack the understanding you need to make the right decisions, which is why most businesses fail.
We discuss the importance of financial planning in more detail in this blog.
Find an accountant
Even if you want to sort out your own books and deal with your own finances, we still recommend that you find an accountant that understands your business. By doing so early, you can get advice without the added stress of finding a reliable accountant when you need them most. Don’t leave it till the last minute, as any good accountant will always be busy around key tax dates.
Furthermore, we recommend that you involve your accountant when creating your financial plan, as they will be able to help you with all your tax planning.
Set up a business bank account
It is important that you can separate your personal finances from your business finances. This also helps you invoice clients and customers while maintaining a professional appearance. Make sure to do some research into costs and rates, as this can vary significantly.
One popular option is PayPal, as setting up a business account is relatively straightforward, and you can integrate this with e-Commerce functionality on your website.
Business Insurance
Make sure you are covered in case of an emergency or accident, especially if you are working as a contractor (electrician, plumber, etc). Remember that as a sole trader, you are not a separate entity to your business, which means you are liable for any debts. This means that you essentially risk your home, personal assets and savings if something goes wrong with your business. As a result, Sole Traders should definitely make sure they arrange insurance in case something goes wrong.
Make a compliance checklist
This doesn’t just apply to tax regulations. You need to make sure you meet all the compliance standards that apply to your business.
For example, have you verified that you are complying with GDPR? Are there other industry regulations you need to comply with? Making a checklist means you can stay on top of everything and ask for professional advice wherever necessary.
Find a workspace
Whether this is a separate room in your house, a planned extension, or a coworking space, you need to make sure that you have a business address. Not only is it a prerequisite for all sorts of admin and compliance factors, like business bank accounts or registering your Limited Company, but it is also the place that you grow your business and service your clients.
Make sure to think about your unique business situation as well. If you run a design or marketing agency and you frequently meet clients to discuss briefs, then you may need a more professional and functional office space. If business credibility is an important decision factor for your clients or customers, then the ‘home office’ option might not be the most suitable for you.
Look at funding options & bursaries
This is especially relevant if you’re involved in a niche industry that is receiving a lot of subsidies or investments, like tech, financial companies, or social enterprises. Government grants could help increase cashflow within in your business, but there is obviously a lot of work involved in the process.
Being aware of them is a good start, though.
Come up with a Marketing Plan and Strategy
Now that you’ve gotten most of the compliance and technical elements out of the way you’ll need a marketing plan. This should outline your brand, sales channels, marketing strategy, logo’s, budgets (make sure to link this up with your financial plan), social media, paid advertising, marketing assets, and everything else.
Above all, you need a functional website that you can push visitors to. This should represent your business and allow you to attract new business. Don’t skimp on a good website, as poor online visibility can cause significant issues and often means potential customers will hesitate before buying.
Record Everything
Keep a note of everything you spend when you’re starting out, especially your expenses. Your accountant will help you understand which elements of your business are likely to cost you more (or less) when it comes to tax.
It can be easy to get caught up with all the work but staying organised is also vital. Especially when it comes to your finance, as HMRC can always go back years during an enquiry, or worse, a full-blown tax investigation.
Download our guides
If you need more information about starting up a business, then please visit our resource section for a full list of all our useful business guides.
