Have you got a game-changing new business idea but are uncertain about how to start-up on your own? Are you tired of being a regular employee and have ambitions to work for yourself? Self-employment is a brave step to take but one that has the potential to be incredibly rewarding. There are a few things to consider before you take the plunge though. We’ve put together ten questions you ought to ask yourself before starting your own business.
1. What is a unique sales proposition and why do I need one?You need to identify what it is that sets your business apart from its contemporaries. If you can utilise this, you stand a far greater chance of achieving success. The key to this is figuring out your unique sales proposition (USP). You then need to communicate it effectively enough to encourage actions and conversions. It’s important that you distinguish the features of your product or service that direct competitors cannot replicate. By expressing the benefits of your brand promise, you can gain trust from prospective customers. This, in turn, will develop more valuable relationships. Every new business is different. That’s what makes you unique. There are no hard and fast rules on the best way to exploit your USP. So, take the time to analyse your competitors’ advertising and marketing campaigns. Learn how other companies use their USP to their advantage. You can then find out what works for you and apply it to your own business model. For more information on how to develop your company’s USP, check out this free guide from small business portal, Bytestart.
2. What is a business plan and should I create one?Your business plan should describe your company’s objectives and strategies. It should also cover things like sales estimates and financial forecasts. Writing a plan will help you clarify your business model and set your targets. It will help you measure your progress and flag up potential complications. Your plan is a written document which describes your business. You’ll need one if you want to secure investment or a bank loan, for instance. It can also help to convince customers, suppliers and potential employees to offer their support. There’s plenty of guidance out there to help you. You can download business plan templates, such as this one from the Government recommended, ‘Start Up Loans’ website. It provides free advice on how to write your revolutionary business plan.
3. Should I register as a sole trader or a limited company?If you’re thinking of becoming a sole trader, you’ll need to register for self-assessment and file annual tax returns. You must also make sure you keep records of your sales and expenses. You’ll not need to register your business name. Remember, though, as a sole trader you are the business. You’re the owner, the management, and the staff. On the other hand, if you’re looking at setting up a business as a limited company, you’ll require a company name and address. You’ll need at least one director and one shareholder. And, you’ll also need a Standard Industrial Classification (SIC) code. This is a four-digit code specifying the nature of your business. In addition, you’ll need the company’s shareholder/s to agree to create the company and its written rules. You can then complete your company incorporation by registering online with Companies House. Of course, if none of this falls under your specific area of expertise, Danbro can take care of it. Click here for more information on the differences between sole traders and limited companies. Or, give us a call today on 01253 600 150.
4. Do I need to audit my business plan?From social media and time management to web reporting and financial admin. It’s important to incorporate the types of technology that will enhance your company’s capabilities. There are countless tools and apps available to help streamline and audit your business. They’re useful in reducing the day-to-day demands of running your own business. Here at Danbro, we practice what we preach. We’re willing to champion tools such as Toggl, MailChimp and FreeAgent. This is because we know from experience what value they can bring to your start-up business. To see our list of ten top tools and apps for small businesses and the self-employed, click here.
5. How to find the most suitable business bank account?Once you’ve registered your company, you’ll need a business bank account. There are four steps to take when finding the best business account for you. So says Martin Lewis (that clever chap off the tele) anyway.
- STEP 1: Use a personal bank account… if you can.
- STEP 2: Locate the business bank account with the lowest charges.
- STEP 3: List the fees that apply to your account and minimise the charges you pay.
- STEP 4: ‘Sweep’ cash into a business savings account and maximise the interest.
6. Does VAT (Value-Added Tax) apply to me?If your turnover exceeds the threshold for VAT, which gets reviewed every year on April 1st (suffering no fools), you have a legal obligation to register for VAT. Likewise, if you expect to top the respective threshold in a single 30-day period, you must also register for VAT. If you do not register within 30 days of going over the threshold, you may get penalised. Please be aware though that if your business only sells VAT-exempt products and services, you cannot register for VAT. Many businesses still opt to register for VAT voluntarily, even when their UK sales fall below the VAT threshold. This means that you’ll have to account for VAT on your sales but would be able to claim back the VAT on eligible purchases.
7. What insurance does my business need?With a million and one things on your to-do-list as a new business owner, insurance policies might not be too high on your agenda. Well, they should be.
- Employers’ liability insurance provides your business with cover for legal fees and compensation costs, should an employee or ex-employee choose to sue over things like illness or a work related injury. Along with motor insurance, this is the only policy you MUST have in place under UK law. However, it doesn’t apply to businesses with fewer than two employees. Failure to comply can result in financial penalties of up to £2,500 per day.
- Professional indemnity insurance covers you for the cost of claims made by a customer or client for any financial losses suffered as a result of professional negligence. While it’s not yet a legal requirement, it is common practice nowadays for businesses to have professional indemnity insurance.
- Public liability insurance provides your business with cover for legal costs or compensation claims if a third party gets injured. Or, if their property gets damaged; either at your company’s premises or whilst your company is working on their property. Again, while you’re under no legal obligation to get this type of insurance, certain businesses may not allow you to operate on their premises without such cover.
- Another consideration should be property insurance. Whether you’re a tech company reliant on IT equipment. Or, if you’re a tradesperson who’d struggle without their tools, property insurance serves to protect your business’ building and assets. Quick caveat though; when purchasing this kind of insurance, ‘ensure that the sum insured on your contents list is equal to or greater than the value of your equipment’. Price comparison sites are a really useful tool in this regard.