Step By Step Guide For Planning out Your New Business
If you have been thinking about starting up your own business, it can often seem to be an overwhelming and quite complicated process from the outside. There are lots of things to consider and put in place even before you officially launch your new enterprise.
A lot of people dream of starting their own business, especially if they are unhappy in their current job and want to break free of their shackles and take a leap of faith into something – anything – that will set them free, even if they have yet to come up with a good business idea.
This guide is aimed at UK based entrepreneurs, whether they are looking to go solo or to start small and hire in help as and when their business starts to grow. But most importantly it is a guide to starting your own business on a tight budget where you don’t have thousands of pounds to spare to kick-start your business.
1: Think things through and evaluate your skills
Sometimes your own business can evolve from a hobby you enjoy or a skill that you possess that simply develops and grows over time. For example, someone who is passionate about baking cakes and is never happier than when busy baking and icing cakes in their kitchen can often start taking orders from family and friends for their cakes. Word will soon spread and then before you know it you have orders coming in thick and fast. It is just a matter here of making your cake baking business official and registering as self-employed with HMRC, after which you can start to advertise your business and start accepting more orders.
Having a skill to fall back on and that can be used to start up your own small enterprise is a great idea. You can start off by looking at what skills you have that can lead to a profitable business idea, such as cake baking, woodworking, being good at DIY and fixing things, painting and decorating, gardening, turning scrap fabric materials into stuffed toys or soft furnishings. These are all low-cost business ideas that can be started on little to zero budget and have the potential to grow into something very sustainable over the years.
2: Know your limits
Evaluating your skills is a fantastic way to narrow down your business niche, but you also need to recognise your weaknesses along with your strengths. Starting up your own business will mean that you end up wearing many different hats. This is because you will have the sole responsibility for every aspect or area of your business, even down to those essential tasks that you don’t like, find completely tedious, or simply don’t understand.
Identifying your weaknesses may feel a little uncomfortable to do, but it does show that you are prepared to admit that you cannot do everything and that it isn’t a sign of weakness to seek help with those tasks that you know you will struggle with.
When running a business there are some very important tasks that you simply cannot ignore or delay and then forget about. For example, dealing with all of your statutory obligations coming from HMRC and Companies House and making sure you don’t miss any submission deadlines or fail to submit the correct information that they need from you.
Mistakes can be costly, so if you know for a fact that you are not very good at bookkeeping and accounts, then it can actually save you a lot of money, time, stress, frustration and effort by putting your business bookkeeping and accounts into the hands of a professional accountant to manage for you.
For a solo-entrepreneur with a very simple business, it may be easy and cost-effective to invest in some accounting software to run on your computer or choose an online provider such as QuickBooks to help manage your accounts. QuickBooks is HMRC compliant and is set up for digital tax changes that the government are bringing in to make reporting and paying tax digital.
3: Do you have the passion and drive to sustain your business?
The number one essential ingredient for making sure your business succeeds is your own passion, drive and motivation to see it through to the bitter end. You may be excited and enthusiastic about starting your own enterprise, but is it the thrill of the new set up and tackling new challenges that really excites you, or is it the thought of you running your business for years into the future?
If your business idea isn’t aligned with your personal ambitions, then will you have the motivation and desire to keep it going once the thrill of launching a new business is over with? Can you see yourself doing the same job in five, ten or fifteen years? Is there a chance you will become bored after a couple of years and be right back to where you are now with itchy feet and the desire to start up something else?
Make sure that you are 100% committed to your business before you invest your time and energy into creating it.
4: Do you have a good reason to start your business?
Lots of us get bored with our job or career path. Simply wanting a change of scenery or a different focus are not good enough reasons for upping sticks, ditching your day job and starting a business. Boredom isn’t a great motivator to launch a new business with, so if you are simply tired of your surroundings or are becoming frustrated in your work, then why not talk to your boss to see what other options are open to you in the workplace.
An internal promotion with new challenges and responsibilities or a move to a different department within your workplace can often provide enough of a solution to keep you stimulated.
5: Where do you want your business to go?
In truth, you should have more than one solid reason for starting up your own business. You must also think about the future and decide whether or not you want to make a change so that you can build something that you can leave for your family to carry on. If your business idea is something that your family members have no interest in, then the chances are that you may face having to wind it up once you decide to retire.
If you know your business idea will not appeal to your family, then you can look at it objectively and set about building it up with a view to taking on shareholders by selling shares so that your business will continue on into the future once you step away from it.
6: Are you the right age to start a business?
Even though more of us are working longer until we retire – if we ever do decide to retire – you need to be honest and ask yourself if you are at a good age to start up a new business.
An interesting study of new start-ups shows that the average age of those taking the leap are aged between 20 to 35 years old. For those falling within this age bracket, most are starting new tech start-ups, which you can say is an industry that is biased towards the younger generation anyway.
However, in another US-based study looking at ‘the anatomy of an entrepreneur’, the researchers found that the average age of a new company founder is 40 or over. The main reasons why most of these founders waited for so long was to allow themselves to build up a good few years of experience under their belt.
While age should never be a barrier to starting your own business, you do need to consider the pro’s and cons of starting up at the age you are at and how it may affect such things as your state pension entitlements, National Insurance, and any private or company pension you may have paid in to for many years.
Another factor to consider is the type of day to day jobs you will be performing under your new role. Let’s say that if you have been working for many years as a skilled plumber for a plumbing firm, but decide that you want to go solo and set yourself up as a self-employed plumber, how many years can you see yourself sustaining this for before it gets too much for you?
Physically demanding skilled jobs do take their toll on the body, so if your business idea involves a lot of physical graft, would it be wise for you to start this up if you are reaching your late 50’s? Is it really a sustainable business for you to operate by yourself?
7: Can you undercut your competition and still make a profit?
So, you have your business idea and you are confident that it will be a success. You have the drive and determination to sustain your business and the passion to make it grow. Now it is time to look at how your business can provide significant savings to your target customers when compared to your direct competition, yet still, come out of it with a profit.
Look for ways that you can innovate your business processes so that you doing things better than your rivals. What tends to happen in a lot of non-tech companies is that once they find a profitable method of working, they don’t really want to change the status quo while their methods remain profitable.
You really need to look at ways to disrupt the way things normally operate with new technologies and innovations that can cut costs, save you time or deliver more efficiency. You really need to do much more than looking at your competitors business model and copy it exactly to make your business a success. Take a step further and engineer your business to be future-proof and adopt the latest technological tools that are available to you so you start your business one-step-ahead of your competition and then sit back and watch as they try to catch up.
What you need to remember is that not many business ideas are truly unique. Most of the world’s most successful companies are not truly revolutionary. Most of the big players came into already established markets and business sectors and simply outperformed everyone else to reach the top.
8: Think small to think big
Not everyone wants to start up a business that is going to go global and dominate the world. Many new budding entrepreneurs simply want to carve out their own small niche business and be happy to be proud of their products or services.
This can be the case if you can successfully turn your hobby into a working business. It makes sense when you think about it because your hobby is your passion. It is something you already know an awful lot about and have a high level of expertise in practising it.
You may well have a huge customer base sitting right on your own doorstep within your local community. This could be the town or city you live in, or even your county if your business idea involves you taking your services to people living locally.
We can go back to the cake baking hobby idea here as an example. You could set up your own small bakery shop where you create beautiful and individual cakes to sell or to order. If you are good at sugarcraft, then you could look at offering extra services such as running regular sugarcraft classes to bring in a bit of extra revenue.
If you are into DIY and repairs, then there is a growing demand from eco-minded people for ‘reuse, re-purpose and recycle’ services. You may have noticed a rise in the number of ‘repair-cafes’ popping up across the country recently where people can take their broken electrical goods to be fixed or re-built rather than having to send them to landfill.
9: Can you be a multipotentialite?
A multipotentialite is someone with many interests, skills and creative pursuits. It may well be a case that you don’t need to limit yourself to just one single speciality for your business idea. If you possess many different skills it can be worth trying a few out to see which ones take off and which should be left on the sidelines.
So for example, you may be a fantastic copywriter and really enjoy researching and producing well-crafted copy for business clients that need help with their website content or weekly newsletters and business guides. However, you may be a very talented graphic designer on the side, so can also take on projects such as leaflet and flyer design for local restaurants and other businesses in need of these services.
10: Commit to being a professional company from day one
Taking that first step into self-employment and starting up your own business can be very exciting and we are sure that your family and closest friends will be fully supportive and full of enthusiasm for your new business venture. However, you must understand that you may not be greeted with such trust and enthusiasm when coming face to face with your prospective new customers.
The whole idea behind your new business will be to deliver a quality product or service that your customers or clients will be happy to pay for. The hard part is convincing them to take a gamble on your brand-new, untested and unproven new business.
First impressions count in business, so that means you need to go out there and create the right first impression to inspire your prospective customers and win their trust. The best way to do this is by showing them that you take your business very seriously and have taken the necessary legal steps to officially register your company to make it a legitimate business.
You do this by going through the company formations process and registering your business as a limited company with Companies House. Your company will be officially recognised as a business entity in its own right and will be recorded in the official register of companies that is kept at Companies House.
Registering your own limited company isn’t as daunting as you may think. However, you should know that if you decide to register your company by yourself, if you make any mistakes or omissions on your registration forms, Companies House will reject your application.
In this case, it can save you a lot of time and effort to put your trust into a professional service that can take care of everything for you, such as Your Company Formations. We are leading experts in the field of registering businesses and forming new companies with Companies House and have been providing our specialist services for many years to our satisfied clients.
You can read our Guide to our Company Formations Packages to find out more about the types of companies you can form, or you can chat to one of our very friendly team members who will be happy to answer any questions you may have and suggest the best type of company to form for your business.
Don’t worry if you are not quite ready to jump in with both feet to get your business off the ground. You can take the precautionary measure of forming your own limited company so that you can secure your chosen business name to protect it and prevent anyone else from claiming it. This means that you can continue to plan and structure your business safe in the knowledge that any marketing materials, logos, business stationery and web designs you have created will be able to go ahead using your registered company name.
Until you are ready to start trading under your company name you can leave your company in a ‘dormant‘ state.
Our expert team at Your Company Formations are here to take the worry off your shoulders about officially registering your company and to make sure that you get your submission right the very first time. This means that your new company will be up and running very quickly so you can set your best foot forward and present yourself as a serious business in the eyes of your prospective customers.