With all the uncertainty of the cost of living, and the average wage to remain uncoupled from the cost of living, there has been an increase in the number of people looking to start their own business. There are many ways to approach starting your own business, but it’s essential to consider; your business idea, how much time you have, the time it will need and the amount of money you want to put into it before making any decisions. To help take the guesswork out of the process, follow along to learn how to start a small business. As we all know, a dream remains a dream until action is taken. Here are some actions to take:
Before You Start:
Get your mindset right
The public often hears about overnight successes because they make for a great headline. However, it’s rarely that simple—they don’t see the years of dreaming, building and hard work that goes on behind the scenes.
Consistency and Discipline is key.
New entrepreneurs start by feeding off the initial enthusiasm but get frustrated when that doesn’t sustain. That is why it is essential that you create habits and build in the consistency through discipline. As they say: “motivation wanes, and discipline reigns”
Get your idea:
Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love reading and writing, but how viable is your business idea if you’re not a great author? Maybe you love making candles and want to open a candle shop in your small town that already has four close by—it won’t be easy to corner the market when you’re creating the same product in a market of incredible competition.
Remember to ask yourself three questions:
- What do you hate doing?
- What do you love doing?
- What would make these easier?
Once you have an idea, measure it against whether you’re good at it and if it’s profitable.
Your business idea doesn’t have to be the brand new – instead, you can take an existing product and improve upon it. This is called innovation.
Now, to get Started:
Know Your Competitors and Market
Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you and your business apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets (or even exotic pets!)
Who are you?
One of the best things about starting your own business is being able to choose a name for yourself. But, finding the right one is not as simple as you may think! It needs a little bit of thought to ensure you tick all the legality boxes and create the right impression.
If you have decided to register a limited company, you can search on Companies House to check your chosen name is available, if you are a sole trader or a partnership you will only need to register with HMRC. Your accountant can help with any forms that are necessary.
When choosing your company name, bear in mind that it will be the first impression of your business to all your potential clients. Your name should have the right tonality and convey the correct message – whether you want to portray professionalism or a fun, quirky personality, a well-chosen name will help you do this Ensure you use the same tonality across all contact points – email, website, social media etc. Consider if your name is easy to pronounce, spell and is easy for customers to remember. It is also worth checking if the obvious domain name is available if you will need a website.
Ensure you keep all documentation received from Companies House and HMRC as your accountant will need them!
Get a new bank account
If you have a limited company, it is a legal obligation to open a bank account in the company’s name. If you are a sole trader, we would highly recommend for you to set up a separate trading account as bank regulations will not allow you to use your personal bank account for business transactions.
Keeping your business and personal accounts separate, enables you to see all the components involved for managing business throughout the year and makes it easy to separate business and personal expenses. This will have a major impact on cash flow and analysis (see our upcoming blog for that one!)
Money’s tight when you first start-up. The last thing you want is to miss out on reclaiming expenses you incur as you start to build your business. Make sure you keep the receipts for any money you spend on startup costs as they are all tax deductible.
Start Planning for Taxes
One of the most important things to do when starting a small business is to start planning for taxes. Taxes can be complex, and there are several different types of taxes you may be liable for, including corporation tax, Value Added Tax, Income Tax and PAYE tax if you run a payroll. With this in mind, keep all of your receipts and evidence of expenses!
Money, Money, Money
What are your start-up costs? To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses, or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll, VAT, compliance and any other professional services you think will apply. Be as through as you can!
Businesses can take years to turn a profit, so it’s better to overestimate the start-up costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.
Get to know your community!
Book into a local networking event to meet other business owners in your area. This will help you start building a support network and maybe even get some new customers! Establishing great relationships with other like-minded businesspeople can provide a lifeline of support and business generation for a start-up or small business at any stage. Business networking is a great way to share your successes and mistakes with others and will play an important part in growing a sustainable business. We hold networking events semi-frequently – stay in touch or subscribe to our email to receive notifications!
Bottom Line
Starting a small business takes time, effort, and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.
Need someone to manage your accounts after starting a new business? Book a meeting or contact us today.