Many people are thinking of starting up a small business at this time, and despite the ongoing pandemic, it’s actually a good time to consider this. Many successful startups have been born out of times of recession - the greatest amount of new startups began life following the 2008 financial crash.
There’s a checklist of things you’ll need to consider before setting up your business - let’s take a look at the main points here.
What are the most important things to consider before you set up a business?
The first and most important thing to do is to research the viability of your business idea, and who your ideal customer (your target market) is. It’s also important to think about who your main competitors are, and what your Unique Selling Point (USP) will be that helps you to stand out.
You need to make sure the product or service you will be offering is right for your target market and whether there is a need for it.
Things may change as time goes on depending on how your business evolves. But it’s vital to have a plan in place. Writing a business plan can help you get everything in order and will generally include:
- Market and Customer Research
- Competitor Research
- Information on your Product or Service
- Business structure
- Financial Information and Estimates
To make sales, you need to get noticed, and this starts with building your brand.
Today’s it’s crucial to have an online presence. Building a website is an essential for modern businesses. Customers tend to check out a business online through their website and online reviews. A small business website doesn’t have to be expensive or complicated, and platforms like Squarespace and WordPress mean almost anyone can set up a basic website.
Building a marketing strategy will help clarify your marketing goals, and should aim to increase your brand awareness and grow your business. Your marketing strategy should include your messaging and target audience (this may vary if you have different sectors you’re targeting), as well as the marketing channels and platforms you plan to use.
Finances for small businesses
Some businesses can start with one’s personal finances, while others need more. You need to come up with the realistic amount that you might need, including the costs outlined in your business plan, and accept that it may take time before you see a profit.
When selecting a business bank account, be aware of charges that may apply, and the facilities and benefits the bank offers. Once your bank account is set up, it’s a good idea to invest in an accounting programme or service, to make sure your business books are correct from the word go. This can be as easy as using a subscription, cloud-based software like Nomisma.
Sole trader vs. Limited Company
What are the most important differences between being a Sole Trader and a Limited Company?
Essentially, Limited Companies can be more tax efficient than sole trading - instead of Income Tax they pay Corporation Tax on their profits. Limited Companies can also claim a wider amount of tax-deductible costs.
As a sole trader, the business owner and business are treated as one. However, with a Limited Company the business is a separate entity, meaning your personal assets are protected.
At DNS Accountants we can provide expert financial advice for your new business venture. Book a call and let’s talk about your business ideas!