So you have a great business idea

So you have a great business idea. But before
you even think of launching your business
consider this…
www.baldwinsaccountants.co.uk

1 .Formulate a business plan
The key thing to a successful new business is starting out with
clear goals and a plan on how to achieve them. Developing a
business plan will help identify both the financial targets - sales
price, cost of sales, gross profit, overheads and the all-important
net profit! The business plan should also help identify key
elements to your specific market including identifying the
competition and benchmarking against them. It will also identify
any requirements for funding and indeed can be used for
inclusion in funding proposals and applications.

2. Choose your Accountants/Advisors
“The second thing I should do - really?”……
Yup! (and with us the first meeting is free!)
Many start-up businesses think ‘let’s just get going and worry
about the legal and tax side later’. This can lead to some quite
large mistakes, headaches you don’t need and extra costs down
the line. Accountants are experienced in dealing with Start-ups
and can help you to make the right decisions across all areas of
the business as well as using their experience to review your
business plan. The right adviser should be able to demonstrate
previous success with growing new businesses, be able to reel
off a few case studies, and be well-connected with all the other
professionals needed to help get your business off the ground
(solicitors, HR advisors, insurance brokers and so on).

3. Decide on an appropriate legal entity
Dependant on a number of factors a business may decide to
start life as a sole trader, a partnership, a Limited Company or an
LLP. A business needs to consider the legal, tax and “image”
implications of each type of entity and decide on what fits with
the business model. This should be one of the first discussions
to have with your accountant/advisor.

4. Ensure you are correctly registered
Once a business has decided on its legal entity it needs to
ensure the entity is correctly registered with HMRC and also
with Companies House if appropriate. There are some quite
significant fines for failing to notify HMRC which could cripple a
new business before it even begins! Any decent accountant will
be able to make sure this happens correctly and within the right
timescales.

A number of new businesses get started without opening a
separate bank account to their personal one. This can be a big
mistake. Confusing business and personal finance can lead to
problems in the future in terms of tax, and if a Limited Company
with the Director potentially withdrawing too much money!
A lot of banks encourage new businesses so it is important to
consider all the possibilities and see which bank will help
support your business. Do the rounds and compare what is on
offer carefully before committing yourself. Speak to other
comparable business people and see who they recommend.
5. Open a bank account

If you expect turnover in the next 30 days to exceed the VAT
registration limit of £79,000 you must get registered. However if
that is not the case the period before becoming registered can
be lucrative in terms of effectively retaining the 20% VAT (or
expensive if you are not claiming the VAT on supplies! ). Speak
with your accountant to make the best financial decision for
your business.
6. To be or not to be? VAT registration

It is important to ensure from day one you are keeping appropriate
accounting records, not just to keep HMRC happy but for you to
monitor business growth. A lot of businesses watch the cash increase
then suddenly disappear when a large supplier invoice comes in.
Good structure from day one can help you keep a pulse on the
business and monitor it against your business plan.
Quality management information leads to informed business
decisions, without it you are in effect ‘guessing’. It’s important that
you find an adviser who will not only produce the level of
management information you need, but also help you interpret what
it means for your individual business. In the early days you need to be
able to spot potential anomalies or issues quickly, and react
accordingly.
.
7. The devil is in the paperwork

If you have produced an accurate business plan you should know whether you
are able to self-fund or whether you will need external funding to launch your
business. Banks are still quite often the first point of call for people wanting to
set up in business, but they are not always the best option, and indeed many
Business owners find they are refused bank funding in today’s lending market.
There are other types or lender on the market and it may be worth considering
seed investors or crowd funding, taking on board a business partner or other
options.
There is no simple answer - it depends on how much you want to borrow, how
long for, and also whether you feel comfortable with others having an equity
stake in your business. A reputable adviser will be able to give you advice on
where to go, and we would suggest that your accountant is likely to have reliable
contacts across the various funding routes and be in a position to give an
unbiased view.
8. Funding

Before you launch your business you will need to insure yourself adequately
against risk. This sounds very simple, but in reality it depends on what your
business does, and in turn the complexity of the business activities involved.
Some insurance will be compulsory and others advisable, the key is to weigh
up cost against risk. No one wants to have insurance they don’t need, but
equally and unexpected claim can easily take under a fledgling business.
Most new businesses will come into contact with members of the public
from time to time, may be at a customer’s premises or inviting someone on
to your premises. If there is any likelihood of injury to others, or the
premises of others, then Public Liability Cover should be thought about. If
you are intending to buy plant and machinery or other types of expensive
assets for your new business then it is important for them to be protected
too. All of the covers above and many more can generally be found in a
Commercial Combined policy.
If you are giving advice or providing a service that customers pay for, you
should consider Professional Indemnity Insurance. PI insurance will help with
the costs of defending any claim against you by a customer, as well as paying
the compensation amounts to settle the claim.
9. Insurance

There is no point in having a great product or service if no one knows
about it! Your business plan will have highlighted your key demographics
in terms of potential customers – but how are you going to reach them?
Very often at the start money will be tight so you may need to ‘think out
of the box’ in terms of your advertising and marketing strategy.
There are many ways of marketing your new business at little or no cost
in today’s market. Networking is fairly inexpensive, but unless you choose
events carefully according to where your customers are going to be this
could be a very fruitless route. Social media is free and great results can
be gained from using this route if you choose the right medium for your
target audience. We advise every new business to have a web presence –
ideally a website - but this isn’t right for everyone. Some businesses are
successfully launched with just a blog and advertising on free forums and
business web pages. Also don’t underestimate the amount of PR you may
be able to get in local newspapers for free; the media loves to see a story
about a new start-up particularly if you have a unique or quirky business
idea.
10. Route to market

So you have a great business idea

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