Business Startups are exciting, challenging and also difficult. When you are start on a steep learning curve, mastering many skills that you never needed before. Here are our top six tips to get you ahead:
1. Business Plan For Your Business Startup
Create a vision you wholeheartedly believe in and work backwards. How much do you want to earn from your business startup this year? What about next year? How much will you have to sell this month and this week to achieve your goals? Note down these numbers and they will form the basis of your business plan.
Over two-thirds of owner-managed companies with a turnover of up to £10 million do not have a plan at all. This could include your competition. Don’t delay, get a headstart!
2. Business Structure Of Your Business Startup
Which business structure is best for your business startup? You can launch as a sole trader, a partnership or limited liability partnership, or a limited company. The legal form you choose will depend on your commercial needs, the financial risk you are willing to take and your tax position.
Whether you are setting up your first business or adding to an existing business, it pays to set up your business in the most efficient way. If you wish to set up as a partnership or a sole trader and incorporate a company later, a top tip is to check if the company name is available and incorporate your company now. Register it as dormant so that you know that later on you can use your preferred company name.
3. Financing Your Business Startup
If your business startup doesn’t have enough capital from the start and your sales fail to live up to expectations, you’ll soon run out of money. This could spell the end for your business. To be successful you need to be realistic about your capital requirements.
4. Cashflow is King
Inability to manage cashflow is the most common reason businesses fail. Many profitable and seemingly successful businesses have gone ‘bust’ because they haven’t had enough cash to pay their bills when due. You need to forecast your future cashflow or you could end up making bad decisions based on false assumptions.
If your business startup is within the scope of VAT, it may be in your best interests to register for VAT from the date you start. This will affect your profitability and cashflow. You must register for VAT if your VAT taxable turnover for the previous 12 months is more than £77,000. HM Revenue & Customs operate a number of special schemes to help businesses in specific sectors account for VAT.
6. Financial Management of Your Business Startup
Not everyone has a head for figures, but you need to manage your business finances so you stay in control.
This includes getting invoices out promptly and chasing them when overdue; separating personal and business expenses; obtaining a proper invoice for business expenses and keeping accurate and up to date books. At all times you need to know how much your business owes and how much it is owed.
What would be your top tip for someone just starting out in business? Did you agree with the tips in this post? We would love to hear what you thought of our tips. Please leave a comment and let us know!