Want to start a new small business but need some help along the way?
In this article, we cover what you need to consider if you’re looking to start your own company, covering how to choose the best business entity, dealing with business plans, and more.
Plus, download our small business toolkit, which will provide you with some essential tools to get up and running.
Here’s what we cover:
Choose the right business entity
You’ll need to decide what kind of business you’re going to create.
You might want to become self-employed. Or you may want to create a limited company – something known as incorporation.
There’s also the possibility of a partnership, which is somewhere between the two, but is much less common because self-employment or a limited company tick most peoples’ boxes.
This is the simplest kind of business entity, and legally it comprises just one person: yourself.
Doing your accounting is therefore more straightforward. After you’ve deducted tax, National Insurance and expenses, whatever’s left is yours.
However, as a sole trader, you’re also personally liable for debts your business might create.
And because it’s not an incorporated business, it can’t own things such as vehicles or property. You must use your own.
The benefit of a Ltd, as they’re known, is immediate. It’s a legal entity in itself, so can take on debts and can own things such as cars, equipment and properties.
The limited company will pay you a salary and, if it’s just you in the company, you’ll be considered the director as well as the shareholder – so you can claim dividends (whatever the company makes after tax and outgoings) too.
The downside of a limited company is increased complexity – the company will have to pay corporation tax, and the paperwork for a limited company can be difficult to understand, although a good accountant can help.
Steps to get started in business
So, where you do you get started if you want to create a business?
It’s wise to speak to an accountant about your plans. They can register you as self-employed, or create a company for you.
Accountants have bags of experience that they’re always happy to share. They can point you in the direction of free funding.
Speak to a bank (or sign up online) to create an account specifically for your business – even if you’re planning to be a sole trader.
The taxman has the legal right to examine your business accounts and if you use your own bank account, it can become intrusive.
Get the tools. Use accounting software. Get a good cash flow forecasting spreadsheet (see below for our free example).
Using the right tools from day one will significantly reduce the amount of admin work you have to do – and leave more time to pursue your dreams and goals.
Good accounting software will issue and send invoices for you, for example – and even chase them up.
Figure out where, or how, you’re going to operate the business.
Will you need a dedicated space, such as an office? Will you need a vehicle? What equipment and supplies will you need?
Really dig down into details and be as pragmatic as possible.
Set a date.
When will you start your business? Well, there’s no time like the present – and you should be careful not to fall into the trap of forever delaying.
Create a business plan
If you’re serious about creating a business, you’ll need a business plan – and lots of advice on the steps to go through, and processes and small business solutions to put in place.
For most people, creating a business plan is one of the hardest tasks they undertake in the early days of their business.
Thankfully, help is available.
There are lots of business plan examples and templates online, including some here at Sage Advice.
These are an excellent starting point because they ask questions that simply need to be answered if you hope to attract interest in your business – and therefore get investment.
What are those questions that you should answer in a business plan?
At a minimum, you should include the following information:
- Description of your business and objectives
- Your products or services and their pricing
- Who you anticipate your customers to be
- Who you consider your competitors
- What people will be involved, in terms of staffing, existing investors, or even mentors
- How you intend to make your business a success
- Any key financial figures
- The volume of sales you expect
- Profit or loss statement projected for the first three years
- The level of investment required.
Download your small business toolkit today
Our small business toolkit is all you need to get your business started. It comprises three free downloads:
- Guide: This information-packed guide is designed to help you achieve success by addressing typical challenges encountered by small businesses in the first few years. It includes potential funding sources that all businesses need to know about.
- Business plan template: This lets you update or complete your strategy for success, as outlined above. All you have to do is follow the instructions in each section, entering your own information.
- Cash flow forecast template: This can be used to predict funds flowing in and out of your business over the next 12 months. This is vital, and you can use it along with the advice in our guide to address any cash shortfalls.
Editor’s note: This article was first published in July 2020 and has been updated for relevance.
Small business toolkit
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