Business planning and market research are the first things you should do when starting a business. Conducting market research will help you to understand the sector, market, trends and any potential risks you may face. Whilst business planning will allow you to identify different areas of the business - such as the product, price, competitors, location and finance. We recommend that you complete both exercises as they will put you in a stronger position and provide you with a plan when starting.
Legal status: Choosing the correct legal status for your business is important and will depend on different factors such as the type of business you want to start, the size and if you are going to employ staff. It is worth researching the differences between sole trader, limited company, partnership etc. to understand which one is better suited for your business. There are advantages and disadvantages for each, selecting the correct legal status is important as it can save you time and money in the future if something goes wrong.
Peace of mind: There are different factors to consider when protecting your business, such as the cost, level of cover and the type of insurance. It is advisable to conduct research to identify the correct type of insurance. If you require additional support contact an insurance company or a broker for further information.
Being compliant: It is important to identify if your business requires any mandatory and regulatory requirements such as licencing, data protection, and health and safety. For example if you are a market trader you will need to contact the council to obtain a market traders licence before you start trading. If you are unsure of the type of licence you require visit https://www.gov.uk/licence-finder or discuss it with your local authority.
Location: Choosing a suitable location to trade from is important, as you will need to consider different factors such as, demographics, accessibility, size, location and price. Once you have chosen suitable premises you will need to budget for additional expenses such as rent, insurance business rates and utility bills. So undertaking prior research will be beneficial. If you want to trade from home and you have a mortgage or if you rent, it is worth contacting the lender or landlord to find out if you can operate your business from home. It is also worth contacting the local authority to identify if you need to apply for change of use on your property or to pay business rates.
Banking: If you operate as a limited company or limited liability partnership you will need a business account. However, if you are a sole trader it is not mandatory to open a business account, but it is advisable to open a separate business bank account once you start trading. This will allow you to separate your personal finances from your business. The main banks usually offer free business banking for new businesses usually for 12-24 months (check individual banks for terms and conditions).
Accounting: Whether you’re a sole trader or a limited company you will need to keep up to date accounts of your income and expenses. This will assist you when completing your annual accounts for Her Majesty and Revenue (HMRC) and or Companies House. You can record income and expenditure using a spread sheet, online, accounting software packages. Alternatively, you can use an accountant to look after your accounts which will come at an additional cost.
Starting a business when you have a full time job can be good – the time restriction forces you to prioritise and work efficiently