Britain has been in and out of lockdown for over a year, the economy has shrunk, and unemployment is on the rise. So, is this a good time to start a business? Despite the challenging circumstances, many entrepreneurs are in fact identifying opportunities presented by the pandemic.
Research shows that there has been a 30% increase in incorporated businesses registered with Companies House in 2020 versus 2019. And, over the last year, 1 in 5 people in the UK have said they have already started a business, or plan to start one in 2021.
So, what do you do if you want to start a business but don’t know where to begin? Let’s dive into five steps that make starting your own business far less daunting:
- You have your idea, it’s time to make it a reality; think space and place
Let’s start at the beginning. Where will your mission control be? You’ll need a dedicated area that is your business space, which is a clean, clear and positive area where you can operate your business from.
Self-belief is critical, so start every day with a positive mantra that reflects you and your ambitions. Believing in your idea and your ability to make it succeed are imperative to help your business gets off to a flying start.
The next stage is to register your company name, decide whether you are a sole trader or a limited company and open a business bank account.
- Writing your business plan
Your business plan is your blueprint for success. It will ensure you think hard about what your business is, where you want it to go and crucially how you’re going to get there. Don’t worry, your business plan isn’t a static document and doesn’t need to be perfect from the get-go. Make sure to update it regularly as your ideas and experiences evolve – progressing, pivoting and learning as you go.
You’ll use your business plan to work towards a series of milestones that will help you and your business grow. A good template will include a business overview, your goals, the market you’ll be addressing and how your products or services will help to solve a problem or fulfil an untapped need for your target market. Opportunity, pricing, proposition and positioning will also be key so ensure these are well considered, researched and defined as part of your plan.
- Know your numbers
Fear not, you do not have to be a maths genius. If there’s one way you should approach writing your business plan, it’s to accept that it will sometimes be an exercise in exposing what you don’t know – and that will help you improve. In fact, it’s crucial. Of course, you might be blessed with a numbers brain, but not everyone is a finance expert.
The financial part of your business plan will tell you, in black and white, if your business is viable. No raw data? Look for information in the public domain, such as competitors’ accounts, to give you examples of sales/costs/ratios that are relevant to your market-and use these as a benchmark. Here you can detail your costs, sales forecast, cash flow, profit and available funds or finance.
- Show me the money!
Your business is launched, your goods or services are in the market, but what about getting paid? Efficient invoicing and debtor management is important for healthy cash flow. Understanding and managing your cashflow position in real time is critical to business survival. SMEs in the UK are paid on average 21 days late, so make sure you have a plan in place to mitigate, manage or prevent this risk.
You might offer flexible payment options to get paid more promptly. This means you will have fewer forgotten invoices, and spend less time following up on missed payments from customers. ‘Pay now’ buttons on invoices or phone payments reduce the average time it takes to pay an invoice from 35 to 20 days.
Consider a system that automatically alerts you when invoices are received and paid so you’ll know exactly which clients you need to chase and avoid wasting time combing through bank statements. Data on how and when customers pay you is automatically transferred and trackable within good accounting software.
Ultimately, communication, understanding your customers and building relationships is key here. Pick up the phone and talk to key decision makers, build rapport, get commitment and set expectations.
- Keep on top of your taxes
We all grasp the basic idea of personal tax but owning a business means there are several other tax implications to consider. What type of business taxes you’ll need to pay, and when, depend on the structure of your business. Understand your tax obligations – ignorance is no excuse, so getting a credible and experienced accountant to support you can be a valuable investment.
Make sure you leverage technology to help you. Making Tax Digital for Income Tax is a HMRC service that requires businesses to keep digital records and file VAT returns using compatible software. To keep on top of this, you should explore the opportunities and efficiencies offered by cloud-based solutions. Businesses that digitalise their accounting spend less time on admin, have more timely and accurate information and are able to make more informed business decisions – saving time and money and allowing you to focus on making your business dreams a reality.
It’s a great idea to start a diary with your key tax dates highlighted to keep on top of things. After starting your business, you need to register for Self-Assessment as soon as possible and no later than 5th October in your business’ second tax year.
Following these simple yet important steps will get you well on your business journey. It can be a tough journey at times but undoubtedly one of the most rewarding you’ll ever embark on. Ensure to take time to recognise your accomplishments, your learnings and the milestones you achieve along the way – they’ll provide the fuel, the motivation and the energy to continue, to grow and to succeed as you pursue your dreams.