The ultimate step by step guide
Probably one of the most asked questions during the 65, 619 new company incorporations in the UK (according to the latest statistics for April 2016) was “how much?”. Well not a lot to register it… but quite a bit to set up and maintain it.
There are definitely some factors to take into account that, if overlooked, can be deadly for your business, even before you start trading.
Yes, the idea motivates you, and your will is stronger than ever, but how solid are your finances and how long can your business survive without profit? It is vital that you think through all the potential costs properly, and include a contingency plan. There are always unexpected expenses. Those, along with poor budgeting are the most common reasons for start-up failure.
Once the money is sorted and your idea is finally turning into reality, you should be able to answer these basic questions and include them in your business plan along with all projected costs.
- What is your market?
- Who are your competitors?
- How useful is your product and how will you position it?
- What is your Unique Selling Point?
- Are you going solo or setting up a limited liability company?
Now, all you’ve got to do is make sure you include all these costs before you get started:
- Business premises: after staff salaries, probably the biggest operating cost. Whether you use serviced offices or retail business premises, bear in mind that normally these come with agency fees and service charges. You may also have to pay a big sum upfront on your lease, as some landlords and agencies operate on a quarterly rather than monthly basis.
- Professional advice: Include these services in your budget. The planning stage is one of the most important. It’s OK if you are not an expert, but find some legal and financial advisors to help you with your plan. Keep these contacts for future occasions – when you employ staff or have questions or on projected costs and profits, taxes… Then you’ll definitely need an accountant, payroll agent, lawyer or solicitor.
- Business travel: when starting a new business, you’ll probably have to attend meetings outside the office. Have some budget allocated to travel, either by public transport or using your own vehicle.
- Stock, tools and equipment: if you’re not operating a service this can also mean a significant upfront cost. You need to make sure that you’ve got all the material needed to carry out your work smoothly from the start.
- Insurance: this should be done straight away. It’s important that you protect yourself and keep your company from any type of liability. Insurance is not that expensive but it is important to get the right type of cover. The most common (and essential) is Employer’s Liability Insurance. The certificate should be displayed in your office along with the Certificate of Incorporation or Business Name Registration. Don’t make your business vulnerable.
- Marketing: as you’re starting a new business, you need to make people aware of its existence! Include events and networking on your budget as part of your awareness strategy. You can opt by traditional methods such as direct mail or spend a small amount in ensuring your website is well placed in search engine results. Invest some time and money in creating your brand: leaflets, logo, corporate brand sheet, business cards, etc. Create an identity that makes your company unforgettable!
- Staffing and employment: refer to your professional advisers to have guidance on recruiting new employees, wages, tax, National Insurance or any other payroll or HR matters – again, no need to be an expert, just seek some help to save time and effort and ensure you “do it right”. Companies nowadays tend to outsource these services, and there are various packages sold depending on the size of the company.
- Other expenses normally overlooked:
- IT and other equipment- computers, printers, toners
- Office furniture
- Business stationery and office supplies
- Website development
- Utilities – electricity, water
- Phone and internet charges
- Choose your business structure
- Find a location
- Register your company with Companies House
- Register for tax and national insurance
- License your business (if applicable)
- Get a website
- Good luck!
Any questions? We’d be happy to help – get in touch with me or any of my colleagues at ICC -International Corporate Creations.
by Joana Miranda, Admin and Finance at ICC – International Corporate Creations