Starting one’s own business is a courageous act. Fortune may favour the brave, but in order to realise your ambitions common sense, informed decisions and a good plan are essential. Make sure you seek good advice and most importantly, have everything you need.
Before starting up a business, as a first step, it is sobering but truly necessary to ask yourself: is my plan realistic? In order to see one’s dreams through to completion, having an idea that is do-able and not simply an exciting prospect is essential. Consider whether there is a sustainable income available to you in the field that you are entering into, and whether you can fight off competition and ensure growth. If you cannot comfortably foresee that these are likely, it is worth waiting before risking your money and time; patience, and putting matters on hold for a time will pay dividends later if it means you are likely to enter the world of business in a stronger, less insecure position than at present.
Determining certain factors will help you gauge where you stand: analyse your financial situation with discipline- realistically tote up overheads against projected sales revenue to see if you really are going to be able to sink or swim. If it is looks too tight, don’t risk it.
The next step is the planning stage, at this point you will need to seek advice from the right quarters: independent financial advisors, from trusted friends, accountants, lawyers and worthy literature on the subject, for example.
Issues worth examining at this stage (that indicate questions that you may also want to ask) include what protection from personal liability you may need, which all depends on your business’ risks; how you expect to be taxed; what sort of ownership structure you will be registering (i.e. Partnership, sole proprietorship); whether you want a website and if there is a domain name available for your company that is in the name you want.
Besides having a good business plan and a sensible start up fund for your business, you will need to consider other requirements and organise yourself in key areas before you register the project.
You will need to prepare organisational paperwork: this depends on your ownership structure- the forms and laws you will need to attend to will differ if you are an LLC (or, limited company in the UK and elsewhere), partnership, corporation, or self-employed. For this, it is valuable to be as informed as possible about the laws that will directly affect your business, and to get sound advice from experts.
You will need to have clearly chosen a location that is affordable and appropriate for your business- and to investigate the small print of any commercial lease that you may be offered.
You will also need to investigate the permits or licences you will need in order to go about your business. This will depend on the nature of your trade and the services you offer: e.g. if you want to open a book shop that differs from a liquor store in terms of what licences you will need to obtain. Ask about this early, and know exactly what the costs and the laws are.
Following this, you need to think about insurance: you may need to assess what you will need to insure i.e. vehicles, property, hazardous substances; also, homeowner’s and health and disability insurance may need to be considered, depending on your set-up. Contact a number of brokers and compare quotes, but never go without cover.
Accounting is another major issue to address. Work out long in advance of applying for any kind of loan you may want how you are going to audit yourself. Either get educated on how to do this yourself and purchase business accounting software, or get an accountant. Either way, make sure that you have this area under control; otherwise you will have difficulty securing loans or outside investment down the line.
On a practical note, make sure you obtain a legal calendar from your government’s Inland Revenue or tax department, and you are aware of deadlines and dates that will matter to you. Finding out that you owe money to the government when money is sparse is worth avoiding!
The most essential issue to address above all else, is capital. If you do not have the money that you will need to set things up in your business, you will have to turn elsewhere for a loan. This is not be feared, as it is the usual route for many just starting out in the world of commerce, nonetheless it can be a daunting task if you do not know how to go about it.
If you apply for a start-up business loan it is very important to shop around (as always) for the best deal that is suited to your unique set of needs. Make sure you know what they are really offering: don’t be tempted by banks that offer loans with short term benefits but long term headaches and severe penalties- think objectively about how your needs will be best served over the long run. Banks can be an excellent source of information for the business start up.
Once you have found the right loan, to be able to gain approval and, moreover, get the best rates on your business start-up loan, you need to prepare a water-tight, sensible business plan. Such a plan will generally need to include a definition of your target market; the way you will attract business from your target market and also the nature of your services or products offered.
The next thing your bank or lender will be looking for is some kind of assurance about the likelihood of you being able to maintain a regular income from your business. Even if you look like you can tap into a niche market, you still need to come up with some contingency plans and show you have thought about being able to keep money going if the market takes a turn.
When you apply for a business start-up loan, the lender will look up your personal credit rating. Since you will control the books of your new business, the lender will check to see how well you have been able to control your own finances. Even if you do have bad credit, don’t be too disheartened, as you can still find some lenders out there that will help you out.
Make sure that once you have the money arranged, the books in order and all your insurance, legal, tax and other issues settled that you register your business with the government, and stick to your business plan, with Spartan discipline if necessary!
I agree having a business plan and understanding your business is crucial when you are starting out, there are other ways in which you can get financial support when starting a business (or any time), capital allowances are available to companies, it is not necessarily something that people are aware of that haven’t ran a business before but making a building fit for your business, or purchasing plant can mean your company is elligible for capital allowances, it is a little bit more complicated than that but there are a lot of great resources out there for people looking.
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