15th April 2019
Before rushing in head first, it’s sensible to research the industry and market you’ll be entering. Is there sufficient demand for your idea, product or service? Does anyone else have a similar offer? If so, how well are they doing it and what can you do better? Look into your customer base to identify your key demographic - find out where they are, what they want and how you can reach them.
Business plans aren’t just a must for potential investors, they’re are an important step for you to formulate your business mission, scope and strategy. Committing a plan to paper will keep you on track - plus it’s an essential stage for analysing your strengths, weaknesses and potential threats, and how you propose to tackle them.
You might not have a marketing department (yet!), but a marketing plan is just as important as your business plan. Your product could be a gamechanger, but if you don’t get word out to the right customers in the right places then you’re stuck at first base. Again research is key - once you’ve pinned down your demographic and what grabs their attention, formulate a strategy for getting your voice heard using the most appropriate marketing mix.
Before you go into business, you will need to decide on the legal structure of your company, usually one of the following:
This is the fun part! Don’t be afraid to get creative, just remember what you decide now will be with you throughout your business journey, so it’s important to find a name that not only suits you now, but will be attractive to customers further down the line. Check your chosen moniker against the register of UK companies at Companies House so you don’t duplicate an already existing business name.
Once you’ve settled on the perfect name, claim it! Register a domain name - or several versions (e.g. .com and .co.uk) to avoid potential domain squatters. There are several great website design and hosting services out there that make setting up your own website a pretty simple process. Keep your URL short and easy to remember - this will be your web address for the duration of your business. If you’re going into retail, research good ecommerce sites. This is also an ideal time to set up your social media accounts, even if you’re not quite ready to launch them.
Just like your company name, your brand identity is key to attracting the right customer demographic. Branding can include your company logo, fonts, colourway and images - it’s what adds personality to your products or services. Approach a well reviewed, independent graphic designer to help you get this pinned down from the start. Asking friends and family for opinions on brand is a good start - but remember to prioritise the opinion of your potential customers and those who would be doing business with you.
To set up a private limited company, you need to ‘incorporate’ it by registering with Companies House. You’ll need:
Find out more about incorporation here https://www.gov.uk/limited-company-formation
It’s important early on to establish how your company will be funded: how you will cover yours and any staff income, and what your production and running costs will be. You might be self funding your business, or you might want to research small business grants, loans or crowdfunding initiatives. You may also be ready to approach equity investors - if so, a good business plan and a solid pitch is key.
Once you’re up and running, you’ll need to optimise your cashflow - your priority should always be chasing debtors, whilst pushing your payment credit terms to the limit. A great app for keeping track of what’s owed to you is Chaser, which sends out tailored email chasers based on how long your customers haven’t paid. Each email is personalised and personal, making them harder to ignore.
Having a minimum viable product, or MVP, is vital for getting investors and early adopters on board. At this point it’s advisable to assert your Intellectual Property ownership over your creations by filing for patents and protecting your trademarks for any prototypes and branding. Find out more here https://www.gov.uk/intellectual-property-an-overview
As with setting up any bank account, you need to shop around. Some banks have better benefits for startups than others. Once you’ve got your business account up and running, it can be beneficial to link it to a mobile and desktop dashboard visualisation tool which predicts your future spend based on historic outgoings. This is ideal for really early stage businesses when having an intelligent, transparent oversight of your cash is imperative.
Look into what insurance you will need for your type of business. Employers’ Liability, Professional Indemnity, Product Liability and Public Liability insurance are the most common, but there are many more you might need to have in place before you start trading.
You might be able to run your company independently at the start, but don’t put off hiring other experts to do the things you can’t. A diverse skill and knowledge set will pay back dividends. In order to employ others you must make sure you:
It’s time to get an accountant and, as more early stage businesses are currently doing, look into accountancy software such as Propel’s Technology Dashboard, Xero, and FreeAgent which will let you manage and analyse your finances yourself, online and in real time. Your accountant will also use these tools to monitor performance, submit tax returns and more (in line with HMRC's Making Tax Digital) in line with your business as it grows. Your business will also need to be registered with HMRC for Corporation Tax, VAT, PAYE and Self Assessment, depending on the structure of your organisation.
Whilst it might be tempting to take on your company’s financials, the cost of an accountant will pay back dividends - most early stage business owners don’t have the time or resources to do the daily bookkeeping, let alone analyse their monthly accounts.
As Sam Hewitt, Senior Finance Expert at Deloitte says, “25% of most company accounting is compliance, but the remaining 75% is strategy - if you don’t have intelligent financial oversight and insight, it’s impossible to make key strategic decisions in response to the rapidly changing business environment. Business insights dashboards can be a useful tool alongside your accountant to produce at-a-glance reports, graphs and pie charts which visually and simply show how your business is performing in real time.”
Sam also stresses the need to: “make the most of your accountant - hold monthly calls and more if possible, value their understanding of financials, especially when it comes to management reporting. Get empowered with the detailed insight they can provide into your company’s performance.”
Propel by Deloitte can process incorporation, registration, payroll, pensions and EMI options on your behalf, and offers accountancy services for fast growth startups. Find out more here.