Being your own boss gives an array of benefits, principally among them being control and greater financial freedom. While there are naturally risks that also come with being a business owner, an increasing number of people are taking steps to go it alone. What was once daunting for many, is fast becoming a realised idea for many.
In some ways the increase in the number of new businesses has an unusual source. Since the start of the COVID-19 pandemic there has been a great deal of movement of people into new sectors and reassessing what they want from their lives, not just their careers. Dubbed by the media as the ‘Great Resignation’ this trend was seen firstly in the US, where the government keeps a record of people quitting jobs. American resignations peaked in November 2021, while the UK is a little less data driven we are certainly seeing similar trends.
The number of people made redundant is the lowest for over a decade, as is the number of open vacancies in the job market. Areas such as retail and hospitality, once seen as the ideal entry point for first time workers, are now perceived with greater scrutiny. Younger people in particular are seeing the slowing of the economy and greater power in the recruitment market as signs that starting their own business carries much less risk than previously.
Getting started is often the hardest part of any task, and the creation of your first company is certainly a large task at that! Before you get started it’s crucial to take all the necessary steps to ensure your go to market plan is seamless, with as many costs and processes accounted for as possible.
Research Your Market
History is littered with company’s that had plenty of financial backing but a poorly planned out product that has no interest is a guaranteed failure. In recent years companies with a ludicrous amount of capital have sunk in a short time with no real audience for their service.
Short lived streaming service Quibi raised over a billion dollars in investment, but given the service was essentially a mobile only version of more popular services the lack of good content and interest meant it lasted just six months. While your first company will likely not bomb as hard, there is no doubt that understanding your audience is crucial before commencing.
If you’re considering opening a store locally then survey the local area. Are there competitors present around the corner? If so, what are their prices and services like in comparison to what you can offer? It may also be of benefit to canvass the locals and ask about their interest in your shop, or learn about similar shops that have operated there in past years. If someone you would have considered a competitor has recently gone out of business then there is likely a reason for that!
If you’re considering operating in the online space then things can be decidedly trickier. There is an extremely high chance that whatever you are selling that there will be hundreds of sites offering the exact same product! That isn’t to say new online businesses don’t succeed, but the unique selling points of your company are vital to identify before you open up.
Define Your Business Structure
There are a few different options when forming a new company. Selecting the correct structure for your business plan is vital for admin and tax reasons. The principal options are:
Sole Trader
Operating as a sole trader is often the principal option for many start ups. Having no direct employees or partners means that you will shoulder a significant amount of responsibility. In effect your name and company are directly linked, and not considered different, as a result outstanding debts or legal claims would sit with you.
Partnership
Similar to a Sole Trader arrangement, the only difference is the spreading of responsibilities to more than one party. If you’re entering into a small business with another close friend or family member then this can be a good route to start off with.
Limited Company
The use of a limited company will separate you from your business, so if you were to experience financial hardships then these would not be tied directly to you. The application and maintenance of a limited company involves considerably more admin, and for some it may be of benefit to utilise an accountant to ensure everything is set up correctly.
Secure Funding
Depending on your intentions, the financial side of your new business is usually one of the easiest things to navigate. At present there are numerous ways to secure funding for your business and ensure your start things off right. The hardship with finances often comes later down the line, once you are fully operational you need to ensure that the repayment of any funding is secured along with enough profits to cover running costs, and pay yourself.
The UK government has been reliable in the past few years with supporting the financial side of business start ups. There are numerous schemes available at any one time, including localised schemes that provide mentoring as well financial assistance.
Ensure Your Are Protected
From day one of owning a business you can be at risk. Regardless of your chosen sector there are numerous areas where your finances are in a precarious situation if you don’t take the proper steps to get protection. If you intend on employing anyone aside yourself then you will require Employer’s Liability Insurance at a minimum, but there are plenty of our areas to consider.
The cover you will require varies widely depending on your sector, size and numerous other factors. Your best option is to actually consult with an expert in start up insurance, they will be best placed to get you the cover you need to minimise risks to your fledgling business. Having a trusted partner will also assist in saving you time, a brokered insurance solution will take the pressure from you to get the correct level of cover as well as unifying your various policies to one cost and one renewal date.
