Starting a Business (UK Edition)
Getting a business off the ground may not be easy but it can be great fun, especially if it gets off to a flying start. This Cheat Sheet serves up key ways to make sure that your business gets the initial boost that it deserves.
How to Create Great Business Plans
Bankers, and other people, reading business plans see hundreds of them every year. Your own business plan has to grab their attention. Follow these tips to make your business plan stand out from the crowd:
Show how you’re different to the competition.
Make your projections believable.
Say how big the market is.
Introduce yourself and your team.
Include details on non-executive directors and mentors.
Provide financial forecasts.
Demonstrate the product or service.
Spell out the benefits to your potential investor.
Explain your web strategy, including cyber security measures.
Set out your social media strategy – Facebook, LinkedIn, Twitter and so on.
Researching the Market when Starting a Business
Professional business advisers often say that you have to know enough about your market to succeed, without qualifying how much is enough. To understand business areas that are new to you, factors to research and have a sound grasp of include
Your product or service
The advertising and promotional material
Channels of distribution
Overseas business opportunities
Can You Make Money through Starting a Business?
Having fun is great, even essential if you’re going to weather the inevitable storms that every business faces at some time or another. But fun can easily turn sour unless you make a profit. Can your business idea leave you rolling in used tenners? To check that out, you need to establish
Day-to-day operating costs
How long it will take to reach breakeven
How much start-up capital you need
The likely sales volume
The profit level required for the business not merely to survive, but also to thrive
The retail price of your product or service
Selecting a Distribution Channel for Your Products or Services
If your customers don’t come to you, you have no option but to take your product or service to them. The following are options for doing so:
Internet and mail order
Consider these factors when choosing channels of distribution for your particular business:
Does it meet your customers’ needs?
Can the product itself survive?
Can you sell enough this way?
Is it compatible with your image?
How do your competitors distribute?
Is the channel cost-effective?
Is the mark-up enough?
Reasons to Outsource Parts of Your Business
Doing everything yourself is rarely a good strategy in business. Other people may be better, cheaper or faster than you at some aspect of your business. While you may, for example, be able to deliver products to your customers, couriers are probable better value for both you (and your customers).
Consider the following reasons why it might make sense for you to consider outsourcing some aspects of your business:
Assistance in meeting unexpected deadlines
Access to expertise
More predictable costs
More free time
Economies of scale
How to Calculate VAT
Calculating the VAT (Value Added Tax) element of any transaction can be a confusing conundrum. By following these three simple steps, you can get the sum right first time:
Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 120, if the VAT rate is 20 per cent. (If the rate is different, add 100 to the VAT percentage rate and divide by that number.)
Multiply the result from Step 1 by 100 to get the pre-VAT total.
Multiply the result from Step 1 by 20 to arrive at the VAT element of the bill.
10 Ways to Minimise Tax when in Business
Making a profit is essential if you’re to succeed in business. The more of that profit you can hold onto the more you have to invest in new equipment, processes, products and services and so stay ahead of the competition.
Take these steps to keep your tax bill to a minimum:
Make sure that you include all allowable business expenses. When you’ve recently set up in business, you may not be fully aware of all the expenses that you can claim.
If you’ve made losses in any tax period, under certain circumstances you may carry these forward to offset future taxable profits or back against past profits.
You can defer paying capital gains tax if you plan to buy another asset with the proceeds. This is known as ‘rollover relief’ and normally you can use it for up to three years after the taxable event.
Pension contributions reduce your taxable profits. You may even be able to set up a pension scheme that allows you some say over how those funds are used.
If you intend to buy capital assets for your business, bring forward your spending plans to maximise your use of the writing-down allowance, which is the portion of the cost of the asset you can set against tax in any year.
Identify non-cash benefits that you and others working for you can take instead of taxable salary.
Examine the pros and cons of taking your money out of a limited company by way of dividends or salary. These routes are taxed differently and may provide scope for tax reduction.
If your spouse has no other income from employment, he or she could earn a sum equivalent to the annual tax-free allowance (currently about £5,000) by working for your business.
If you incurred any pre-trading expenses at any stage over the seven years before you started up in business, you can probably treat them as if you incurred them after trading started.
You may be able to treat the full purchase price of business assets you bought through hire purchase in your capital allowances calculation.