Starting a Business (UK Edition)
Got a great business idea and fancy your chances of turning it into a money-making reality? Use the practical advice in this cheat sheet to get to grips with market research, taxes and perfecting your own business plan and be prepared for all that lies in store when starting up your own business.
How to Make a Great Business Plan
Got a great business idea but struggling to get your business plan together? Follow these tips to make your business plan stand out from the crowd:
Hit them with the benefits
Make your projections believable
Say how big the market is
Introduce yourself and your team
Include non-executive directors
Provide financial forecasts
Demonstrate the product or service
Spell out the benefits to your potential investor
Researching the Market Place of Your Business
Researching your market place is a vital exercise when starting up any business. To understand business areas that are new to you, research factors such as:
Your product or service
The advertising and promotional material
Channels of distribution
Can Your Business Make Money?
Even with the most thorough of market research and the best business plan in the world, you’re not on to a winner unless your business idea can bring in the pennies. You need to establish:
Day-to-day operating costs
How long it will take to reach break even
How much start-up capital do 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 Business
Customers are what you need to make your money. If your customers don’t come to you, then you have the following options for getting your product or service to them:
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 in Business
There are plenty of great reasons to outsource your work load. Take a look at this quick list to see how outsourcing can benefit you and 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 real stinger of a sum. Following these simple steps can help you get it right:
Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 117.5, if the VAT rate is 17.5 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 17.5 to arrive at the VAT element of the bill.
Five Ways to Improve Your Business’s Presence Online
For any kind of business, the Internet can prove to be a most valuable platform. Read these tips to see how you can take advantage of all it has to offer and launch your business into the world of cyberspace!
Once you have a website you have ‘readers’ who other people will pay to reach, just as they would if you had a hard copy magazine. You can sell space on your website yourself or affiliate with other websites.
Nearly a quarter of all jobs are filled using the Internet so when you start to grow your business you can advertise for staff on your own website. In that way you can be sure applicants will know something of your business and you could cut out most of the costs of recruitment.
Businesses get dozens of phone calls and letters asking essentially the same questions. By having an FAQ (Frequently Asked Questions) section on your website you can head off most of those and save time and money.
Carry out free customer satisfaction surveys to get quick customer feedback on new products, services as well as any aspect of your business proposition.
Sell your products and services 24/7/365 all around the world .
Ten Ways to Minimise Tax
Paying taxes is unfortunately an inescapable part of running any business. Here are some simple ways of making sure you don’t pay more than you need to.
Make sure you include all allowable business expenses. When you have recently set up in business, you may not be fully aware of all the expenses that you can claim.
If you have 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 you can use it normally 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 do 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 £4,000) 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.