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People start their own business for all sorts of reasons. Perhaps they’re looking for more freedom, or want to get off the job treadmill, or maybe they just feel ready to take on the challenge of running their own company.
In 2014, there were 587,000 new businesses set up*, more than in any other year on record, most of them small operations with their own challenges.
But whether you’re a plumber setting up a one-person business, a financial adviser setting up a practice with some colleagues, or an entrepreneur launching your own product, there are some things that apply to everyone when it comes to running a business.
Here are five things that need to be at the forefront of your mind.
- Before you set up on your own, it’s important to make sure that your finances are in shape. At this stage, your business doesn’t have a credit history, so lenders will judge you on how you’ve managed your own finances, in order to assess your creditworthiness and the risk factor. Checking your Experian Credit Report and Score can give you an indication of what kind of loan you might get, in case you need to apply for credit at some point. Usually, a higher score means you’re seen as lower risk – meaning you’re more likely to get credit, and at better rates. Many people will be using their own money to get started and may have to live on a reduced wage while they get things going, so unless you’ve got a ready-made vast client base it’s worth planning to cover yourself in those early months.
- Find out if there’s a market for what you’re providing – is there a local audience? Is it something you can do from home? If you’re opening a shop, are there already plenty like that in the area? If there’s no demand for your business you’re likely to struggle.
- Getting your company set-up right is essential. One of the key decisions is deciding what structure your company should take. Should you be a sole trader, a partnership or a limited company? Each has its own distinct pros and cons. For instance, The rate of corporation tax for small companies means that profits can be kept in the business at comparatively low rates of taxation,. However, costs are incurred when you set up a company, and annual accounting costs are greater than they are for sole traders. And then there’s VAT, insurance and more.. Much of this will depend on the type of business you’re going to be running – getting appropriate advice at this point is really important.
- While being self-employed allows you to be in charge, you can’t do everything yourself. There are times when you may well want to turn to experts to help you out – an accountant to set up the company and keep your books in order; a web designer to create a simple web page or something more detailed; or a photographer to take pictures of your products.
- So you’re in business now. Your first priorities are likely to be growing your customer base and protecting it from financial risk. Networking becomes even more important when you’re no longer perhaps part of a large organisation. Business contacts and simple word of mouth recommendation can be useful, and social media networking can be used as a great promotional tool. Try targeting the right people that you think will like what it is that you are doing – getting your name known out there and attending trade shows.
– Watch business start-up Maids To Measure share their experiences
Being realistic ,financially prepared and doing your research could increase your chances of starting up a business and creating long term growth and success. And remember, there’s plenty of free advice available from your bank, business advice centres or websites such as startups.co.uk, Citizens Advice and www.gov.uk.
*Data from Experian, pH data from Gareth Rumsey analysis