Chapter 5

Timing the jump

Starting a business can be a confusing operation: so many decisions to take, so many actions to carry out. It can be important to keep to the right path. If you fail to take one step when it is necessary, this can delay your start.

What is in this chapter?

This chapter should help you to keep to the critical path. It sets out 60 steps. Not all will apply to every business – decide which are critical for yours and which you can ignore. You might find it convenient to combine two steps even though one does not need to be done until later. But, in general, carry out the steps in the approximate order given. The steps are divided into four sections:

• Initial preparation (see below).
• Getting into greater detail (p. 44).
• Setting up (p. 46).
• Ready to trade (p. 47).

Initial preparation

1Carry on in your job, if you are in paid employment; if able to, carry on drawing Jobseeker’s Allowance, if unemployed. You can undertake the initial preparation and research while still doing this, although to keep the allowance you also need to carry on looking for a job. If you are unemployed, you may be eligible for some help in starting your business through the New Enterprise Allowance (p. 60) – talk to Jobcentre Plus, look on www.gov.uk.

2Analyse your character and abilities. Are you the right person to start on your own (p. 33)?

3Discuss with your family the possibility of starting a business. Are they aware of what it will mean to family life? Will they be committed (p. 35)?

4Come up with a shortlist of ideas for a business. Do you have the necessary skills? Does the market look promising (pp.39–40)? Will you be marketing yourself or through an online platform?

5Briefly define product ideas (p. 11).

6Brush up inadequate skills. Apart from reading the relevant sections of this book, consider training courses and counselling (p. 58).

7Consider whether you should start the business with someone who has complementary skills – that is, who is strong in those skills in which you are weak. Negotiate who gets what share in the partnership or company.

8Decide how big a business you want. Will it be large- or small-scale? How much growth potential do your business ideas have? Do you have the essential management skills to opt for a fast-growth route?

9Did your self-analysis suggest that you needed ongoing help? Or have you been unable to come up with a sound business idea? What about a franchise? Typically, you need between one-third and one-half of the purchase price (p. 97).

10Investigate the possibilities of buying a business if you have the necessary funds or can raise them (p. 69).

11Carry out detailed market research into a shortlist of ideas (p. 30).

12Identify a market sector (p. 21) and work on the product for your chosen sector.

13In steps 11 and 12, narrow down possible ideas to a leading prospect.

14Work out your principal selling method – online platform, e-commerce, your own website, for example.

15Develop first rough estimate of amount and timing of sales.

16Review yourself, your skills, your family, your idea (p. 33). Take the decision to proceed, do further work or abandon. It is better to drop the idea now than carry on with doubts.

Getting into greater detail

17Draw up an initial business plan. Forecast sales, costs, cash flows. At this stage, figures will be very approximate (p. 287).

18Make a preliminary decision about your need to raise money. Roughly, how much will you need? Who is the likeliest lender (p. 305)?

19Discuss with your family what you will be able to invest. Consider what security you can offer (pp. 35, 310).

20Seek out and employ the advisers you may need. These could include a solicitor, accountant, bank, design consultant, IT specialist, database experts and web designers.

21Decide how much you will spend setting up, but keep a margin of safety. Tailor the amount to how much you are willing to risk yourself, as the funds you can raise will be a multiple of what you can invest.

22If you are currently employed, are you able to give the necessary effort to get the business going? Or do you need the extra income? Consider giving up work.

23Test your product or service to confirm its performance. Test-market your product or service, if possible. Review your product as a result of testing.

24Apply for a patent to protect the product or register the design or trade mark, if applicable (p. 109).

25What form will your business take: for example, sole trader, partnership or limited company (pp. 58, 61, 64)?

26Decide your IT strategy – accounts package, spreadsheet, e-mail, database and so on.

27Name your product and business (p. 119). Keep in mind your sector of the market and the product’s benefits. The name is part of your selling effort.

28Register the company or limited liability partnership name, or change the name if buying a ready-made company (p. 82). Check there is no other company with that name. Sole traders and conventional partnerships need take no action.

29Draw up a partnership agreement, if applicable (p. 65).

30Come up with some initial ideas about a web site design and branding.

31Develop ideas about how to sell your product or service. Identify the product benefits and advantages. What means will you use to get your message across: web site, social media channels, leaflet, etc. (p. 129)?

32Identify possible suppliers. Begin your negotiations.

33Develop a pricing strategy (p. 177).

34Refine a business plan (p. 49). Be pessimistic about sales and costs.

35Ask an adviser or colleague to go through the plan with you, challenging all the assumptions and figures. Have you identified the principal risks, threats, opportunities, strengths and weaknesses?

36Review the plan yet again. Does the business look viable? Will you go ahead, research further or abandon? All the momentum is to push forward because of all the work and commitment put in so far. But if the idea does not hold water, the right decision is not to proceed but to research something else.

Setting up

37Consider what equipment your business will need. Investigate how to pay for it: cash, hire purchase or leasing.

38Establish guidelines on what credit to offer, what credit to take from suppliers, how you will control cash (p. 323).

39Find out what insurance you will need for your business (p. 279).

40Estimate the amount of initial stock and production run, if applicable.

41Make first approaches about raising money.

42Decide if you will start trading before you raise the money or if you will wait until you have finalised. Remember with complicated finance, it can take several months.

43Register for VAT if you are forced to and, if not, consider whether it would be beneficial (p. 399).

44Choose accounting package (p. 363) and decide if you need to use an experienced bookkeeper or accountant.

45Work out what your accounting period should be. There is some advantage in a year-end early in the tax year if profits are rising (p. 374).

46Consider the virtues of trading from home, even if several of you are joining together to start the business. E-mail, mobiles, video meeting apps, such as Zoom or Teams, FaceTime or WhatsApp and other messaging links can help you to communicate from several locations.

47Finalise decisions about your online presence.

48If you will need staff when you start trading, start the search now.

49Carry on developing your ideas about image (p. 121), how to sell (p. 149) and how to get your message across (p. 129).

50Draw up terms and conditions of sale, if applicable. Set up your database for actual and potential customers.

51If you will be selling direct yourself, develop a sales dialogue. Train by carrying out role-play with your spouse or a colleague (p. 161).

52Set up a financial control system – that is, how you will compare actual performance with budgeted performance as drawn from your business plan.

53Finalise your decisions about mailers, apps and social media channels.

54Draw up contracts of employment for any staff. Consider outsourcing your HR function.

Ready to trade

55Finalise premises (if applicable), fitting out, employing staff, sales methods.

56If you are still employed, hand in your notice. If you are unemployed, contact your local Jobcentre Plus to find out whether you can get any financial assistance from the start of trading.

57Tell HM Revenue & Customs (HMRC) if you are to be a sole trader or partner (pp. 60, 64).

58If you are forming a company or taking on staff, ask HMRC for information on how to operate the PAYE tax system (p. 251).

59Set up a reporting system for your staff.

60Plan the opening.

Summary

1Use this step-by-step guide to help to start your business in the right way.

2The guide is in approximate order; in particular, actions may vary depending on whether you decide to postpone trading until you have raised the money you need.