Earlier this year we researched a number of our users. We asked them a pretty simple and straightforward question.
“You are about to start your new business. What are your main worries?”
We have compiled the results of that research, in the order the answers were given to us. Here are the top 10 reasons you’re not sleeping soundly and why you really shouldn’t worry so much.”
1. Getting Customers – How can I attract new customers? How do I build a website? How do I start advertising?
“Getting customers was the number one concern for everyone we spoke to. No surprise really because let’s face it, if you don’t have any customers, you don’t really have a business. So what can you do?
There are many advertising options open to businesses and there is no ‘one size fits all’ approach. The methods that work for you will depend entirely on your business and your target market. However, some common techniques offline include magazine advertising, billboard posters, leaflet distribution, and event sponsorship whilst online techniques include search engine optimisation, pay per click advertising, social media marketing, and online press releases. The important thing is to carefully consider the risk vs reward ratio of any potential campaigns and monitor the results. Be careful to judge future spend and budget properly and if you need to build a website. There are a number of tools on the market to help you out.
2. Accounting and Bookkeeping – The main concerns: What are my responsibilities? How do I record income and expenditure? When do I need to complete my accounts?
“The first thing is to develop a system to record all of your income and expenditure. This will ensure you can easily produce any accounts in the future and comply with bookkeeping requirements. So, make sure you keep all of those invoices and receipts and file them away. It’s useful to have a spreadsheet that shows the costs and income each month and what they can be attributed to (e.g. bank fees, sale of goods, etc) and then you can assign a unique code to each invoice or receipt for cross-referencing at a later date. Luckily there are also some very good software packages available, such as KashFlow, to help with this.
3. Cash flow – The main concerns: I need to speculate to accumulate so how do I get quick returns on investment? Are there any loans available to me?
Proper budgeting, planning and money management should ensure you limit the risk of cash flow issues. However, when starting out it can be difficult to fund everything you need to do to grow your business. In this case taking some form of loan may be an appropriate option. At the basic level you can take a business loan from one of the high-street banks. They will need to see your business plan and satisfy themselves they will get a return on their investment, but they are still one of the most popular ways of gaining a loan. There are also various private investors around looking for exciting business ventures to plough their money into. However, be sure to check out the various government schemes open to you. In recent years a number of schemes have been announced to help provide funding to startup businesses. Check with the Government site for information on the current schemes open to you: https://www.gov.uk/starting-up-a-business/get-funding
4. Tax – The main concerns: What if I have income from elsewhere? How do I declare that I have untaxed income? Is starting a company going to be tax efficient?
This is something that should always be discussed with an accountant, as not only are they best qualified to offer the most up-to-date advice, they can also asses your own individual circumstances and tailor their advice to you. If you have income that is not taxed at source then this will need declaring through a tax return each year – you’ll need to register with HMRC as self-employed to set this up.
5. Insurance – The main concerns: What insurance do I need? Am I fully covered?
The insurance you will require depends on the type of business you have. Almost all businesses should have general liability insurance to cover you against legal issues relating to accident, injuries and claims of negligence. Businesses selling products should look into product liability insurance and those selling services may need professional liability insurance. If the business owns property then commercial property insurance will be required or if you work from home, you may need home-based business insurance since your normal home insurance policies may not cover business use. A lawyer can make recommendations based on your circumstances.
6. Recruiting Staff – Main concerns: Where do I start? What insurance do I need? How do I pay them?
Firstly make sure you really do need to employ someone and that the business can support the expense over the long-term. Recruiting staff is a big step and should only be done when you are sure the business can afford it and needs it. Remember you can also hire freelancers and agencies to complete the work for you. Whilst this may work out more expensive it is considered less of a risk as it is usually without the long-term commitment. If you do take on staff you will need to be familiar with the current minimum wage level and ensure your offered wage at least meets that requirement. You will also need to get employers liability insurance as soon as you take on your first employee and ensure you comply with all the current health and safety requirements in the work place. Once you have found your perfect employee you will need to check they have the legal right to work in the UK, draw up an employment contract and/or a written statement of employment and register with HMRC as an employer up to 4 weeks before your staff receives their first paycheck.
7. Business Premises – Main concerns: Can I work from home? How would that affect my mortgage, insurance and so on? How can I find an office or business premises?
Depending on your business, you may be able to work from home. However, that can sometimes effect your personal mortgage and insurance policies, so you will need to check with your providers to clarify what is and isn’t covered. You may need to take home-based business insurance to cover any shortfall in these policies. If you need an office or business premises then you should first decide where you wish to be located and then search the various estate agents and property management companies for one that suits your business. Things to consider: Do you want it furnished? Do you want it serviced? These come at a cost but they do leave you free to concentrate on the business.
8. Trademark Protection – Main concerns: How can I stop competitors using my name? Do I need to register my trademark?
Contrary to popular belief, registering a limited company name does not give you any trademark rights on that name. All it does it prevent other people being able to set up their own company using the same, or a similar, name. If you want to protect your name or logo as a trademark and prevent anyone from being able to use it without your permission, you will need to register it as a trademark via the proper channels. This can be a lengthy and costly process but it will give you the maximum protection possible. Start with a visit to the Intellectual Property Office website: http://www.ipo.gov.uk/
9. Legal Protection – Main concerns: What are my legal rights? Am I protected legally? What if my business fails, will that affect my personal assets?
If you have set up as a limited company then generally your personal assets are not at risk. As a limited company is, by its very nature, limited liability. However, this does not give you a free licence to run up debts. So, as a director you must still act within the confines of the law and run your business in a responsible manner. However, if things do go wrong, despite your best intentions, any amounts owing will be written off if your company fails.
However, if you are operating as a sole trader it is a different story, as you are personally responsible for any losses your business incurs. This means that your personal assets are at risk should your company fail. This is one of the biggest reasons many people opt to form a limited company.
The Future – Main concerns: Is my business sustainable? Does it offer me long-term security? Can I leave it to someone in my will?
Before starting a business you will hopefully have investigated your idea thoroughly to ensure it is sustainable in the long-term. However things do change and so it’s important to monitor this on an ongoing basis, conducting a regular SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to help run your business effectively.
In terms of future succession, if you have a limited company then it is usually a simple procedure to add a clause in your last will of testament to state what you would like to happen to your business if you happen to pass away. A solicitor qualified in will writing should be able to help you do this. If you are a sole trader the situation is usually more complex since there is no registered business as such to pass on. However there are still ways to ensure your friends or family can still benefit from the work you have done. Again a qualified solicitor is best placed to help you on this.
So, there you have it. There is no doubt that starting a business is an exciting time and it can be the most rewarding thing you ever do. The thing is to listen to advice, learn by your mistakes and never be afraid to change your mind. That way you may sleep a little bit easier tonight.
