starting a business - the correct order and pitfalls - help!

[Sir Snaz]

Morning PH chums ......

having always been 'an employee' its about time I got my 'powerfully built Company Director' wings ......

so ...I have the idea for a business, I have funds to start said business and a (few) good contacts within the industry I'm looking at (which is a product within the leisure ind.)

I have very little concept of starting a business at all.

So what is the correct way / order of doing things?

are there certain things that need to happen first?

does anyone have any experience of pitfalls that arent readily obvious to the newbie?

I am aware this is a vague request at best ......but would appreciate any words of advice

snaz

[feef]

You can start as a sole trader, which is just you as an individual, with a trading name. Just need to make sure you register for self assessment with HMRC and maybe VAT if your turnover is going to be high enough or you feel it'll help your business.

If you want a little more protection, then a ltd company is a legal entity in it's own right, of which you would be the director.
Bit more paperwork involved, with annual returns, annual accounts and whatnot, but also provides a mechanism to manage business costs a little more efficiently if you have a good accountant.

[Simpo Two]

1) Know your market
2) Have your product priced and position correctly.
3) Be able to promote and sell.

After that you can worry about sole trader, accounts, tax yada.

[Eric Mc]

Simple advice - speak to an accountant as early in the setting up process as possible - preferably BEFORE you do anything.

[technodup]

1) Try to sell whatever it is you have
2) Everything else

If you can't do 1 you don't need to worry about 2. And you'll not have spent any money on stuff you don't need.

[Sir Snaz]

I keep telling the missus it cant be that hard!

thanks for the replies so far ...... and I kinda thought an early conversation with a specialist accountant was a must ........along these lines does anyone know of accountants that specialize in business start ups ....London area preferred?

something else that I had not really considered is business banking - what is a good and bad deal here?

love you all in advance

snaz

[Eric Mc]

I've just sent you an e-mail, if you want a quick word.

[akirk]

Federation of Small Businesses - can be interesting to look at their website
As above - get an accountant
Find someone in your friendship / family circle who has run a business (hopefully successfully / recently) and who will mentor you / act as a sounding board / help with bits you are not sure about etc. for a nice meal out somewhere...

Work out a basic business plan
Keep it as simple as possible
Spend as little money as possible unless what you are buying helps you progress on the plan (so no offices / fountains / porsches on the company!)

get on and do it

[StevieBee]

Eric Mc said:

Simple advice - speak to an accountant as early in the setting up process as possible - preferably BEFORE you do anything.

Number one, do not ignore this advice.

Others to add....

Avoid at all costs the temptation to 'give away' any of your company. If you need something that you do not have the money for, either wait until you have the money, don't have whatever it is or do all you can to raise the money without giving a single percent away. There are exceptions, but not many.

It sounds like you are flying solo but if you are or are likely to go into partnership, get a proper shareholders agreement drawn up. Probably the most unpleasant thing you will ever need to do in business but absolutely vital.

Remember to breathe and enjoy the ride.

Good luck

[Simpo Two]

Whichever one you put first, make sure you're going to make a profit. As a former director of mine said, 'If you want to go bankrupt you may as well put your feet up an enjoy it, there's no point working for it'.

[Sir Snaz]

Thanks all for the may and informative replies ....and extra special thanks to Eric for your time on the phone today ....very very helpful indeed

I will keep you posted on how i get along ...

snaz

[Eric Mc]

No problem. Always nice to chat to a fellow PHer for real.

[Sir Snaz]

So I am getting ducks in a row etc etc .....

In the process of actually writing down (I am really doing this!!) a proper business plan/road map ......

Wondered how important people think this is?, and if you have started a small business yourself .....how closely/how much help (or hindrance)it was to you ......

[Doofus]

Sir Snaz said:

So I am getting ducks in a row etc etc .....

In the process of actually writing down (I am really doing this!!) a proper business plan/road map ......

Wondered how important people think this is?, and if you have started a small business yourself .....how closely/how much help (or hindrance)it was to you ......

I've never been one for 'Mission Statements' and inspirational catchphrases, but it's essential, IMO, to have a clear idea of your intent. You need to know what you intend to do, where you intend to place yourself in the market, and how you intend to define your success.

I worked as a non-exec with an MD some time ago, and he was great at coming up with new ideas. He'd get incredibly pissed off when I'd say "OK, but how will you know if it's worked?" By which I mean you have to know what your intention is, and how you define your success so that you can measure your progress.

You should always be flexible, and be prepared to deviate from your 'plan', but you should never lose sight of why you're in the business that you're in. Your reasons are unique to you, but if you don't have a clear picture of what they are, it's easy to fall down countless rabbit holes, and end up doing pointless busy work.

I also think one very important thing to learn early on is that you are allowed to say "No." You need to understand the consequences of doing so (keep your roadmap in mind), but you simply can't please all of the people all of the time. If you try, you'll go mad. Or broke. Or both...

[Eric Mc]

Sir Snaz said:

So I am getting ducks in a row etc etc .....

In the process of actually writing down (I am really doing this!!) a proper business plan/road map ......

Wondered how important people think this is?, and if you have started a small business yourself .....how closely/how much help (or hindrance)it was to you ......

No harm in doing this. However, it's most important function will be to provide you with a laugh two years down the line when you see how differently things worked out.

[aww999]

It's well worth doing a business plan with some cash flow projections - you will need to carefully monitor whether you've got enough money coming in today, to cover the expenses you'll incur tomorrow. There can often be a significant timelag between costs incurred, orders placed, sales made and the actual movements of cash that relate to those events. Your current cash reserves act as a buffer for the time differences between cost out and sales in, and also to cover fixed costs (rent, rates, insurance) as you grow the business and start building sales revenue.

You don't need to predict the future in absolute clarity, you just need to be able to recognise whether things start going south before you end up broke.

I ran a small business 10+years ago and didn't have a clue about any of that stuff, so it was a real hand-to-mouth affair.

[anonymous-user]

Cashflow is king.