New Year Perfect Time for New Start-ups

In the current economic climate setting up a new business can be daunting. With the start of a new year, ICAEW is encouraging budding entrepreneurs to get their new ventures up and running. This comes as government currently conducts an enquiry into entrepreneurship, which ICAEW has responded to.

Clive Lewis, ICAEW’s Head of Enterprise, explains:

“SME growth is crucial to the UK’s economic success. If entrepreneurs believe they have a strong business plan, the necessary resources and the determination to succeed, then the start of a new year is a good time to encourage new influxes of enterprise to help boost the economy.”

“It can be hugely rewarding for start-ups to be their own boss and to build something from scratch in the community. A new business could well be the best way to earn an income, especially if they have saleable skills, an innovative idea or an interest that could be turned into a profitable business. It is also important to note that start-up businesses need to build a network of contacts for customer referrals, to help find potential suppliers and sub-contractors and to offer peer group advice.”

Clive’s top ten tips for budding entrepreneurs are:

  1. Research the market. Find out whether customers will buy what you are offering, and use feedback to refine your product or service. (See Market Research: The Basics)

  2. Write a business plan. Describe your business, how it will operate and its finances for the first two years. (See Writing a Business Plan)

  3. Raise finance if needed. Being under-financed often leads to poor performance at the start. (Read: Raising Finance for your Business)

  4. Build in contingencies. Setting up always takes longer than you think, especially if you need to comply with health & safety requirements, planning regulations etc.

  5. Choose the right staff. Unless you are planning to be a one-man-band, pick the best people you can afford. They may work for less than the market rate initially if they are convinced of the potential for growth of the business. (See: Staff Planning)

  6. Find a mentor. It is helpful to have someone to bounce ideas off. Learn from customers and suppliers and ask the views of your chartered accountant and other advisers. (Read: Personal Development Plans)

  7. Make sure you have the right financial information. This is vital, not just for the taxman but for you to understand your trading performance. Set up records from the start, using software if you are comfortable with it. Employ a good book-keeper if you can afford to or talk to your chartered accountant.

  8. Monitor key performance indicators. Ensure that you have right data, such as turnover, gross margins, overheads, finance costs, net profit, cashflow and working capital, on a daily, monthly and annual basis. (More about KPIs)

  9. Be alive to possibilities and dangers. Don’t exclude taking the business in a different direction if you see potential elsewhere or there are problems ahead. Watch out for competitors in difficulty and listen to your customers, suppliers and staff.

  10. Learn. Absorb all that you can from the experience of being an entrepreneur and from those around you, and also learn from your mistakes.

  11. Reduce the chances of failure. Do something you already know, or employ people with experience in the sector. Manage your overheads and working capital. Appoint a chartered accountant with experience of start-ups before you launch your new enterprise.

In a response to a Parliamentary Group enquiry on entrepreneurship, ICAEW recognises that at a time of active deficit reduction programmes within the public sector there is a limited amount of support government can provide to start-ups. ICAEW’s Business Advice Service (BAS) helps small companies and start-ups with business and financial advice to aid economic growth and deliver expert guidance on how best to start, plan, manage and grow a business.

Clive Lewis adds:

“In tough economic conditions, small businesses need the right advice and support to succeed. As a profession that acts in the public interest, ICAEW Chartered Accountants recognise their responsibility to offer crucial guidance. BAS offers an initial free consultation with no obligation to continue with the service and will play a vital role in the business support landscape.”

Chartered accountants can save entrepreneurs time by helping with compliance issues such as notifying HM Revenue and Customs of commencement of a new business and registering for VAT as well as advising on issues such as which legal status a new business should have to minimise tax liabilities. They also have an established network of contacts. If they are unable to help they will know somebody who can.

  • For further business advice articles see our section on StartUps.

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