So you have a great business idea

www.baldwinsaccountants.co.uk

So you have a great business idea. But before you even think of launching your business consider this…


1 .Formulate a business plan

The key thing to a successful new business is starting out with clear goals and a plan on how to achieve them. Developing a business plan will help identify both the financial targets - sales price, cost of sales, gross profit, overheads and the all-important net profit! The business plan should also help identify key elements to your specific market including identifying the competition and benchmarking against them. It will also identify any requirements for funding and indeed can be used for inclusion in funding proposals and applications.


2. Choose your Accountants/Advisors “The second thing I should do - really?”…… Yup! (and with us the first meeting is free!)Many start-up businesses think ‘let’s just get going and worry about the legal and tax side later’. This can lead to some quite large mistakes, headaches you don’t need and extra costs down the line. Accountants are experienced in dealing with Start-ups and can help you to make the right decisions across all areas of the business as well as using their experience to review your business plan. The right adviser should be able to demonstrate previous success with growing new businesses, be able to reel off a few case studies, and be well-connected with all the other professionals needed to help get your business off the ground (solicitors, HR advisors, insurance brokers and so on).


3. Decide on an appropriate legal entityDependant on a number of factors a business may decide to start life as a sole trader, a partnership, a Limited Company or an LLP. A business needs to consider the legal, tax and “image” implications of each type of entity and decide on what fits with the business model. This should be one of the first discussions to have with your accountant/advisor.


4. Ensure you are correctly registeredOnce a business has decided on its legal entity it needs to ensure the entity is correctly registered with HMRC and also with Companies House if appropriate. There are some quite significant fines for failing to notify HMRC which could cripple a new business before it even begins! Any decent accountant will be able to make sure this happens correctly and within the right timescales.


A number of new businesses get started without opening a separate bank account to their personal one. This can be a big mistake. Confusing business and personal finance can lead to problems in the future in terms of tax, and if a Limited Company with the Director potentially withdrawing too much money!

A lot of banks encourage new businesses so it is important to consider all the possibilities and see which bank will help support your business. Do the rounds and compare what is on offer carefully before committing yourself. Speak to other comparable business people and see who they recommend.

5. Open a bank account


If you expect turnover in the next 30 days to exceed the VAT registration limit of £79,000 you must get registered. However if that is not the case the period before becoming registered can be lucrative in terms of effectively retaining the 20% VAT (or expensive if you are not claiming the VAT on supplies! ). Speak with your accountant to make the best financial decision for your business.

6. To be or not to be? VAT registration


It is important to ensure from day one you are keeping appropriate accounting records, not just to keep HMRC happy but for you to monitor business growth. A lot of businesses watch the cash increase then suddenly disappear when a large supplier invoice comes in. Good structure from day one can help you keep a pulse on the business and monitor it against your business plan.

Quality management information leads to informed business decisions, without it you are in effect ‘guessing’. It’s important that you find an adviser who will not only produce the level of management information you need, but also help you interpret what it means for your individual business. In the early days you need to be able to spot potential anomalies or issues quickly, and react accordingly. .

7. The devil is in the paperwork


If you have produced an accurate business plan you should know whether you are able to self-fund or whether you will need external funding to launch your business. Banks are still quite often the first point of call for people wanting to set up in business, but they are not always the best option, and indeed many Business owners find they are refused bank funding in today’s lending market. There are other types or lender on the market and it may be worth considering seed investors or crowd funding, taking on board a business partner or other options.

There is no simple answer - it depends on how much you want to borrow, how long for, and also whether you feel comfortable with others having an equity stake in your business. A reputable adviser will be able to give you advice on where to go, and we would suggest that your accountant is likely to have reliable contacts across the various funding routes and be in a position to give an unbiased view.

8. Funding


Before you launch your business you will need to insure yourself adequately against risk. This sounds very simple, but in reality it depends on what your business does, and in turn the complexity of the business activities involved. Some insurance will be compulsory and others advisable, the key is to weigh up cost against risk. No one wants to have insurance they don’t need, but equally and unexpected claim can easily take under a fledgling business. Most new businesses will come into contact with members of the public from time to time, may be at a customer’s premises or inviting someone on to your premises. If there is any likelihood of injury to others, or the premises of others, then Public Liability Cover should be thought about. If you are intending to buy plant and machinery or other types of expensive assets for your new business then it is important for them to be protected too. All of the covers above and many more can generally be found in a Commercial Combined policy.If you are giving advice or providing a service that customers pay for, you should consider Professional Indemnity Insurance. PI insurance will help with the costs of defending any claim against you by a customer, as well as paying the compensation amounts to settle the claim.

9. Insurance

There is no point in having a great product or service if no one knows about it! Your business plan will have highlighted your key demographics in terms of potential customers – but how are you going to reach them? Very often at the start money will be tight so you may need to ‘think out of the box’ in terms of your advertising and marketing strategy.

There are many ways of marketing your new business at little or no cost in today’s market. Networking is fairly inexpensive, but unless you choose events carefully according to where your customers are going to be this could be a very fruitless route. Social media is free and great results can be gained from using this route if you choose the right medium for your target audience. We advise every new business to have a web presence – ideally a website - but this isn’t right for everyone. Some businesses are successfully launched with just a blog and advertising on free forums and business web pages. Also don’t underestimate the amount of PR you may be able to get in local newspapers for free; the media loves to see a story about a new start-up particularly if you have a unique or quirky business idea.


10. Route to market

So you have a great business idea

Business

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