It is unlikely that you will wake up on January 1st and suddenly decide to start a business. This is probably something you have been thinking about for a long time, it may even be a lifelong dream or an itch you just have to scratch. Whatever your motivation, starting a business requires a lot of planning, strategy and preparation and below, Jonathan Finn from our Company and Commercial team has provided a rundown of the key considerations you need to make in preparing to start your new business.
Ison Harrison can offer professional advice on setting up your business and Jonathan has a wealth of experience in advising clients upon legal structures, legal formalities, sale and shareholder agreements and general advice on the process, so here are those crucial planning activities you should undertake in the lead up to what could be the most exciting challenge of your life:
Of course the first thing you need to decide is what is your business going to be? This will involve some market research to identify whether the business idea you have has any potential. You need to look at that particular market, what the customer base is like, whether there is too much competition, whether the market is thriving or has growth potential and whether there is room for your business to expand in future years with new products or services.
A business plan is the main document that will assist you in forming your own business. In compiling this you will answer yourself a lot of the questions that need answering. You will be able to set out what your goals will be and how you intend to achieve them. Your business plan will also define your business structure, how you are going to attack your market and how you expect to make money. This document is a key step and is often used to secure finance from a bank or other guarantor, as it shows your business is credible, professional and has secure potential.
A financial advisor will be able to help you with budgets and working out what kind of capital you need to start your business, and then to see it through the first uncertain period before you expect to start making money.
Jonathan has vast experience of working with finance brokers and lenders and is therefore well placed to introduce you to an advisor who can assist you the most. Many businesses take time to become profitable and self-sustainable, so you need money to run the business in the meantime and provide some form of income as necessary. This might come from savings, from friends or family, from a bank or from a combination of these, but be sure to take advice and don’t overstretch yourself.
Choosing the right location for your business is critical to its success, unless you are running an online business where the location is irrelevant. However, location needs to be an early consideration as it can affect profitability, competition and finances. You have to think about your market, i.e.. where your customer base is; can they find you? Is there any competition around you?
While this will have been defined in your business plan, there are legal formalities you have to go through in order to formally establish your business, and these differ according to which structure you decide upon. Get professional help on this, but certainly the structure you choose – sole trader/entrepreneur, partnership, limited company etc – will most likely be an obvious choice from the outset.
Red tape and legal formalities
Depending on the industry or market you are entering you may need certain licences or permits in order to be able to trade, such as alcohol licenses or food hygiene certificates. You also need to register with HMRC for tax purposes, and you need to look into intellectual property law, employment law and public liability insurance.
Your trading name is a legal requirement but this also needs to be marketable and to work effectively as your brand. It has to stand out and represent you in the best way. Think about your website, securing domain names, think about your social media profiles, logos and branding and think about whether your name is future proof and will enable you to effectively expand and diversify.
Of course this goes hand in hand with location, but your premises as an actual building have to work for the business. They may be the public face of your business or they may just be an office that nobody sees, but either way they are critical to your success. Think about location, but also practicality, ergonomics, ease of parking and access, rent and rates and do the premises allow you to expand as you plan to?
Apart from premises, this can include stock, machinery and equipment, a website domain, computer hardware, office fixtures and fittings and this all needs to be budgeted for and sourced cost-efficiently.
There is a lot to consider here and the planning just to get to the starting point can often take a year or more, so patience and long term thinking is key. No business has survived without strategic planning and making sure the business has a natural place in its particular market. Our commercial team are always helping new start-up businesses and we have a great reputation for considerate, trusted and professional advice for businesses of all shapes and sizes, so please call Jonathan Finn for expert start up business advice on 0113 284 5067.