Tips for starting a business

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Evening all,

I'm in the process of starting up my own business. The website is nearing completion and I have handed in my resignation (I know, I know, risky stuff but I'm going to make this work).

There is a whole wealth of information available on the Internet and whilst the Inland Revenue pages are informative, I'd quite like some 'real-world' advice from any entrepreneurs on here or perhaps from people who have had experience in business startup themselves.

A couple of questions I'd like to ask straight off if I may:

- How do I go about registering my Private Ltd Company's name? http://www.businesslink.gov.uk seems to be there place to do it but I've quickly searched for other sites and not sure now where to start.

- I'm aware of the threshold whereby you need to register for VAT. Whilst I'm quite sure I'm not going to go over this in my first year I'd quite like to register voluntarily and benefit from claiming VAT back on business purchases etc... any thoughts on this?

- How does your credit rating affect your business? When opening accounts with companies for the purchase of goods do they look at my personal account or that of the business?

I'm sure other questions will follow. Thank you in advance for the help.

Dave
 
Dave - if you are starting a Ltd co - you will need an accountant - they will explain about issuied capital the benefits of A & b Shares, dividends , Corporation Tax etc.
As regards Vat - remember if you are going to reclaim it, you also have to charge it - and unless you have some pretty big initial purchases plannned it may well in your interests not to register until your turnover makes it necessary - remember if you dont charge it you will be 20% more competitive than those who do!
Get a good accountant - an hour of their time is worth paying for and start off on the right foot!
 
Voluntary VAT registration can be a good choice provided that you're buying from VAT registered businesses and selling to VAT registered businesses too, but a very bad idea if you're selling to unregistered businesses or individuals.

Of course, there can be short term gains if you register voluntarily, but generally you'll lose out. And anyway, although (for example) if you're VAT registered you can claim back the VAT if you buy a van second hand van from a dealer, you can often save more by buying it privately...

As for credit rating, if it's the business that's responsible for the debt then in theory nobody should be checking your own credit record, but in practice they are very likely to, especially when the Company is young and especially for large amounts. Personally I've found that it's usually quite a bit cheaper to pay cash for everything anyway.
 
If your going LTD, and an accountant will tell you this anyway, then start the company with £100 worth of share capital. Any more funds you put into the business do as a directors loan, then you can withdraw it without paying income tax.

Keep receipts on everything.

Have a good business plan. Have a good marketing plan. Summarise these plans onto a sheet of A4 and stick it above your desk. These plans are what the goals of the business should be, and should be seen daily to remind you of your goal. Also remember that these plans need to be flexible - revisit them regularly and update them to make sure they fit with your current goals.

Your business bank manager will want a copy of your plan. It is worth marking down dates that you hit significant milestones on a copy of the plan. That way you can point out to your bank manager that when you put something in your plan it happens. This can be a big thing when going to the bank wanting funds.

Get a company credit card. It can make paying for things easier - especially if you are getting charged for every cheque you write/payment you make. THat way you can make the payment for free on the card and just clear the card IN FULL every month.

Keep a log of the hours you do, just for reference.

Instead of using the traditional post for sending mail use something like- TNTPost's Transcend - which is hybrid mail, allowing you to type a letter on your computer, add your header etc. then email it to their system, which will then print, stick in an envelope and post without you moving your bottom - and saving you money as well in both printing, postage and time costs.


With regards credit accounts from businesses, as GMAN will confirm, most will go on a credit search and decide how much your worth. THese days do not be offended if you do not get credit terms from people straight away. Build a relationship with people to get terms, but also remember cash is king and haggle a discount for paying up front/before your 30 days are up.

Give us a clue what line of business it is and we have more little gems!
 
Firstly, thank you for the comments, they are most helpful indeed.

I'm starting up my own computer support company. Some may think that there's not much of a gap in the market for that sort of thing and you may be right. But having done quite a bit of research I can tell you that there are plenty of people out there who will rip you off when it comes to this sort of thing and customers simply aren't standing for it anymore. They're still willing to pay the money but they want something extra.

My aim is to provide a reliable and honest service which is of good value. I also plan on providing tuition to customers so that they feel like they're learning something in the process. i.e, I don't just fix the problem, charge them £50 and leave only for it to happen again for whatever reason (as can often happen with computers). This is my unique selling point if you like.

In terms of capital, there's really not much that I'd need. I have a vehicle and tools. Things like usb sticks and portable hard drives I also have so none of that is a problem.

To cut more costs (but not necessarily corners) I'm building my own website. I'd like to eventually offer this as one of my services but for the time being I'm still very much an amateur. Your thoughts are welcome on the one I have built for myself so far (please bear in mind that it is still under construction and some pages have yet to be uploaded). www.meandmypc.co.uk

I shall be making an appointment with an accountant in due course. Whilst I'm confident I have the knowledge to provide customers with a good services, I fear I currently lack the business acumen required to really make this a success.

Thanks again for your comments (y)

Dave
 
Well, I wish you all the luck in the world with this, but what you've just said confirms my earlier view about VAT registration - it isn't going to be in your interest to register for VAT until the law requires you to. Your accountant will tell you that, and my guess is that s/he will also tell you that you'll be better off operating as a sole trader than as a limited liability company.

You think that your competitors are ripping people off? You may be right, but you need to near in mind that self employed people don't earn money every hour, and often not even every day. Pricing needs to allow for this, and also needs to allow for time wasters and bad debts - not things that you need to worry about when you're working for someone else. Your pricing also needs to allow for business overheads, marketing and so on - and these costs are usually higher than people think.
 
the points made above are all valid and provide food for thought... i would just add, that during this economic climate, it will be very surprising if you get credit off any suppliers at the moment, particularly as a new limited company.

what they may ask you to do is provide a personal guarantee - this may sound ok in the first instance for a nominal credit limit - but i have come across companies who have done this in the past, only to build up £10, £20, £50k credit limits a few years down the line and completely forget that they signed their 'personal guarantee' all those years ago. If things go pear shaped it will be the directors who get a knock on their doors for the money. This same lesson can be learnt when extending credit to your customers (presuming you will be dealing with quite a few corporates)... it might be that you will not get the business if you don't offer credit... so you need to consider how you will make sure you're going to get paid.

Factoring is an option... HSBC, Natwest are good... they will insure your debt and provide funding of approx. 80% against your invoices, so you get 80% of your money after 1 day of the invoice being issued and the other 20% when the factoring company collect from the customer.. you would be looking at costs of around 1.5% of the invoice values for this service. There will be a minimum annual spend though!

there's so many variables and options to consider depending on how your business will be set up, that you do need an hour with an accountant - they will also get the forms to register your limited company. good luck! (y)
 
Afternoon,

I'm well aware of the risks but this is something I've wanted to do for a while now and circumstances dictate that this is the ideal time to try it. If it falls flat on it's face, at least I can say I gave it a go. Though it wont fail :)

I'm now scouring the internet looking at pros and cons of sole traders and private ltd companies. Too much information. Both seem like a viable option to me. I prefer the professionalism the Ltd company brings to the image of the business but clearly would require more work than sole trading.

I think the VAT side of things is a no-brainer really. Unless I start turning over huge sums of money I don't think it's necessary. As Garry said savings can often be had just through shopping around and being slightly more savvy. Negating the VAT issue. It's not like I need tens of thousands to set up, far from it.

Thanks again for the comments, they are helping :)
 
One thing that people often forget is holidays & illness cover. You can't be expected to work 24/7/52 and perhaps need to plan for how you will provide cover for your customers while you're enjoying a well-earned break. Also consider how you would service your customers' requirements should anything untoward happen health-wise.
As regards your unique selling point; will companies have the time to let their staff learn about fixing the problems they're paying you to deal with - If I read that part of your post correctly.
One thing that might be a good selling point is to offer your customers advice and training on data security (eg taking backups, encrypting data on USB sticks & external drives etc) and making sure that their employees are using company ICT equipment appropriately (eg Internet access - is it monitored?). Just a thought
I wish you the best of luck with your business
 
PetethePrimate said:
One thing that people often forget is holidays & illness cover. You can't be expected to work 24/7/52 and perhaps need to plan for how you will provide cover for your customers while you're enjoying a well-earned break. Also consider how you would service your customers' requirements should anything untoward happen health-wise.
As regards your unique selling point; will companies have the time to let their staff learn about fixing the problems they're paying you to deal with - If I read that part of your post correctly.
One thing that might be a good selling point is to offer your customers advice and training on data security (eg taking backups, encrypting data on USB sticks & external drives etc) and making sure that their employees are using company ICT equipment appropriately (eg Internet access - is it monitored?). Just a thought
I wish you the best of luck with your business
Click to expand...

Thank you for your post.

Holidays are certainly something I have thought about. Not only do I have to cover the cost of the holiday itself, but also the fact that I wont be earning :bat: One of the downfalls of working for yourself I guess. I will certainly get something in place for when I'm off ill or on hols.

With regards tuition, this was more geared towards your average home user. I will structure this part of the business much differently for business jobs. As you say,

I need to go home, have a good brainstorm and really think about all of the different aspects, from accounting and invoicing through to pricing etc... I know it's not going to be easy, especially at the beginning but it can't not work. I'm more determined than ever.

Thanks again for everyone's help.
 
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