Start Ups
Start ups
Is this your first time or have you done it before?
A start up can happen at any age. You might be earning some useful cash while continuing your education. Maybe you have always been an unhappy employee and dream of the day you could start your own business. Perhaps you have found an idea and a gap in the market and want to exploit it yourself. It could be that you have been made redundant and you have no choice. It could be any one or a combination of any of these. But here you are, at a critical moment in your journey.
When it comes to considering start-ups, you almost need to know everything about the tax system and have an encyclopaedic understanding of human nature. These are both huge topics. Most people just do it based upon limited knowledge, or can we say blissful ignorance.
Some will succeed but others will fall by the wayside, wondering why their plan did not work. The way that most first time start-ups work is that they get started and then hope to stay afloat long enough to learn everything that they needed to know at the outset. There is a better way. Use our experience.
Even if you have done it before, and have learnt a lot along the way, you will not know everything and it could be that you missed something in your previous business that could have helped you along the way. On the other hand, perhaps you could teach us a thing or two. You see, every day is a school day. Every day teaches us something new. That applied to all of us.
Let’s consider some of the factors that you need to consider when staring out on this journey of discovery.
Consider the 5 business essentials
Product or service – you need a product or service for which there is an adequate demand and people are willing to put their hands in their pockets and give you cash.
Marketing – how will you tell your potential target customers what you have to sell.
Sales – This is where you seal the deal and make the sale
Fulfilment, service delivery – If it is a product, how is it produced and delivered. If it is a service, how will you deliver that service
Financials/Profit – If, at the end of the day you cannot sell your product or service and make a sufficient profit to sustain the business and you, you do not have a business.
Who, What, When, How and Why
Who is going to be in this business and are they sharing in the rewards of are they just employees?
What value is your business going to bring to the market?
When will you start to procure, manufacture, deliver, collect payments?
How will your business operate? If you are selling goods, will you procure them or manufacture yourself? Will you need equipment, training, finance? If you are providing a service, who will deliver it? How will you ensure that the right service is delivered at the right standard? How will you monitor quality control?
Why does this business exist? The simple answer is to say that it exists to earn money, but it is much more than that. Here is a quote for you to consider:
Visionary companies are ideologically driven more than profit driven. Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself. Profit is like oxygen, food, water and blood for the body; they are not the point of life, but without them, there is no life.
James C. Collins and Jerry I. Porras
Planning your start up
The best time to talk to an accountant is when you first think about starting or buying your own business. The next best time is now. A little bit of time and money invested in timely advice could save you thousands of pounds and make the difference between success and failure, particularly if start-up funds are limited.
- Company, partnership, sole trader or other, which is best? It’s not all about the tax saved.
- Remuneration strategies, how will you be paid? – get this wrong and it can cost you thousands of pounds every year unnecessarily usually in National Insurance paid needlessly.
- How is the start-up financed? Working capital? It will take more than you think, do you have reserves?
- Will you have outside shareholders? Do you need to adjust your Articles of Association so they cannot sell their shares to your competitor? Do you need incentives to attract outside investors such as the Enterprise Investor Scheme?
- There’s a lot to think about in any start up situation. There may be no one perfect start up strategy but you need to find the one that suits you best. It may not be the best strategy in the long term, so you change it at an appropriate time.
- You have a lot to learn so when reaching for your goals, stand on the shoulders of people who have already done it. Use their experience and don’t repeat the mistakes they made. Talk to other people, everyone will try and help, so just ask what you need to know. You will learn so much in the first few years that when you look back at yourself, just starting out, you will not recognise yourself.
Starting out? Use this as the agenda for your next meeting.
- Evaluate business ideas, profitability, and potential for growth.
- Decide on the most suitable structure for your business – sole trader, partnership, or limited company or other
- Prepare a business plan, cash flow projections, budgets, and trading forecasts
- Assess your finance requirements – advice on the best sources of finance, and draw up the necessary proposals
- Establish good working relationship with a bank, but which one?
- Complete any registration procedures with Companies House, Inland Revenue, or Customs and Excise
- Deal with company secretarial issues
- Remuneration strategies including involvement (and remuneration) of your significant other.
- Set up recording systems for accounting and business management and for complying with statutory requirements