Starting a business is a huge decision. It can seem very overwhelming and complicated, with so many things that need to be considered, from coming up with an idea to registering the company to business planning and much more.

 

Despite countless sacrifices that will be made and challenges business owners face, a whopping 84 per cent of small business owners would do it all over again.

 

Even during the Covid-19 pandemic in 2020, the number of new businesses created in the UK increased by 14 per cent. Data from HMRC also shows that in March 2021, more new businesses were launched than in any other month since records began in 1989.

 

If you’re thinking about jumping into the business world, there are some key steps you need to take first. We have put together a list of our ten top things you need to know when starting a new business…

 

  1. Know yourself as an entrepreneur before you start

First things first, you need to take a look at your strengths, weaknesses, and skills, so you can start thinking about what you can and cannot do.

 

While you might have a great business idea, it’s important to examine your skills and personality traits, as they may not match with the business you are wanting to create. For example, a person that doesn’t enjoy speaking to new people wouldn’t necessarily consider a heavily client facing business.

 

Gaining an understand of yourself and your strengths can help narrow down which ideas and industries would work for you

 

  1. Produce something you will be passionate about

When setting up your own company, passion is key – you’re much more likely to succeed if you’re doing something you love, than if you go with an idea you’re not passionate about. As a business owner, you’ll need to put in a lot of time and effort, so it’s crucial that you love what the firm does, what it stands for, and who its target market is.

 

  1. Write a business plan

Once you’ve got your idea in place, you need to ask yourself a few important questions, such as:

  • What is the purpose of your business?
  • Who is your target audience?
  • What are your end goals?
  • How will you finance start-up costs?

 

This will help you determine core factors, including what you want to achieve and the direction you want the business to go in.

 

  1. Watch your expenses

It can be tempting to go all out when your business is fresh and exciting, but it’s vital that you don’t overspend. Think carefully about the purchases you need and that make sense for your business, and avoid spending a fortune on fancy equipment that won’t help you to reach your goals – at least not in the beginning.

 

  1. Choosing a company name

Often one of the first things entrepreneurs consider when starting a business is what to name it – but it runs much deeper than how it sounds and looks. When choosing a company name, legal requirements need to be considered to make sure the name isn’t trademarked or used by another company in a similar field – this can be checked here.

 

  1. Registering the business

There are several types of legal structures you can choose from when setting up a business:

 

Sole trader

sole trader is where one person owns and runs the entire business. It is the simplest structure you could adopt and is very suitable for any one-person businesses; this includes independent accountants, web developers and gardeners, among others.

 

Being a sole trader means the individual is entitled to all/any profits but is also liable for any debt or damages incurred.

 

Limited company                                              

A limited company means the business is a separate entity from its owners.

 

This means the owners are only liable for any debts to the extent of the amount of money they have put into the business, limiting any exposure for owners beyond their total investment. There are two types of limited companies you can incorporate in the UK.

Private limited company (LTD or Ltd)

In a private limited company, the owners privately hold shares. This is the most common and preferred incorporation structure for most small businesses in the UK. Over 2 million limited companies are operating in the UK now.

 

 

  1. Manage your cash flow

Cash flow becomes an important factor in setting up a company, as it enables the business to settle any debts, reinvest, return money to shareholders, pay expenses, and provide a buffer against future financial challenges.

 

If products need to be purchased (and paid for) ahead of being sold, working capital funds will be needed to set up the businesses. Some businesses are cash businesses, so may create a surplus of funds from the beginning.

 

It’s also not unusual for a new business to struggle to obtain finance from suppliers, as there is no trading history, and so supplies must be paid for upfront.

 

  1. Register with the government

You will need to gather a variety of business licences before you can legally operate your business and there are several documents you must prepare before registering – more details on these can be found on the Gov.uk website.

 

  1. Setting up and understanding your finances, tax and accounting

Before any profit can start going in your pocket, you need to open a business bank account to send, receive and store your business funds.

 

As the business owner, you will be responsible for filing forms, paperwork and paying various taxes to HMRC on an annual or regular term.

 

From the start it is essential to run your business properly and be legally compliant to avoid hefty fines.

 

  1. Hire an accountant

It is always advisable to have an accountant when starting a business – in fact, a good accountant will save your business more money than they cost to hire. They will ensure:

  • The right amount of tax is paid
  • You meet, file and pay any major tax deadlines and annual statements etc
  • Annual accounts are correctly complied and submitted

 

To summarise, starting a new business can be tough, and there are a lot of things to consider – but it’s also very exciting and rewarding when you get it right.

 

If you need help implementing these 10 steps – or at any other point on your business journey – get in touch with our team on 01642 244090 or info@chuhanandsingh.co.uk.