SEARCH, INDEX, UPDATES, CONTENTS, getting started - are you realistic about your new business?
A brilliant new idea generates passion and enthusiasm. Maintaining that passion and enthusiasm to experience the joy of reality requires an appropriate attitude to the task and the challenges which arise along the way. We hope that you find these notes helpful.
Business plan
You intend to generate a commercial return from your idea so you have a
business plan. Is it a good business plan and can it be improved? Converting
your business plan from an idea in your head into words on paper will help you
refine your ideas.
The product
There is a difference between you believing you can supply a product that
customers want and delivering a product that meets the customers needs. You may
not want to commission market research, but there are ways you can try to make
it easy for potential customers to help you improve your product. Customers
decide what they want to pay for.
The delivery
No-one does it as well as you, but how much can you do? Successful people
have the ability to delegate. To delegate successfully requires an understanding
of the task involved and effective communication of requirements and
expectations. It is not an abdication of responsibility. How will you develop a
well trained, motivated and committed team?
The regulations
You can achieve a great deal in business by the simple application of common
sense, but you will also need to comply with any regulations that are specific
to your product, for example the use of fire resistant materials. There are also
health and safety regulations and employment regulations which apply to all
businesses. There are questions that you are not allowed to ask a prospective
employee at an interview, references to age that you are not permitted to
include in advertisements, procedures that you must adopt to resolve a dispute
with an employee. Make yourself aware of the regulations before you are made
aware of them.
The system
Your delivery will be more reliable if you are methodical. In any given set of
circumstances, there is probably a most efficient way of delivering your
product. Will you always deliver in that way, and can you put the steps in
writing for someone else to follow? People enjoy being confident about what they
are doing. You may be concerned about the cost of training someone who then
leaves, but what might be the cost of an incompetent person who does not leave?
The records
You will want to respond to every opportunity to win an order - so you will
need a thorough system to record enquiries, possibly to the extend of using a
phone system that monitors calls your receptionist could not answer in order that you
can ring back. To be of value to you, you must have confidence in those records,
and you must follow them up.
The assets
You may need facilities in order to deliver your product. You may have a choice
in acquiring those facilities. If you choose to rent or lease, how long is your
commitment or can you simply stop using the facilities? If you choose to buy,
what is the resale value and what is the market? Either way, are you responsible
for insuring the assets while you are using them? Will you keep a fixed asset
register with serial numbers and photos for identification purposes. We
recommend keeping an up to date photographic record of your premises and
equipment.
The finances
Being paid is the reward. That requires an order, which includes an
agreement on pricing and payment, the delivery, invoicing and collection which
your bookkeeping will record. You will establish whether your
reward is likely to be adequate by preparing a budget. You may
need to monitor your cashflow.
The structure
Will you trade in your own name? Will someone else take the risk with you in
a partnership? Should your business be operated as a Limited Liability
Partnership? Should you business be run as a Private Limited Company, or
possibly a Public Limited Company and one day a Stock Market floatation?
Whichever structure you choose, HMRC will impose a £100 penalty if you fail to
notify them within three months of commencing to trade.
The accounts
Your business will need financial accounts, possibly to show to lenders,
shareholders and the Registrar of Companies if appropriate, but certainly for HM
Revenue and Customs. You will want to file your accounts within the filing
deadlines in order to avoid penalties, and to prepare accounts which comply with
all the statutory disclosure requirements.
The tax
We can predict your tax liability and explain a number of tax mitigation
strategies that may be available to you. Some need advance planning, so the
sooner you talk to us the better. You will need to monitor your turnover every
month to determine whether you should be registered for VAT and complete VAT
returns as required. You will need to substantiate to HMRC that your returns are
accurate and complete. Any new business should register with HMRC within three
months.
The exit
It is never to early to consider your eventual exit from the business. If
the business is dependant on you, it will cease when you do, although you may be
able to sell your contact list to a competitor. If you have created a business
that is not dependant on you, an investor might buy it from you. The price will
depend on the potential return on investment (ROI) that the investor can
achieve. Early planning can maximise the amount that you eventually sell the business
for, or how you will realise the assets in your business.
See also
bookkeeping - how do you manage your business?
moving forward
- what do you want to achieve?
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 3 September 2006.