So you have an amazing idea, and you’ve told your friends, family and business acquaintances about it and they to think it has potential. What do you do next? The thought of setting up your own business can be daunting, leaving you feeling overwhelmed with where to begin. With the help of GOV.UK and ClearSky Accounting we’ve provided the basics to setting up your business. Remember to take it step-by-step and don’t be afraid to ask for help if you need it.
1. Your Idea
This is how all great businesses start, as an idea. Whether you’ve just had a ‘light bulb moment’ or your idea is years in the making, you need to ensure that it is realistic and marketable. There are excellent websites such as National Enterprise Network to provide advice on your business idea.
When you’re sure about your idea, make sure you register it, you don’t want your design or concept being stolen. You can protect your intellectual property and designs with copyrights, patents and trademarks.
You, your family and your friends may think that your business idea is fantastic but the reality is, the customer market may not. Before you invest too much time and money in to your business you need to establish if your product or service will be in demand. Research the market by:
- Looking at competitors: Do they have a similar product or service? Is there a niche in the market? What would be different about your offering? By gauging where you would place yourself within the market place you can begin to establish who your customer base would be and how much they are willing to pay.
- Speaking with customers: Question them about their needs and how they would consume the potential product or service. Would they add anything or take anything away? Listen to their feedback, their input is essential.
- Build a prototype: Building a prototype will enable you to show the idea to customers so they really get a feel for what you envisage. When you have your prototype you can gain additional feedback as to how they think it will work realistically and what they’d be willing to pay for it. There’s no point in developing the end product if it isn’t profitable.
3. Business Plan
You’ve registered your idea and ironed out the kinks by speaking with your target market, now it’s time to put pen to paper and script your business plan. Your business plan is an official document that will be used not only by you to establish the vision and goals, but to gain funding, partners and support for your business idea. Your business plan should include:
- Your vision, goals and aim
- Details of the product or service
- Your market research and outcome
- People required (staff and production)
- Financial forecast
- Legal requirements
If you don’t want to go it alone with your business (a sole trader) then setting up with a partner (or partners) is the best way forward. Having business partners can hold many benefits: the work load is shared, and you receive additional funding, varied ideas, more business contacts and a larger skills set.
You should, when carrying out your business research, have spoken to a number of suppliers to gain some insight in to the production costs of your product or service. Now’s the time to take this one step further and speak to various suppliers, making an informed decision: Who’s best to provide the supplies to your business and at what cost? Having reliable suppliers (not necessarily the cheapest) is important to ensure you get your product/service to market on time and to standards.
5. Business Set Up
Before requesting funding for your business you will need to establish what legal structure is right for your company—are you a sole trader, limited liability company or a partnership? Your company structure will affect your financial risk, taxes paid and how much control you hold. For more information on setting up as a limited liability company click here.
If you are going to be taking on additional staff you will need to read up on employment rights and may need to seek legal advice.
Other responsibilities include ensuring you have the right company insurances and licences, if required.
You’ve done all the ground work—now it’s time to raise the funding to get your business off the ground. There are a number of options for funding your business:
- Government schemes: The government usually has some sort of funding available for business startups. Before heading to the bank, take a look online to see the latest offering in the way of funding for new businesses, and if you qualify.
- Bank loans: One way of gaining the start-up costs for your business is a bank loan. You will have to present your business plan to the bank, give a realistic cash flow, prove that your business is capable of making profit and will be able to make the loan repayments. Some banks will require you to provide security against your loan, such as your house or a car. You will need to consider the consequences of this option should you not be able to repay the loan.
- Shares: If you don’t wish to take out a bank loan to raise funds you can sell shares of your business. There are various options to raise money via shares: friends and family, wealthy individuals who invest in startups (business angels), or private equity companies that invest largely in companies they think will make a profit quickly. Shareholders have a right to have a say in the running of the company and a share in the profits.
This is a breakdown of the necessities you will need to set your business. Remember to plan properly, take each stage step-by-step and seek professional help where required.