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New Business Start Up - Overview

Setting up a new business can be an exciting prospect. You have ultimate control over your destiny. You are the boss. You personally benefit from the success of the business.

It can also be quite a daunting prospect. Running a new business can mean you have to become an expert in almost every aspect of your business. There is also so much to do to get your business established. There are of course downsides but on balance if you develop a successful business the rewards more than make up for any downsides.

There are a number of things you need to think about before setting up your business:


1. You should develop a business plan for your new business. This should be comprehensive and cover all aspects of your business. It will help you to assess the financial viability of your business. It is far better to find out before you start your business that it can’t succeed rather than sink your life savings into it and later find out it can’t succeed! Using business planning software enables you to easily adjust the business plan to determine such things as your break even point, the impact of different selling price or cost assumptions on profitability and more importantly the finance the business will require to be input by yourself. If you are looking to raise finance for your business, you will almost certainly need a comprehensive business plan to present to any potential lender of finance. They will want to be sure that your business is a sound financial investment. If you have ever watched Dragon’s Den you will know that potential investors are switched off if you do not have a good understanding of your business financials. You cannot have a sound understanding of your business finances without a detailed business plan.


2. You need to set-up a bank account for your new business. Mixing your personal bank account with your business bank account leads to problems and confusion which should be avoided.


3. You need to register your business with HM Revenue and Customs within three months of starting up your business.


4. You need to decide if you want to register or need to register for VAT. Whilst registration brings additional administration it may be advantageous for you to register under certain circumstances. VAT registration is compulsory if the value of your taxable supplies exceeds or is expected to exceed £67,000 in a 12 month period.


5. You need to consider and have thought out your business location. Can the business be run from a spare room in your house or do you need a different business location. Consider the location, ease to get to for you, your staff, your customers or suppliers if necessary. Look carefully all the costs, not just the rent. What is included in the rent, are rates, utilities, maintenance, etc included? Do you need to install telephone/fax/broadband? You need to budget for all of these costs within your business plan.


6. Look at the different types of insurance you will require and get some quotes for these. Whilst it is advisable to shop around for the best price on your insurance policy, do not save money by being inadequately insured. Also remember, when comparing insurance prices you also check that the cover offered by the insurance policy is on a like for like basis.


7. Look at the additional staff you may need to employ and all of the associated costs involved. Also consider the relevant legislation relating to employing people such as Employment Law and Health and Safety.


8. Consider what marketing and advertising the business will require both at start-up and on-going. You need to look at the most cost effective way of reaching your target customers.

9. Do you need a website, for most businesses these days this is a
must. It adds credibility to your business and can be a cost effective way to market your business products or services. An e-commerce website also allows you to sell your products on line 24/7. Think also about the ongoing search engine optimisation. Consult with a professional website developer as there are lots of options ranging from a few hundred pounds to many thousands.

10. Think about how you will manage the business finances. When it comes to business finances you will often need the help of an accountant. However, you also need to keep your own eyes firmly focused on your money. Fortunately there are some excellent software accounting packages on the market designed specifically to give financial control of your business. An accounting system will make your life easier so you can get on with the job of developing your business. It is important that you get this right from the outset as the cost of losing financial control of your business would be far greater than the modest cost of a good accounting system.

 

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