The UK economy is built on SMEs and innovative entrepreneurs.
In 2022/23, over 800,000 new businesses were registered nationwide, an increase of 6.4 per cent on the previous period. SMEs are significant contributors to wider economic health and their continued existence and growth can be evidence of a thriving, innovative society.
What this means in practice is that, if you’re ready, this may be the ideal time to set up your new business.
How do you know if you’re ready? We’ve got you covered.
Starting your business – What you need to know
There are a number of steps that you need to take before you take that all-important step of opening for business.
We’ll go over the six most important steps to building the foundations of a successful business that fully realises your vision:
- Market and competitors
- Business plans
- Registering your business
- Funding and cash flow
- Accounts and taxes
- Networking
Bear in mind that these steps will look slightly different depending on your sector and the nature of your business – but they’re always a good starting point.
Know your market
This should be the first step for any entrepreneur looking to set up a successful business.
Your business should meet a real consumer need and fill an identifiable gap in the market.
Your unique selling point (USP) ought to be clear to you and communicable to your audience – offering value from the first point of contact.
Additionally, you’ll likely need to demonstrate a strong grasp of your USP if you’re seeking external funding and investment, so pin this down early on.
Crafting your business plan
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 and the time you have invested.
We can advise you on writing a comprehensive business plan that will set you up for success.
Registering your business
There are two aspects to registering your business:
- Choosing a legal structure
- 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 a number of benefits and drawbacks and 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 defines what your company does.
This creates an ongoing responsibility to submit accounts and Confirmation Statement at the end of each accounting period.
Getting your accounts right
It’s vital that you get your accounting in place and streamlined as quickly as possible to avoid contravening 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 substantial financial penalties and reputational damages.
You can stay on top of compliance by keeping your accounts up to date in collaboration with your accountant or finance team.
Building your network
No business is an island. Growing your network of fellow entrepreneurs and third-party suppliers is an excellent way to access peer-to-peer support and stay updated on developments in your sector.
This also applies to building your online presence.
In the early days of your business, it’s important to 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 with our team today.
