In this article, “Five Top Tips for Starting a Business”, you’ll pick up some great tips to guide you on your way.
A Question for You
What made you want to start out on your own, if indeed you have? Perhaps, after a long career with a so-called “proper job”, you’ve decided to work for yourself rather than for someone else. Well done.
To be fair, in general, there’s a lot to learn and loads to take on board – not least surrounding sales and marketing. If you don’t sell, you won’t succeed – it’s as brutal as that. And not everyone is naturally gifted at developing their own businesses. The good news is that our clients work in several industry sectors. They know their stuff, so do get in touch if you’d like us to link you up with marketing or sales experts.
As Angel Bookkeeping specialises in bookkeeping and accounting, we’ll focus on the financial and administrative side of things.
So, let’s return to our original question:
Why Start Your Own Business?
Knowing what motivates you is an excellent foundation for success and can tell you much about your future.
Perhaps you’ve had a hobby for several years and are keen to monetise it. If your passion for fashion or your fancy for photography can earn you a good living, why not? Equally, with a clear head, if you can turn it into actual pounds and common sense, go for it.
Being employed rather than self-employed takes up a lot of hours in the day, and they’re mostly not of your choosing. If you’d appreciate more flexibility and balance in your life – and let’s face it, who wouldn’t, then starting a business is a grand plan. From now on, you’re the boss. If you prepare, plan, and you’ve done your research, you’ll have a solid course of action in front of you.
Turning hard work into strategic work is a significant challenge; people often mention working on the business rather than in the business.
We agree.
While nothing is guaranteed, if you understand who buys from you, work on reducing risk and streamline time-consuming work, your future looks bright.
Incidentally, talking of streamlining, this is where Angel Bookkeeping steps up to the mark. We’re here to help you manage your finances by documenting transactions, issuing and paying invoices, generating reports and recording accurate financial data.
We’ll touch on this later on.
Five Top Tips for Starting a Business
1. Decide on Your Business Structure
This is an important decision. It will impact the way you organise your business, as well as your legal obligations and tax position. Plus, your filing requirements and personal liabilities to third parties.
One structure isn’t necessarily better than another, but each may have its own advantages and disadvantages. This is a quick guide:
Sole Trader. Most start-ups begin this way. It’s a simple, straightforward structure but can incur personal risk. That is, versus a limited company, you have no separate legal “personality”, legal formalities or limitation of liability.
Set-up costs can be minimal (but do see point no.3 below). Beware: in our opinion, it’s challenging to start out on your own, at least without some injection of funds. You will need to register as self-employed with HMRC as soon as you start trading and will pay tax and NI through self-assessment.
Business partnership. There are various types of partnerships, and you and your partner share responsibility for the business, including any losses incurred and bills – for equipment and stock, for example. And of course, the profits, on which you will pay your share of tax.
Limited company. This type of business is legally “separate” from you, and its finances are separate from your personal ones.
2. Work Out Your Pricing
Put simply, money coming in minus the money you spend on goods and services is profit; profit is what we live on – how we pay our mortgages and bills. All self-employed business owners need to make a profit, otherwise everyone will shut up shop quickly.
So far, so obvious.
But, many business owners, it appears, struggle to get their costs right. Many undercharge for their services, perhaps due to British reserve. It’s worth doing your research here to find out your competitors’ pricing structure. Thus, you can amend yours accordingly.
Go higher if you offer a more premium experience or match the average if you work with price-sensitive customers. We advise you to avoid going low until you are expecting a lot of sales.
In any case, don’t undersell yourself. Set your prices and stick to them. If you’re not sure, ask Angel Bookkeeping, as it’s likely that we already have experience in your area.
3. Consider Start-Up Funds
Before customers pay you, you will need funds to keep your business going and for personal expenses.
The trouble is that becoming self-employed can be quite an expensive exercise. There are nice-to-haves, such as renting an office; in the early stages, a quiet place at home could suffice. And then there are what we’d consider your bare minimum must-haves: a decent, well-designed website, good-quality marketing materials, and, ideally, outsourcing some or all of your financial admin.
In any case, your revenue will be low and often re-invested back into your growing company.
You’ll find many different sources of funding for your start-up business, including:
- Personal savings
- Money from your family and friends
- Bank loans and overdrafts
- Grants and government support
Is funding essential? The short answer is no.
But, to be successful you must appear successful, so scrimping on your marketing or admin is not necessarily the best look. And people (your future clients) will notice this.
4. Create a Business Plan
There’s not enough space here to cover everything you need to include in a business plan, but suffice to say that if you fail to plan, you are most certainly planning to fail.
Not only can a formally structured business plan help you secure funding, it helps you understand everything about your would-be company, what you do, and how you do it. Also, the actions and tasks you will undertake at defined stages to move forward and achieve the progress you need.
In effect, a business plan is a written tool that projects 3-5 years ahead and outlines the path you intend to take to grow your income.
Why is a business plan so critical? Because during your first months as an entrepreneur, it’s your Sat Nav. It guides you through the processes regarding the structure, managing and running of your start-up company. Equally, it can help you think through and detail all the key elements of how you will operate and oversee things.
Think of it as a living project – one that you will refer to constantly, with tweaks and updates as you go along.
There’s no right or wrong way to create a business plan, and there’s a lot of guidance and advice out there to help you.
5. Streamline Your Business Accounting With A Bookkeeper
Taking the time to establish excellent accounting systems right from the get-go could be one of the best things you ever do. It will, quite literally, and will save you hours of precious time right now, and well into the future.
You may think you’re fine at storing receipts and invoices, with a determination to sort them out as your tax filing deadline approaches. Most likely, this isn’t going to happen, at least not in a comfortable time frame. You are just too busy. And, financial administration is almost certainly not your key skill.
What does a bookkeeper do?
Angel Bookkeeping can take over as much or as little as you need. Our services include:
- Recording your financial transactions
- Maintaining up-to-date, organised records of income, expenses, assets and liabilities
- Ensuring that the information we gather and hold adheres to legitimate accounting principles and regulations
- Reconciliation of bank statements
As a business owner, you’ll have the meticulous data you need to make informed decisions based on your financial status. Above all, you’ll have an ultra-valuable insight into your financial performance and where you stand.
Five Top Tips for Starting a Business: Key Take Aways for Would-Be Entrepreneurs
- Follow your heart. Life is too short to spend your days not actually liking what you do. Starting your own business could be your best-ever achievement.
- Do things carefully. Research your market, get your pricing right and don’t undersell yourself.
- Write a business plan. Always write a business plan.
- Outsource key tasks, like bookkeeping, to people who are going to do them better than you. You deserve a life outside of work, and you need to get your financial accounting right.
And now, it’s time to get excited. What will you call your new business, do you think?