New Business - Set Up Considerations?

[Rinko]

Apologies for the long post and any information very gratefully received.

The wife and I are both currently employed full time, but have found an interesting business opportunity that we think is worth exploring. There is a primary business, with a sideline of food and drink (just cafe type food and drink, rather than meals/alcohol). This opportunity also requires physical premises (we have found a possible location already) and it's associated costs.

Neither of us have experience in setting up or running a business alone, however we have both worked for small and large businesses and have some skills which are applicable (e.g. marketing).

I am acutely aware there are a myriad of costs and factors that we need to consider, and would be very grateful for suggestions of items to add to those I have already identified:

Initial Costs

Business Set-Up
Website Creation
Domain Registration

Ongoing Costs

Business Loan Repayment
Building Rental Cost
Business Rates
Buildings and Contents Insurance
Public Liability Insurance
Electricity (and Gas if available)
Water Rates
Business Telephone and Broadband
Web Hosting
Wages

I've not included costs for an accountant, as we have family and friends who may be able to handle that for us (at least initially).

In the short term, we plan to look at the "competition" to see what their footfall is like and make some estimates about their turnover. I use quotes because this business doesn't have the traditional competition issues, and happily they are a reasonable distance from our proposed location.

Finally, does anyone know about business use classes for premesis? The building we have identified currently has A1 granted, but I think if we wanted to do food and drink on premesis we need A3 as well?

Thanks in advance.

Paul.

[craig7584]

One of your other major outgoings will be advertising, depending on your type of business and target audience you have several options but generally this will cost u!

Im assuming 'business set-up' includes getting any products you require? it sounds as though you will be mainly offering some sort of service?

[Rinko]

Thanks for that - yep, primarily a "service", with the additional possibility of cafe style food and drink on the side. The set up costs are really about fitting/kitting out/etc as well as any costs to set up the company officially (branding etc).

I've not included ongoing costs for the food, as that is entirely dependant upon being able to add the building use class. However I get the feeling that might actually be the most profitable element.

Advertising is an obvious one, although it's difficult to know what would be required in this particular instance. I suspect word of mouth could be very important and we have a good point from which to seed that, but we certainly need to add it to the list, thanks!

[Eric Mc]

If you are going down the limited company route you will, almost definitely, need an accountant.

Even if you are not - think very carefully as to whether you should be using one right from the off. It's best to avoid mistakes BEFORE you make them rather than be told 12 months down the line, "If I were you, I wouldn't have done it that way".

I say that to a lot to clients who come to me six months plus AFTER they have started their business.

Edited by Eric Mc on Monday 21st February 16:57

[ewenm]

Initial cashflow - the startup finance will need to cover running costs for the time from startup to when you're generating income.

[Rinko]

ewenm said:

Initial cashflow - the startup finance will need to cover running costs for the time from startup to when you're generating income.

That is something I had considered, although not included in my original post. I was unsure of the scale of that "pot", and how to estimate it beyond what we could reasonably project (i.e. time when you are paying rent and rates but before you are open due to fitting out etc).

I believe that there will be peak periods for this specific business and so we would aim to launch so that we meet thost periods and hopefully get a decent cash injection early on.

Eric Mc said:

If you are going down the limited company route you will, almost definitely, need an accountant.

Even if you are not - think very carefully as to whether you should be using one right from the off. It's best to avoid mistakes BEFORE you mnake them rather that be told 12 months down the line, "If I were you, I wouldn't have done it that way".

I say that to a lot to clients who come to me six months plus AFTER they have started their business.

Thanks Eric - I had planned to use a family friend, who is an accountant for several businesses, initially. Although I know the old adage about working with friends and family, so we would budget for more formal solution (perhaps sooner rather than later).

Are there any specialists who we should consider talking to (small busines startup, tax or otherwise) who might have something to offer?

Edited by Rinko on Monday 21st February 17:05

[ewenm]

Rinko said:

Are there any specialists who we should consider talking to (small busines startup, tax or otherwise) who might have something to offer?

It should be bread-and-butter work for most accountants. I'd get the relationship with the family friend on a business footing from the start - if they can't do that then they should be able to help you find someone else.

[Rinko]

ewenm said:

It should be bread-and-butter work for most accountants. I'd get the relationship with the family friend on a business footing from the start - if they can't do that then they should be able to help you find someone else.

Thanks ewenm, I've added a response to your earlier post above.

[Eric Mc]

Rinko said:

Eric Mc said:

If you are going down the limited company route you will, almost definitely, need an accountant.

Even if you are not - think very carefully as to whether you should be using one right from the off. It's best to avoid mistakes BEFORE you mnake them rather that be told 12 months down the line, "If I were you, I wouldn't have done it that way".

I say that to a lot to clients who come to me six months plus AFTER they have started their business.

Thanks Eric - I had planned to use a family friend, who is an accountant for several businesses, initially. Although I know the old adage about working with friends and family, so we would budget for more formal solution (perhaps sooner rather than later).

Are there any specialists who we should consider talking to (small busines startup, tax or otherwise) who might have something to offer?

That is the type of thing accountants specialise in to be honest.

Be careful. If the family friend runs a fully fledged accounting practice, them operating for you should be OK (apart from the possible family issues - of course). However, if they are not running a bona fide practice, they may be in breach of their professional body by taking on clients wiithout having a valid practising certificate and the necessary professional insurance.

Also, if you intend to operate as a limited company, you need to be aware that from 1 April this year, ALL submissons to HMRC are by electronic means only, i.e. no paper accounts, paper Corporation Tax returns or paper Corporation Tax computations will be allowed. Furthermore, the submissions MUST be in iXBRL format only which means that whoever is making the submissions (you or the accountant) must have the software in place to allow this to happen.

[Simpo Two]

I might add that whilst accountants should (obviously) be very good at totting up figures and telling you how much tax to pay, they are not business or marketing gurus. My chap is straight as a die but couldn't sell water in the Sahara.

The best place for a dash of entreprneurial flair is probably yourself. And if you haven't got any, don't start

[Rinko]

Eric Mc said:

That is the type of thing accountants specialise in to be honest.

Be careful. If the family friend runs a fully fledged accounting practice, them operating for you should be OK (apart from the possible family issues - of course). However, if they are not running a bona fide practice, they may be in breach of their professional body by taking on clients wiithout having a valid practising certificate and the necessary professional insurance.

Also, if you intend to operate as a limited company, you need to be aware that from 1 April this year, ALL submissons to HMRC are by electronic means only, i.e. no paper accounts, paper Corporation Tax returns or paper Corporation Tax computaions will be allowed. Furthermore, the submissions MUST be in iXBRL format only which means that whoever is making the submissions (you or the accountant) must have the software in place to allow this to happen.

Thanks for the additional information, I am certain she is all legal and above board - although the more I think about it, the more I feel an independant party is the best choice.

As far as the company status - it's not something I had considered at this stage. In all honesty I can't claim to understand the implications of that choice (for tax or otherwise), other than what I touched on as part of a business degree about 10 years ago! However, again - your advice is duly noted and I at least have some things to begin looking up in google.

Edited by Rinko on Monday 21st February 17:21

[Eric Mc]

And that is PRECISELY why you need to discuss the options, in depth, with a professional at the EARLIEST opportunity.

[Rinko]

Eric Mc said:

And that is PRECISELY why you need to discuss the options, in depth, with a professional at the EARLIEST opportunity.

Do you have any appointments tomorrow?

I take your point and fully intend to consult with people who know what they are doing before I take any action beyond research.

However until I have the facts and figures in hand (if only very rough), I suspect any conversation may be too vague to be of any use.

ETA - Thanks again for taking the time to post, it is appreciated! Clearly there is a lot I need to understand and comprehend, but I'm happy to admit that fact in the hope that you all show pity and answer the daft questions I come up with!

Edited by Rinko on Monday 21st February 17:30

[Eric Mc]

Perhaps.

If you have an idea as to how large the operation will be and the types of profits you are aiming for - and the timescale for these target amounts - then it should be easy to gauge whether a limited company would be the right type of business vehicle.

YHM

[rog007]

It looks to me like you could do with a business mentor to support you through the first six months, particularly if you've not done this before. Better to learn from someone else's costly mistakes? A simple Google search of Business Support Services will throw up both government and private advice and providers.

Whilst of course majoring on the officialdom piece, never forget you have no business without a satisfied customer. Customer service in this country is often poor and a contributing factor in small business failures. Spend time on your customers and they will be there to support you; fail to engage with them and you'll suffer the consequences somewhere along the line. Good luck!

[V8mate]

Stock?
Shop-fitting?

Edited by V8mate on Monday 21st February 20:31

[LooneyTunes]

Your list looks like a really good start, but might be worth checking out BusinessLink.

Not sure if they've been hit by cutbacks, but BusinessLink used to provide start-up advice/mentoring at no cost.