Thousands of people choose to go alone and start their own small business startup every year, either because they have a great idea or they see it as an opportunity to make good money. While all these are valid reasons, there are many other issues you must think of
- What will the small business startup do?
- Where will it operate?
- Will I need an office?
- Do I need to hire people?
- Do I have sufficient financial support?
- How long before profits come by?
There is never a right or wrong small business startups; the only things that decide success or failure are determination, hard work and a will to go on in spite of hurdles.
This may seem like common sense, but surprisingly it is easily overlooked and the lack of which has put many small business startups into grief. After all without a plan how can you measure your progress? So let’s see how actually a business plan is written
A plan should mention these aspects
- Summary (Objectives, aims, mission)
- Company outline (History, structure)
- Products (Description, competitors, future plans)
- Market Analysis (Needs, trends)
- Strategy (Sales, Marketing and production plans)
- Management summary (Organisational structure)
- Finances (business funding source, projected revenue, balance sheet, cash flow)
Like in case of a home business startup, if your small business startup is self financed the business plan need not be elaborate, but if you are relying on a bank for your finance needs, then the plan needs to be detailed, mentioning a forecast and giving estimation on when investors can expect returns, is a good idea. Many banks and the federation of small business have good sample business plans. A good business advisor or accountant may be helpful too.
Raising Small Business Startup Finance:
Ready with your business plan, time to look for financing options.
Choosing a Bank
Before you signup make sure you have taken a look at what’s on offer.
- Check whether facilities like direct debit and standing orders are available, this will help your small business startup run smoothly
- Look for accounts which offer Low or free transaction, either on Cheques or online transactions.
- Make sure your account is accessible through telephone and internet banking, this could prove very essential for your day to day business
- Compare at least 3 accounts using a financial information provider such as moneyfacts.
- Look beyond special offers and see how much you will be paying once the offer period ends.
This type of finance is pretty much dependent on what type of small business startup you are running. If you are running a hi-tech business there are some specialist investors in that sector. Grants can be obtained from Business Links and other local development agencies. Department for Business Innovation and Skills (BIS) can also provide finance which can amount to tens of thousands of pounds. The European Union also has various cash schemes for small business startups.
Schools, Universities and other educational institutions have incubator schemes to help small business startups takeoff. They also have specialist staff that can help you make most of your small business startup. They can also put you in touch with experts that you need and help raise finance.
Business angels are often entrepreneurs or retired executives who are interested in investing money in small business startups. Business angels use their own resources and invest in lump sums. A typical amount they would be ready to invest would be around £30,000. All they need is a business which has a competitive edge and unique selling point to offer. In return an angel will expect a stake in your business or a non-executive seat on the board.
Marketing your Business:
Marketing is a key element for a small business startup’s survival and expansion. First thing your need to do is research the market you are targeting. It is a good idea to know who your most lucrative customers are.
There are various kinds of research you can use, such as free Government statistics and business reports. Hire professionals to carry out research on your behalf, or do it your self using forms of surveys and fieldwork.
If you are testing a new product, take opinion from as many people as possible, from varied age groups and walks of life. Other ways of marketing your product would be advertising, direct marketing, exhibiting in trade fairs and online marketing
Fairs and exhibition charge around £400 for a stand, here you will meet interested companies and get tips from experienced investors.
Protecting your small business startup
If you have a unique product idea then you must protect it. If your small business startup is more intellectual like photography, painting or writing then a copyright is your protection. If your small business startup centres on invention then a patent needs to be acquired. It won’t be cheap, but is well worth it.
Before going in for a patent, make sure your idea is really unique. You can apply for a patent free of charge either on the patent office website or at a public library with a patent department. Otherwise you could go to a registered patent agent or search bureau, for a higher fee. Make sure agents are part of Chartered Institute of Patents Agents. Patent office will cost you £200 for initial filing and the process will take up to 33 months. An agent may charge anything from £600 to £1000 for a small invention.
Copyright is automatic in UK, if you have created an “Intellectual” work, and it lasts for 70 years. You don’t have to apply for it, but make sure you append your work with the international copyright symbol (©) followed by the year of creation and your name.
Tax breaks for small business startups:
- The cost of buying new equipments and premises can be deducted from new company’s taxable profits over several years.
- Companies offering share incentives to their staff, where they can purchase company shares get tax breaks.
- Small and medium businesses who have spent money on research and development can deduct 150% of cost when calculating tax.
- There are capital allowances for energy saving technologies, software, flats over shops and contaminated land.