A record number of people set up on their own in 2015, and with the economy continuing to grow strongly, next year could be an even better year for start-ups. Here are 10 tips from the Company Bug team if you’re thinking of starting your own business in 2016.
The total number of businesses in the UK flew through the 5 million mark for the first time last year, as more and more people decided to go it alone.
If you’re thinking of starting up your own business, try these 16 things to consider before taking the leap, as you need to be sure that setting up on your own is for you, before waving goodbye to your current job. Once you’re sure that working independently is the way you want to go (and most business owners have no regrets about leaving their old jobs behind), here are some tips to help you on your way in 2016!
How are you going to trade?
Perhaps one of the most important decisions you’ll need to make is what structure to use for your new business – should you set up as a sole trader, join up with other sole traders to form a partnership, or set up your own limited company? The sole trader route is the easiest and most ‘hassle free’, whereas the limited route is typically more tax efficient – albeit with more paperwork involved. Try this guide to help make your choice.
Your business name
The name you choose for your business, and particularly your brand or trading name, will help define how you are seen by potential customers. If you’re a limited company, you are bound by various restrictions on the name you can use (e.g. you can’t use the word ‘accountant’ in your company name unless you’re actually a qualified accountant). Also consider researching available domain names when choosing your business name, as for obvious reasons, life will be a lot easier if you have a seamless identity.
What’s your plan?
Creating a business plan may seem like a waste of time to many entrepreneurs. After all, how often do things work out as you planned them to? However, even if your business model evolves in a completely different way further down the line, the actual process of sitting down and planning can generate new ideas, and highlight deficiencies in your initial business idea. Here are some useful ideas for creating a business plan.
How are you going to finance your new venture? There are many ways to raise money to get your business off the ground, from taking out a loan, seeking angel investment, and even using credit cards. A frequently cited Kingston Smith report found that 70% of start-ups were self-funding, and most people would do almost anything to avoid having to approach a bank for a loan. Of course, should you need to seek traditional lending, you will wish you’d taken the time to write that business plan after all!
A successful business needs a Unique Selling Point (or several) to help differentiate itself in the marketplace. What will make your business different from its competitors? It may be that you plan to take on the competition and simply do things better than they do, but how will you achieve this? Find out if your business idea is a good one.
Who are your customers?
You may have a great idea on paper, but is there a market for your products or services? Counter-intuitively, you will often find similar types of business co-existing in the retail world (e.g. estate agents congregating in one stretch of the High Street). If you’re setting up an online shop, you may well consider selling via Google or eBay. Again, you’ll be competing with many other small businesses, so make sure that you can compete and still make a profit.
How till you reach these potential customers? You can market yourself effectively without breaking the bank. If you’re marketing yourself online, considering writing articles about what you do and publish them on related sites. Could you provide services to other small businesses in exchange for publicity? The most successful entrepreneurs are good at breaking conventions and thinking of inventive ways to market themselves.
It is hard to think of a business which wouldn’t benefit from creating an online presence. Even if you don’t plan on selling products via the web (eCommerce), there are significant benefits to be had by providing potential customers with background information on your business, writing articles and blogs, and using social media to tell the world about your new venture. You can buy a domain name and set up a simple website for pennies these days. Try this guide to getting your business online.
Staring a business is a big step to take, and taking on your first employee is often a big decision for a business owner to take, as this involves a new set of responsibilities. You will need to comply with various employment regulations (such as paying the National Minimum Wage), ensure that you pay your employees on time and pay any employment-related taxes to HMRC. Read our guide to taking on your first employee.
Don’t Give Up
When you start a new venture, it may be some time before you feel like you’ve achieved your initial goals. You may have to adjust your expectations if they were unrealistic to start with. You will need to put in long hours and work hard to create a successful business, and there are no short cuts. Above all, don’t give up and if you’re stuck, don’t be too proud to ask for help.