Starting and running a business in the UK
If you’re thinking of starting a business the first and obvious thing you need to do is come up with a business idea that will enable you to provide a service or sell products that people will be willing to pay for. Before you begin to set up the business you should test your idea first to find out if you’re meeting a real customer need. If its a product or range of products that youre going to sell then first figure out the cheapest and quickest way of getting it into the marketplace. No matter if you’re buying and reselling stock, manufacturing a product yourself or providing a local or national service, it pays to test the idea thoroughly and get some feedback.
Try out your business idea with potential customers to see if there’s a real demand for what your business is offering. By doing this you may be able to identify any problems and fix them before you waste too much time or money on something that may not work. If you can provide a product or service that targets a specific group of customers who are not already being catered for, it makes it easier to succeed if the demand proves to be strong. If you come up with a product of your own that solves a problem for a large group of people then you could be on to a real winner.
After seeing the results, ask yourself are you going to make enough money from the financial investment and time and effort you will need to put into starting and running the business? Are you up against some stiff competition? Can you provide a better service or product that is already available?
With certain types of goods you could see whether they will sell successfully by advertising on ebay and selling them by mail order. Alternatively, if you’re starting a retail business where there is a lot of passing trade, then think about testing your idea by taking a short-term lease where suitable premises are available and try out your business idea for a few weeks or months where you can afford to. If selling seasonal goods then think carefully about what is the best time of year to start your business. Some businesses rely on making most of their profits during the weeks leading up to Christmas, while others do better during the Summer months. You could also try different opening hours or provide a home delivery service.
Once you’re satisfied that the business is going to work, then it’s a good idea to write a business plan, especially if you’re going to require more funding to see you through the early stages and until your business shows a healthy profit. A business plan is a good way to sum up: how you will meet the needs of the customer and how you will turn a profit. It should also clearly show the results of your customer research and how you will turn your idea into a viable business before you invest a lot of money. A good business plan will help you convince potential partners and sources of funding about the value of your business.
Whether you set up as a sole trader, partnership or limited company, your business may require you working with a variety of people to develop and sell your idea. These may include business partners, suppliers and distributors. For example,if you want to run a service that uses a particular skill or talent you may have, but don’t have any previous experience of running a business, you may prefer to work with someone who has the business and management skills your company needs, such as financial planning and recruitment, while you can concentrate on using the skills that you possess. This way you may find that running a business will be much more satisfying and less stressful.
A lot of new start-up businesses start out with just one person, known as a ‘sole trader’. Being a sole trader you’ll be classed as self-employed, which means you’ll be your own boss. It also means that you will need to manage your own time and more than likely have to look after the business admin and accounts, unless you can afford to employ someone.
In business you will need to find suitable suppliers, whether you’re making a product need to source raw materials, or simply find someone who can provide the supplies and equipment to run your service. In nearly all cases most businesses need to rely on other businesses to provide the resources you need.
As you start to develop relationships you will get a sense of which suppliers you prefer to deal with. To begin with you can do some research by searching online to find contacts. Better still, you might find that talking to other businesses may help you discover which suppliers are reliable and trustworthy to deal with. By drawing up a list of potential suppliers you can then set about getting estimates and approach them to negotiate prices and agree on payment terms including what your ‘trade credit’ period will be and whether they can offer you discounts for buying in bulk or quick settlement of payments.
If you’re starting a business which involves selling a product or a range of products in shops and other retail establishments and you plan to expand outside of your local area then you’ll need to work with a distributor. In addition, if you plan to sell overseas then you will also need to consider working with a freight forwarder who can deal with exporting your goods.
Expansion into other areas can greatly be enhanced by having a website for your business. Online retailing is growing all the time and many businesses in the retail sector which need to sell in all parts of the country are finding that the best way to compete is by having an online presence. An eCommerce site can be expensive to set up but thankfully it is getting easier and prices are more reasonable than they were a few years ago. However setting up a website is only one part of the equation, advertising and getting enough visitors to your site is also part of it. Having little or no traffic to your website is like having a shop in the middle of nowhere.
Again, it’s best to talk with other businesses who have done this successfully and find out who are the most suitable web design and development companies are to work with, and which ones can give you the best advice or service to help you get the customers you need.
If you’re running a service business you may also be able to sell your services through your website and you should find that a website built for most types of service business will be more like a colour brochure describing what your service is and information about your company. These type of websites are much less costly to set up, but you will still be faced with the problem of getting visitors to your site so offline advertising can be useful, as well as online advertising and the use of social media to help spread the word online.
Funding your business
Most types of business need a certain amount of capital or funding to help them get off the ground. If have a rich relative or some other suitable source of funding that’s fine. But you may have to look elsewhere to find alternative sources of funding to help with the costs of starting up your business.
Some of the options you may have include bank loans and government help schemes. If you can convince your bank manager that there’s a market for your idea, then a bank may be your first choice. Of course, you will need to give the bank realistic cash flow forecasts to prove that you’ll be able to pay back the loan with interest. The bank also might require you to provide security against your loan, such as your house or your car, in case you don’t repay. You should think carefully about how much financial risk you’re willing to take on before you get a loan or give any personal guarantees.
Another option is that you may be able to get financial help from a government-backed support scheme. If you need some initial funding to test and develop your business idea this could be a good way to go. Or if you’re currently unemployed you might be able to get support and financial help from Jobcentre Plus. Try contacting their business support helpline in your area for help and advice on starting or growing your business.
Employing people and other considerations
If you need extra help or people with specific skills to run your business you might decide to take on one or more employees. If so, you will need to learn about your legal responsibilities as an employer, including such things like pay, tax and insurance. Whenever possible, familiarise your self with these requirements before you start employing staff. As an employer you will need to register with HMRC even if you’re a sole trader with only one employee.
Even if you’re not employing people, you’ll most likely need to get insurance for your business such as public liability insurance or employers insurance. To find an authorised insurer check out the British Insurance Brokers’ Association (BIBA) website.
You may also possibly need certain types of licence or permits to operate your business legally, depending on the activities your business is involved in. Consider getting legal advice when setting up your business. A solicitor may also be also be required in helping you in other aspects of your business too.
Unless you are competent at keeping your own accounts you will aslo need an accountant. Keeping accurate accounts of your business financial activities is essential for submitting your accounts for taxation purposes. A good accountant can help with things like financial advice and managing growth. You can also appoint them as an ‘agent’ to deal with your tax affairs, including submitting your VAT returns and dealing with HM Revenue and Customs (HMRC) on your behalf.
When working with accountant and legal advisers make sure you get an estimate for any work they will do for you. Some advisers will charge an hourly fee, and others may offer a fixed price for a piece of work. It’s always worth getting several quotes before you decide who to use, so you can compare prices and make sure you’ll be able to work together okay.
Chartered accountants are fully-qualified members of a professional body. These include…
Association of Chartered Certified Accountants (ACCA)
Institute of Chartered Accountants in England and Wales (ICAEW)
Institute of Chartered Accountants of Scotland (ICAS)
To learn more about starting and running a business, check out the articles listed below for further helpful advice.