Starting a New Business Guide

Setting up a Business

Digital Edition - For personal Use only - CGC 2023

Setting up a Business We have written this guide to make the process of setting up a business as simple as possible and have added all the key elements you need to get started. This guide is really designed for those planning to go self employed as a sole trader. 1. Write a Plan A business plan is a strategy document about the service you want to offer or the product you want to sell. This doesn’t need to be complicated or long but taking the time to sit down and write out the basics will help you get clarity about what it is you want to achieve. Follow these questions to get you started. What is your product or service? Who is your target market? Who is already out there doing what you do? What do they charge? What will you charge? Are there any gaps in the market you can fill uniquely? How will you market your business? Where do you want the business to be in 3 years time?

Will you need capital to get going? If so, how much?

For more information on writing a business plan look at www.gov.uk/write-business-plan 2. Choose a Name Your business name is important. It will be your brand, your identity to your market. Make sure it fits with what you are doing and is easily recognisable to potential customers. The simpler the name the better. It is always good to bounce idea’s off friends and family before you finally decide. If you need an online presence check to see what domain name you could get. There are business generators like www.businessnamegenerator.com that can help you choose a name or if you have an idea try sites such as www.names.co.uk . Domain sites can cost as little as £10 per year and its worth getting the .co.uk or .com ones if you can. Tip – While you are registering your domain you can often get a free email account, so worth having that.

3. Register with the Inland Revenue

4. Open a Business Bank Account If you want to track your income and expenses for your business, by far the easiest way is to set up a business bank account. Most banks offer a free year introductory account. The simplest method is to contact your own bank to do this. You can set up an account in minutes online or check out moneysupermarket.com for some alternative options. Why have a business account? 1. You can track all income and expenses in one place 2. Make purchases of things you need for the business 3. Give customers a legitimate account to pay into 4. Set up your account to connect with your online trading merchant 5. Keep your personal account separate from the business to avoid confusion 6. Easy way to calculate your profits for the end of the tax year

You don’t need to register with the Inland revenue until you start trading. They will need to know the date you started, the business name and your business address. You could just use your name or use your trading name. At the end of the financial year (starts 6th April and ends on 5th April) you will need to tell them how much you earned. There is a simple form which you can fill in to show your sales and your expenses which gives them an indication of your profits. This isn’t a complicated process! To register, follow the link to set up your government gateway account. They will issue you a User ID and password to access HMRC services. You will then get a UTR (unique tax number) which will allow you to make your self assessment tax return. You have until 31st January after your tax year ends to complete your online assessment. www.gov.uk/set-up-sole-trader

5. Get a Brand Now that you have your business name, get a logo designed that can be used on your flyers, website, business cards and any other ways you want to advertise or promote your services. You can find a freelance graphic designer via a site like www.peopleperhour.com or www.upwork.com . You could probably get a decent logo for less than £50. Alternatively you could use a logo generator such as www.freelogodesign. org . Once you have this, you can get your business cards done, flyers, posters, banners or whatever you need doing. Tip – Make sure the logo works for mobile and the colours work for your market audience. Tip – If you need online banners, images and posters you could get your designer to make these or try a site such as www.canva.com to make your own. Tip – Shop around for printing. You could save yourself money by buying from sites such as saxoprint.co.uk , printed.com , helloprint.co.uk , vistaprint.co.uk but might need to have the artwork ready, so use a freelancer if you are not sure.

6. Go Digital The most obvious way to get online is to have a website. There are lots of free websites where you can use a templated design ready to go. Take a look at sites such as Wix, Weebly or GoDaddy that allow you to drag and drop content on to your design. A good simple website will help your customers find you, your products, services and prices. You can get a basic site for around £90. Your website should have the following pages: • Home Page – this is the arrival page for your customers to find out about the business • About – this page explains more about you and why you set it up the business • Services/Store – this page covers your products or services and prices • Contact Us - usually a form for people to get hold of you Depending on what you are promoting you might want to set up a Facebook page, Ebay account, Amazon store, Etsy store,

Shopify account or other instead. Some of these online store platforms make the whole process a lot easier to get selling and are often free to set up. But remember they will charge you for selling but can get you access to customers quickly. That’s your trade off. Tip – Check out competitor websites to see what they have done. Tip – Do your research on online selling platforms to see which one is best for you. Tip – Pay a little extra to get a professional email address based on your domain e.g kerry@....com.

7. Get Promoting Some businesses grow by word of mouth and that is fine if you have customers falling at your feet. If you don’t then you need to promote your business. A lot of word of mouth is now digital with friends and family recommending products and services, so having a presence online is important. Getting on social media will allow you to:

channels you could use. Our advice is to do your research and find the ones that work for you. Again, look at any competitors and see what their presence is like on social media.

Business to Business Sales

LinkedIn, Twitter

Culinary, Creative, Arts

Instagram, Pinterest, Snapchat, Facebook

Sport, Creative, Film

YouTube, Instagram, Twitter

• Increase leads and sales • Engage with your audience • Provide instant help to your customers • Distribute your content • Promote discounts and offers • Drive traffic to your website or store • Promote for free! (or paid if you prefer)

Education

Pinterest, YouTube, Twitter, LinkedIn

Construction, Cleaning, Care

Facebook, Instagram, Twitter

There are lots of other ways you can promote your business from paying for an online advert, putting an ad into a paper, adding livery to your vehicle or arranging for a leaflet drop to your local area. Tip – If you are going to have a presence online then choose one social media platform. Make it work by posting regularly and following up any customer leads.

With so many social platforms out there which one should you choose from? Our simple table gives you an overview of different

8. Making your margins Starting a business is about making money and to do that you need to know your margins. How much does it cost for you to do what you do. Your costs could include your time, fuel if you have to get somewhere, materials you use and other expenses. You need to calculate that before deciding on what you will charge your customer. This is important as it will define where you will work, what work you will do and what you won’t do. If you need materials make sure you have researched where, when and the cost to supply them. Getting these as cheap as you can without losing quality will help you maintain your margins and make money. For some services, margins are quite easy to calculate, for others like catering this is harder as there are lot of extra costs. There are some simple rules out there. If you are going to sell food, you need to treble the costs of ingredients to stand a chance of making a decent profit.

Our example • You sell 100 Posters at £10 per poster = £1000 of sales • Cost of selling those goods with printing and shipping = £200 • Gross Profit (1000 – 200) = £800 • Other costs to the business e.g. website, phone, graphic design, storage, advertising = £200 • Net Profit (1000 – 400) = £600 Whilst it is great to make a £1000 sale, you must understand those margins. What is your net profit after all your expenses are accounted for? Keeping your additional expenses low will ensure you’re making a profit and putting money on your table. One way to think about your margins is to consider how much net profit you are making from every £1 you sell. Then consider what that amount is per hour of your time. If after a year of trading your net profit is less than then minimum wage it may be time to think about whether your business is truly viable.

9. Doing the Numbers You need to create a method to track your income and expenses. The easiest way is to have all transactions go through your business bank account. At the end of the month you can see easily what profit you’ve made. Has the balance on your account gone up before you have taken any drawings out of the business for yourself? You could record week by week on a spreadsheet or on paper. Keep a note of your sales with a receipt book or invoice document using Microsoft Word or other word processor. These often come with invoice templates that you can adapt. Don’t forget to add your logo and method for people to settle the invoice. If you are going to issue lots of invoices you may want to start using an accounting software such as Quickbooks, Xero, Clearbooks or other. This will help when it comes to the end of the year and if you have customers who haven’t paid, you can chase them up easily.

10. Tax doesn’t need to be Taxing If you have recorded your income and expenses then doing your tax return is straight forward. You will need just two figures. The first is your total income for the financial year and the second is the total of all your allowable business expenses. You enter these two amounts into your self assessment. If you have earned less than £85,000 you can complete a simpler form SA103S. The system then calculates your taxable profits and what you need to pay. The process can all be done online. If you have also worked part time or had another employed job during that year, you will need to mention this on your tax return too, so have your P60 to hand. What can be claimed as an allowable expense can be found from this link: www.gov.uk/expenses-if-youre self-employed . If you are not sure how to do your return you can always employ an accountant firm to do it. These may charge as little as £149.

11. Getting Paid If you are setting up a website and are having a store then you will need a merchant service to take online payments to connect with your bank account. If you have a template site such as Weebly or Wix they will already have apps set up to connect you to merchant services such as Paypal, Stripe, Square or Worldpay. If you are going to be out and about and want to take payments from a market stall or face to face, purchasing a card reader to make customers payments is a must in an increasingly cashless world. Most merchants have them and these offer pin and touchless payments e.g. Zettle, Paypal, SumUp. The device connects via Bluetooth to your phone and you make charges using the app on your phone or tablet. Once paid you will get your funds sometimes immediately, sometimes in a day or two with a small fee usually around 1-2%. Check out www.mobiletransaction.org/card-machine small-business-uk for examples. Of course you can still have a receipt book for cash sales.

12. Insurance In order to trade you may well need insurance. If you are driving as part of your business, you are going to need to change the cover on your vehicle to include use for business. The other main ones to consider are: • Public liability that covers you for accidents and damages at your premises or a client’s property. • Employer’s liability insurance if you take on staff and they get sick or injured. • Product liability if someone is injured from a product you made, repaired or supplied. • Professional indemnity insurance if a client loses income or has a damaged reputation based on the advice or knowledge you gave them. Insurance can be relatively cheap if you shop around. You can use websites such as comparethemarket.com or moneysupermarket.com to find a product that works for you. Tip – Think carefully about the level of cover you might need.

13. Professional Registration For some businesses it’s the law that you have to be audited or registered before trading e.g. childcare and you may need to have certain qualifications or certificates. For other industries or services there may be far less red tape. Having some relevant qualifications or a professional body membership will give your customers confidence in trading with you. 14. Capital Everybusinessneedsmoney toget started frompurchasing tools and equipment, to setting up your website or buying livery for your work vehicle. Here are some basic questions to get you thinking about the cash you need. The key is in the first question. • What is the least amount of money you need to get started? • What can you buy cheaply or second hand? • What can you do yourself rather than pay someone else?

• Where can you source cheap services? • Do you need a serviced office or could you work from home? If you can borrow from your own funds (bootstrapping) or get investment from people you know than you can avoid loans and repayment terms. Other options include: going into a partnership with an angel investor, using a kickstart site, looking at formal loans from banks, exploring grants or other funding. If you are 18-30 you could contact the Princes Trust to look at help and funding to get started. Useful Web Pages • www.princes-trust.org.uk/help-for-young-people/ support-starting-business • www.crowdcube.com • www.angelinvestmentnetwork.co.uk • www.crowdfunder.co.uk • www.gov.uk/business-finance-support • www.gov.uk/apply-start-up-loan

15. Business Information and Advice

Useful Web Pages • www.heartofswgrowthhub.co.uk/start-grow business/starting-up • www.gov.uk/moving-from-benefits-to-work/ starting-your-own-business

If you have never been self-employed then get some advice from a professional. They will support you moving forward, help you avoid some of the pitfalls of setting up and test your business idea to see if it will really fly. Around the UK there are lots of growth hubs for small businesses where you can get free insight into creating a business plan. There are also funded courses such as www.popupbusinessschool.co.uk where you can join other people also looking to get started. If you like learning at home than you can look at other short courses online such as www.highspeedtraining.co.uk/business-skills/ starting-a-business-course.aspx The government also has lots of information about setting up your business at www.gov.uk/set-up-business . Many of the banks have advice tips and pages as well as how to set up your account. Your local enterprise partnership may well have lots of advice and get you connected to business networks.

Need More Advice? Contact Clarion Business Support Unit for more advice: bsu@clarionhg.com

Copyright © CGC 2023

Copyright © CGC 2023