Many people dream about setting up their own company, and an increasing number of people are making this dream a reality. According to Companies House, from October – December 2020 alone there were 201,820 new company incorporations. We discuss below what an entrepreneur needs to consider before embarking on this journey.
1) Business Structure:
There are a range of business structures available, you should consider which is best for you. The most common is a limited company, as discussed in this blog, however there are also partnerships, community interest companies and more. Alternatively, you may prefer to operate as a sole trader. Please feel free to contact us for advice on which structure suits your needs.
2) Business Plan:
This will contain all your research and ideas for your start-up. You will need a company name and to check online whether it is available, it is best to have alternatives ready just in case. This plan will also include your aims and goals for the company, these should be SMART objectives (specific, measurable, achievable, realistic and time related) so that you can easily review your progress. Consider devising a mission statement to let customers know what your business stands for, this is becoming increasingly important as many people are showing loyalty towards brands whose ethics match their own.
3) Market Research:
It would be sensible to research your target market and competition so you can evaluate your expected growth and market reach. You want to make sure that there is enough demand for your products or services. You should have some sort of idea how you plan to advertise your product or service. For example, where? online, offline, rely on word of mouth? Also consider how you want to do this; do you want to create a bright one size fits all poster that you can share everywhere or employ a dedicated marketing team member to create a range of advertisements to fit your different customers. Give this some thought as smart marketing is the key to increasing the number of potential customers. Within this consider how much you can afford to spend on marketing to be competitive without having to cut corners elsewhere.
It is important to plan out the financial requirements of the company before you begin trading. Consider the following: How much capital do you have to start with? How much will it cost to provide your product or service? How much do you have to charge to make a profit? Being aware of your financial situation is key to starting and running a company so that you do not spend everything before you have even begun.
Are you planning on having a physical premise to operate from? If so, consider where this will be, how much traffic that location generates and where your local competitors are located. Since early 2020, many companies are opting to operate online only out of either necessity or choice. This could be very sensible when it is uncertain when regular shopping will return but consider the functionality of this. There is no point operating online if you do not have a working website or the technology to sustain this. You should also ensure that your workplace is COVID-19 secure to provide confidence to your customers and staff. This means having hand sanitiser readily available in the building and setting up social distancing measures such as implementing a one-way system.
6) Business Banking Account:
Many overlook the importance of opening a business bank account and believe that they can use their personal accounts. This should be avoided for multiple reasons, firstly, if you open a dedicated business bank account then the company’s finances remain separate to your own, maintaining an important separation of entities. This is worth doing since limited companies are considered separate legal entities to the owners. Secondly, this will make you look like a more attractive investment opportunity if you are hoping to secure external finance for your company. Thirdly, any banking institutions offering business accounts will offer a range of additional benefits or incentives, so it is worth looking around for which one suits your company best. Although most high street banks offer business bank accounts (although many have reduced their offerings temporarily due to the ongoing economic circumstances) we are partnered with Lloyds Bank, Metrobank and NatWest. We are also partnered with the digital only banking providers ANNA Money and Mettle, and DynaPay who focus on helping non-UK based business owners open a UK bank account.
One thing to consider is whether you need to hire an accountant, bear in mind that this will not need to be done immediately but at least within a year of forming your company. As an owner of a limited company, you will have to file confirmation statements and submit tax and payroll information (to name a few) on an annual basis. Hiring a professional is worthwhile if you have a limited company or finance knowledge, it will guarantee compliance with legal requirements, avoiding unnecessary penalties from Companies House or Her Majesty’s Revenue and Customs. We are partnered with Best4Business Accountants and Co Limited, and Taylor Keeble LLP should you require an accountant.
8) The Economy:
Setting up a business at any time requires an in depth look at the economy, and 2021 is no different. In 2020, economies worldwide struggled and many experienced redundancy or furlough. Despite this, many saw the uncertainty as an opportunity to try something new. This optimism is great as a lot of successful companies were created during times of economic struggle; however, you should consider whether your company will struggle to survive – this goes back to the need to evaluate the current supply and demand of your product or service. In addition to this, you must be aware of the operational changes that businesses trading outside of the UK are now facing because of Brexit. Ensure that you have completed any necessary paperwork so that you can continue trading as normal.
For more assistance with setting up your own company, please contact us via one of the following methods:
Call: 020 7523 5381
Email: [email protected]