The UK economy is built on SMEs and innovative entrepreneurs.
In 2022/23, over 800,000 new businesses were registered nationwide, which is a 6.4 per cent increase on the previous period. SMEs are crucial contributors to wider economic health and their continued existence and growth is evidence of a thriving, innovative society.
This means (in practice) that, if you’re ready, this may be the ideal time to set up your new business.
What do you need to know when starting your business?
There are multiple steps that you need to take before you take that all-important leap of opening for business.
We’ll go over the six most valuable steps to building the foundations of a successful business that fully engulfs your vision:
· Market and competitors
· Business plans
· Registering your business
· Funding and cash flow
· Accounts and taxes
· Networking
These steps might look vaguely different depending on your sector and the nature of your business – but they’re always a good place to start.
Create and understand your market
This should be the first step for any entrepreneur looking to set up a successful business.
Your business should meet a true consumer need and fill a noticeable gap in the market.
Your unique selling point (USP) needs to be clear to you and communicable to your audience – offering your customers value from the first point of contact.
Additionally, you’ll need to demonstrate a strong grasp of your USP if you’re seeking external funding and investment, so it is important to pin this down early.
Ensure your business is registered
There are two aspects to registering your business:
1. Choosing a legal structure
2. Telling HMRC and the Government about your business
A legal structure means that you are either a sole trader, part of a partnership or running a limited company.
Each structure has many benefits and drawbacks that will affect the taxes you pay, and whether you are personally liable for costs and debts.
Once you have decided on this, you’ll need to register your business.
If you’re a sole trader, you can do this through Self-Assessment, after which you’ll need to maintain financial records and submit through this system each year.
For limited companies, you’ll need to register with Companies House with a registered address and SIC code, which denotes what your company does.
Companies House has just announced that registrations from 1 May 2024 will cost £50 if done digitally; the comparable cost for registration prior to 1 May 2024 is just £12.
This creates an ongoing responsibility to submit account to a statutory format, a Corporation Tax return and a Confirmation Statement on an annual basis.
Design your business strategy
This is your opportunity to elaborate on your business ideas and put them down in writing.
A business plan allows you to expand on your initial concept, as well as detailing:
· Sales projections
· Cash flow and financing
· Your objectives
· Potential issues and how you will address them
You should spend a considerable amount of time on your business plan to ensure that it accurately reflects your ideas, describes those ideas in quantifiable terms and provides a monetary benchmark against which the progress of the business can be compared.
We can advise you on writing a comprehensive business plan that will set you up for success.
Manage your finances accurately
It’s important you get your accounting in place and streamlined as quickly as possible to avoid breaching any relevant legislation.
This includes knowing what taxes you’ll be liable for, which might include:
· Self-Assessment Income Tax – for sole traders and those in a partnership
· Corporation Tax – you’ll likely pay the ‘small profits’ rate initially for companies with less than £50,000 in profit
· VAT – if your limited company has revenue of £85,000 or more
Failure to pay these, even for new businesses, can result in considerable financial penalties and reputational damages.
You can stay on top of compliance by keeping your accounts up to date in collaboration with your accountant.
Allow your network to grow
No business is an island. Growing your network of fellow entrepreneurs and third-party suppliers is a great way to access peer-to-peer support and stay updated on developments in your sector.
This also applies to building your online presence.
In your business’s early days, it’s crucial you build your website and social media presence to enhance visibility of your brand and get consumers on board as soon as you’re ready for them.
For advice on setting up a new business, please get in touch us today.
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