How to set up a new business
Firstly, apologies for my lengthy absence. I’ve been really surprised by how much work is involved even in just setting up a business, let alone getting it ready to trade. But now, after about 3 weeks, we’ve finally managed to get everything set up and ready to go. And it feels worthwhile (now), although there were definitely times during the weeks that it could that I doubted what we were doing. This should mean that I now have time to resume my previous posting habits of at least every couple of days. More importantly, I should have more to write about these days too.
So on to this post. My plan with this blog has always been to a) improve my own life and b) share the things that I am doing to allow others to improve theirs too. On this basis, I’m going to run through the steps we’ve followed to get the business up and running and ready to trade. Therefore any readers of this blog will hopefully be guided by the steps I’ve taken.
One of the things I’ve noticed during the set up of this business is that there really isn’t that much (free) help available. There isn’t really a site that says “right, you want to start a business, you need to do this, this and then this”. Maybe this might become such a guide, although I’m sure this first draft will not cover everything. That said, if anyone has any questions on this then feel free to contact me and I’ll include my experiences where I can.
As I wrote previously, the most important part of the new business start up is to get the business plan written and reviewed. We’ve produced a couple of iterations of our business plan, and we are now at a stage where we can show the business plan to other people, and they understand and agree with it. However, it’s taken a few iterations to get to this stage. As a result, I now know exactly what different people are looking for from a business plan, and it’s important to ensure that the plan is written to cater for all of these people.
The most important areas we’ve found are the executive summary, which should give readers a good idea of what the business does, and the financial projections, which will be the first section that banks/investors will look at.
Note: this section only applies to companies incorporated in the UK. I have no idea how the incorporate a company in the US! Presumably it will be fairly similar however….
For UK customers, there is a simple and very effective method for incorporating a company, namely to use a company forming agent. Typically, I’ll always avoid paying for something that I could otherwise do myself. However, in this case the benefits both in time and convenience far outweigh the relatively low costs involved.
We used a company called Quick Formations to incorporate our company, but there are literally hundreds of similar companies all ready and willing to do this work for you.
The Inland Revenue was one of my biggest concerns, since the punishments can be quite severe for not doing everything by the book with these guys. However, I was pleasantly surprised to receive a letter from the Inland Revenue a few weeks after incorporating the company, explaining the situation and providing the forms that need to be filled in.
Importantly (as I’ve discovered), it is essential to ensure that all of the items paid for and all invoices sent out/sales received are logged from the very beginning. We fell into the trap of paying for items out of personal funds, only to lose VAT receipts and the like, meaning that we can no longer attribute these costs to the company without recovering and accounting for all of the items spent. Therefore I would recommend that you start keeping a good record (we use an Access database) of all of the cashflows involved from the very beginning.
The website took us a while to produce. The company we’ve set up is a web consultancy business, and so we’d expected that producing a website would take a matter of hours, maybe a couple of days. Unfortunately, the worst part of this production was thinking of and agreeing on a brand for the business. And we still haven’t sorted it, so we’ve had to produce a holding page until we can finalise the site design and content! For those who are interested, the site is currently available at http://www.yardassociates.co.uk .
Following the production of the website, the next key problem was deciding which of the many hosting companies we should choose to host the site. Anyone looking for advice on this would be ill advised to listen to any particular recommendations. From our research, we’ve found that the majority of hosting companies provide the same services at broadly the same cost. My recommendation would therefore be to do a simple Google search and find one that you feel comfortable with. (In case you are wondering, we ended up going with Streamline who can be found at http://www.streamline.net)
This one was also quite simple. These days, all of the major banks are bidding for business banking accounts, and there are numerous benefits that are offered by the banks as a result. We went with Lloyds TSB, simply because logistically it was the easiest (we both already had LTSB personal accounts), and managed to get fee free business banking amongst other benefits as a result.
With all of the logistical stuff finished, it becomes time to actually start trading and to start winning some customers. Fortunately, we already had a strong contact base to work on initially, and have started to make some ground into winning some business. And this is about as far as we have got.
This has probably been the busiest 3 weeks I’ve had in ages, and it has amazed me how much there really is to get done before you can even think about trying to win clients. As a rule of thumb, I’d recommend at least a month before you generally even start looking for business, and maybe 3 months before any cash comes rolling in.
I hope this has proved useful to some people. Certainly it would have proved useful to me as I was working on starting up my business. I will continue to update this as I learn more and more lessons in the future.
So on to this post. My plan with this blog has always been to a) improve my own life and b) share the things that I am doing to allow others to improve theirs too. On this basis, I’m going to run through the steps we’ve followed to get the business up and running and ready to trade. Therefore any readers of this blog will hopefully be guided by the steps I’ve taken.
One of the things I’ve noticed during the set up of this business is that there really isn’t that much (free) help available. There isn’t really a site that says “right, you want to start a business, you need to do this, this and then this”. Maybe this might become such a guide, although I’m sure this first draft will not cover everything. That said, if anyone has any questions on this then feel free to contact me and I’ll include my experiences where I can.
The Business Plan
As I wrote previously, the most important part of the new business start up is to get the business plan written and reviewed. We’ve produced a couple of iterations of our business plan, and we are now at a stage where we can show the business plan to other people, and they understand and agree with it. However, it’s taken a few iterations to get to this stage. As a result, I now know exactly what different people are looking for from a business plan, and it’s important to ensure that the plan is written to cater for all of these people.
The most important areas we’ve found are the executive summary, which should give readers a good idea of what the business does, and the financial projections, which will be the first section that banks/investors will look at.
Incorporating the company
Note: this section only applies to companies incorporated in the UK. I have no idea how the incorporate a company in the US! Presumably it will be fairly similar however….
For UK customers, there is a simple and very effective method for incorporating a company, namely to use a company forming agent. Typically, I’ll always avoid paying for something that I could otherwise do myself. However, in this case the benefits both in time and convenience far outweigh the relatively low costs involved.
We used a company called Quick Formations to incorporate our company, but there are literally hundreds of similar companies all ready and willing to do this work for you.
The Inland Revenue
The Inland Revenue was one of my biggest concerns, since the punishments can be quite severe for not doing everything by the book with these guys. However, I was pleasantly surprised to receive a letter from the Inland Revenue a few weeks after incorporating the company, explaining the situation and providing the forms that need to be filled in.
Accounting
Importantly (as I’ve discovered), it is essential to ensure that all of the items paid for and all invoices sent out/sales received are logged from the very beginning. We fell into the trap of paying for items out of personal funds, only to lose VAT receipts and the like, meaning that we can no longer attribute these costs to the company without recovering and accounting for all of the items spent. Therefore I would recommend that you start keeping a good record (we use an Access database) of all of the cashflows involved from the very beginning.
Website
The website took us a while to produce. The company we’ve set up is a web consultancy business, and so we’d expected that producing a website would take a matter of hours, maybe a couple of days. Unfortunately, the worst part of this production was thinking of and agreeing on a brand for the business. And we still haven’t sorted it, so we’ve had to produce a holding page until we can finalise the site design and content! For those who are interested, the site is currently available at http://www.yardassociates.co.uk .
Following the production of the website, the next key problem was deciding which of the many hosting companies we should choose to host the site. Anyone looking for advice on this would be ill advised to listen to any particular recommendations. From our research, we’ve found that the majority of hosting companies provide the same services at broadly the same cost. My recommendation would therefore be to do a simple Google search and find one that you feel comfortable with. (In case you are wondering, we ended up going with Streamline who can be found at http://www.streamline.net)
Bank Account
This one was also quite simple. These days, all of the major banks are bidding for business banking accounts, and there are numerous benefits that are offered by the banks as a result. We went with Lloyds TSB, simply because logistically it was the easiest (we both already had LTSB personal accounts), and managed to get fee free business banking amongst other benefits as a result.
Bringing in Business
With all of the logistical stuff finished, it becomes time to actually start trading and to start winning some customers. Fortunately, we already had a strong contact base to work on initially, and have started to make some ground into winning some business. And this is about as far as we have got.
This has probably been the busiest 3 weeks I’ve had in ages, and it has amazed me how much there really is to get done before you can even think about trying to win clients. As a rule of thumb, I’d recommend at least a month before you generally even start looking for business, and maybe 3 months before any cash comes rolling in.
I hope this has proved useful to some people. Certainly it would have proved useful to me as I was working on starting up my business. I will continue to update this as I learn more and more lessons in the future.
posted by Newbury at 7:05 AM
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