Top 5 Tips on setting up a new business
All organisations, regardless of size, must have a legal structure, most being either a sole trader or limited company.
Chartered Certified Accountant
Hayley Hedges-Quinn
Thinking of starting a new business? Read this first!
Starting a new business is a hugely exhilarating experience for all entrepreneurs. Yet, certain stats make depressing reading. A CBInsights survey from employees and founders from 101 startups discovered:
42%
of startup businesses fail because there’s no market need for their services or products
29%
failed because they ran out of cash
23%
failed because they didn’t have the right team running the business
19%
of startup businesses fail because there’s no market need for their services or products
18%
failed because of pricing and cost issues
17%
failed because of a poor product offering
17%
failed because they lacked a business model
14%
failed because of poor marketing
14%
failed because they ignored their customers
Shockingly 20% of businesses fail in their first year and around 60% will go bust within their first three years.
So, how can you help your business?
Well, reading the 5 tips below on setting up a new business is a very smart move!
1
Speak to your accountant before you start.
It’s essential you discuss your venture and financial situation in depth with your accountant. They will process your information and professionally consider your business’s pros and cons. An accountant will also look at whether you’ll be better off financially trading as a sole trader or limited company, analysing which best suits you, depending on your circumstances.
It’s essential you discuss your venture and financial situation in depth with your accountant. They will process your information and professionally consider your business’s pros and cons. An accountant will also look at whether you’ll be better off financially trading as a sole trader or limited company, analysing which best suits you, depending on your circumstances.
2
Overheads
What are your overheads? For example:
What is the level of income you require to achieve the minimum income you can live on? Work out your overheads and generously estimate how much extra money you’ll need to add to your product or service to cover costs. This is the only sensible way to effectively cover ongoing business expenses and make money. Even preparing a basic business plan will help you see what you need to achieve to make your business financially viable.
What are your overheads? For example:
- Staffing and employment
- Premises costs
- Insurances
- Equipment
- Professional fees
- Supplies or stock
- Finance or loans
- sales and marketing
What is the level of income you require to achieve the minimum income you can live on? Work out your overheads and generously estimate how much extra money you’ll need to add to your product or service to cover costs. This is the only sensible way to effectively cover ongoing business expenses and make money. Even preparing a basic business plan will help you see what you need to achieve to make your business financially viable.
3
Cashflow
When starting-up a business, it’s crucial you consider your cashflow and how you will finance all your primary costs. You may have savings you can use for your initial outlay that can later be withdrawn from the business and paid back, or you may require some form of financing. There are various options available for finance but with different repayment terms and interest rates, it is best to shop around.
When starting-up a business, it’s crucial you consider your cashflow and how you will finance all your primary costs. You may have savings you can use for your initial outlay that can later be withdrawn from the business and paid back, or you may require some form of financing. There are various options available for finance but with different repayment terms and interest rates, it is best to shop around.
4
Target audience
Who are your target market? Create a customer avatar of who you envisage as your ideal client. Think about their age, job, salary, lifestyle, who they buy from, who influences them and any other demographic you consider important to build a picture of the person you need to directly target. Ensure you also do the same for your ‘bread and butter’ client, both are valuable audiences you’ll need to attract. Once you’ve created an in-depth persona, you’ll understand what form of marketing will appeal most to these people and where to find them.
Who are your target market? Create a customer avatar of who you envisage as your ideal client. Think about their age, job, salary, lifestyle, who they buy from, who influences them and any other demographic you consider important to build a picture of the person you need to directly target. Ensure you also do the same for your ‘bread and butter’ client, both are valuable audiences you’ll need to attract. Once you’ve created an in-depth persona, you’ll understand what form of marketing will appeal most to these people and where to find them.
5
Skillset
Simply, time is money. Is marketing your thing? Do you struggle with organising accounts or driving sales? If you’re spending most of your time working on areas which are not your forte, stop! You need to concentrate your efforts where you bring most to your business – all other aspects can be considered an overhead. Employ or outsource to others the areas you do not have time to personally develop. No areas of business should be neglected but if it’s not your thing – don’t do it and get someone, or something else, to do it for you!
Simply, time is money. Is marketing your thing? Do you struggle with organising accounts or driving sales? If you’re spending most of your time working on areas which are not your forte, stop! You need to concentrate your efforts where you bring most to your business – all other aspects can be considered an overhead. Employ or outsource to others the areas you do not have time to personally develop. No areas of business should be neglected but if it’s not your thing – don’t do it and get someone, or something else, to do it for you!
If you’re considering a new business venture, and would like expert accounting advice, please contact Hayley on 01473 657853. She will be happy to talk through your options and help you find the right path to success.
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