Starting your business is a busy time in any entrepreneur’s life. Vital steps could be easily unnoticed until you’re well into the process. To assist entrepreneurs in getting their businesses set up efficiently and lawfully, here is a checklist of steps that all businesses need to include.
1. Developing a business plan
A business plan will assist you to focus and organise your thoughts about what resources your new business will need, how it will sell its goods and services (and in what markets) and when you can anticipate the business to turn profitable. Numerous businesses fail since people begin them with absurd expectations and only vague thoughts about how to accomplish them. Most successful entrepreneurs are disciplined people who look carefully at strengths, weaknesses and numbers prior to devoting their time and capital to a new business.
2. Decide on a effective name
You’ll need to choose a name for the business. If you are going to operate as a sole trader, this could constitute as simple as your own name, or some variation on it. If you would like to use a corporate name, you’ll be required to ensure that the name isn’t already occupied.
3. Choose an suitable legal structure
The nature of your business and your medium-to-long-term plans for it will play a great part in the legal structure you select. If you operate in a relatively low-risk sector and plan to supply all services personally, then you may wish to set up business as a sole trader. While if you are planning to float on the stock exchange inside six months, you may wish to set up as a PLC from the beginning. The majority of businesses will come someplace in between and use a partnership or limited company structure.
4. Appoint advisors
Most businesses require some degree of external advice. For some, a basic bookkeeping service may suffice, whereas other people will require a wide range of solicitors, accountants and additional advisors. It’s worth investing some time in researching and choosing a team of advisors that you’ll be comfy working with, and who are likely to be able to meet the needs of the business both at start-up and over the longer term.
5. Obtain financing
Numerous businesses fail for lack of capital. You need to be realistic about what level of investment the business will need and have some idea as to how it will get it. Many businesses find that a working capital line of credit is extremely useful, as it is sometimes difficult to match the timing of necessary expenditure to cash flow — but bear in mind that lenders frequently require personal guarantees for new businesses, even if they are to be set up as limited companies.
6. Research applicable regulatory requirements
Know the law that applies to your industry. If you’re starting a transportation business, for example, you need a thorough understanding of the regulations that will affect the business and — crucially — how much it is going to cost to comply with them. In some areas, the regulatory regime is onerous and requires a lot of time and attention during the start-up phase (although your consolation might be that such regulation also acts as a barrier to entry that might limit your competition).
7. Find business premises
For many businesses, premises are both a major expense and a substantial part of the business’ identity (in the case, for instance, of a retail shop). You need to survey the relevant property market carefully in planning your business and prepare for the unexpected. If the ideal location is crucial to your business proposition, you may want to retain a commercial property consultant to assist you in securing the right premises.
8. Review health and safety arrangements
Virtually all businesses must comply with some degree of health and safety regulation. If you’re looking to do business in a sector where health and safety compliance plays a significant part, then you will need to learn about it in advance, and perhaps get some professional help. If your business is a labour-intensive one, then you should expect health and safety matters to be a substantial area of concern.
9. Identify suppliers
Most businesses rely heavily on their suppliers, be it in terms of quality, reliability and/or performance, as well as — perhaps most significantly — credit terms. Some suppliers will, in effect, finance a business by providing raw materials on terms that enable the business to turn them into sold finished goods before they have to pay the supplier. Others will want to be paid up front. This can depend on factors such as industry practice and the creditworthiness of the purchaser. In planning to start a business, you will need to know what to expect and if your business is going to rely on certain key suppliers you may want to enquire in advance as to how the relationship will work.
10. Recruit employees
When your business takes on an employee, even a single casual part-time worker, it is making a significant commitment. The commitment is not just to the employee, but also to various other parties, such as HM Revenue & Customs (HMRC), who have an interest in the employment relationship. Once you recruit an employee, you are obliged to comply with a wide range of employment regulations and other laws, and you must also account to HMRC for PAYE deductions. Make certain you know up front how you’re going to comply, and in particular how you’re going to carry out the mechanics of payroll, etc.
11. Acquire insurance coverage
If you have one or more employees, you must acquire employer’s liability insurance coverage. In addition, there are a range of other insurances you may need or want, depending on the nature of your business and your industry sector. A good commercial insurance broker can help you with this.