For most UK-based start-ups setting up a business is quick, cheap and easy. In fact it’s just about possible to set up a business in a day! If you know what line of business you want to start, you’ve been thinking about it for ages, you’ve read the books, done the courses… then maybe now is the time to ‘do’ it? This article is about the practicalities of how to set up a business. Follow those 7 simple steps and you could be up and running in no time:
Step 1. Let HMRC know you’re becoming self-employed
Get the right starter pack for you. You can do this all online, or phone, and it will get you started as a sole-trader (for other legal structures see ‘part two’ below). We’d also recommend completing HMRC’s free online training which will give you straightforward practical advice on record-keeping, filling in and filing your tax return – and what to do if you take someone on.
Step 2. Sort out insurance cover
The AXA business insurance wizard is a good start. It will tell you which insurances you need and which you should consider. When you’re sure about the insurances you need, shop around for the best deal. Specialist brokers can be great for niche businesses and Trade Associations often arrange big discounts for their members.
Step 3. Choose a business name
Search Google and Companies House to see if the name you want is available. If you can’t decide, go with your own name for now – eg. Jane Blogs Cakes – but don’t invest in printing and brand materials until you’re sure. Buy the website domain name as soon as you’re fixed.
Step 4. Set-up a business bank account
You need a business bank account if you set up a company, as it is a separate legal entity to you. It’s not strictly required if you are a sole trader (though it’s usually recommended) – but you must keep very clear accounts.
Step 5. Get compliant
Make sure that you satisfy all regulatory issues eg. health & safety, licensing, data protection. Gov.uk has some great tools to take you through this. This only takes a few minutes and is straightforward for most start-ups.
Step 6. Start accounting for everything
Appoint an accountant or set-up your own simple book-keeping system. As a minimum keep records on all sales and costs.
Step 7. Sort out your work space
Your Local Authority/ Council should be able to provide information about business premises and rates in your area. If working from home, make sure you understand:
– how to include a percentage of household bills as business costs;
– possible Capital Gains tax implications if you are using one particular room/area in the house for business (best avoided by using parts of rooms);
– planning permission – if you expect regular business visitors or to employ someone who’ll be working from your home, ask your local authority planning department for advice;
– if you rent, check your lease to see that home-working is allowed.
Maybe a little bit of a push, but you could certainly do most and maybe even all of that, in one day.
Part Two – Starting with firm foundations
So getting started isn’t all that difficult and needn’t take long at all. But, of course, you are much more likely to be successful if you start with firm foundations:
Step 8. Decide on the best legal structure for your business
For most this is a choice between being a sole trader and a limited company. However if you are setting up a social enterprise there’s more to consider.
Step 9. Write a business plan
This should include a marketing and sales strategy and financials. It’s vital if you need to raise finance. It’s important regardless and should be a living document, regularly reviewed and updated. Here is a good Business Plan template to download and a great guide to putting your business plan together. If the thought of putting together a business plan makes your skin creep, then check out The Right-Brain Business Plan: A Creative, Visual Map for Success.
Step 10. Manage your cash flow
As part of the business plan, start a Cash flow forecast and update it with actual achievements very regularly. A simple spreadsheet is usually adequate. Even if you need a book-keeper to do this, do make sure that you personally understand it and review it very regularly.
Step 11. Keep costs as low as possible
Until your business model is established and you are making good sales keep your spending as tight as you possibly can. There’s a lot you can do with very little money.
Step 12. Get your business kit in order
Beg, borrow and shop around for IT equipment, furniture and transport.
Step 13. Organise communications
Make sure customers can find you by phone, email and on relevant social networks.
Step 14. Get your business image in order
Develop a brand identity, set-up a website and order business cards and stationery.
Step 15. Get your support in order
Assess your own skills and identify how you’ll fill the gaps. Don’t employ others until you really must. Lots of small businesses start by sub-contracting or collaborating with other freelancers or small businesses.
Most importantly make sure you have someone you can talk to regularly about your business. There will be high days and also days when things go wrong and your motivation slumps. So find a good mentor, a business adviser, or others in the same position as you, who you can share those successes and challenges with.