How to start your small business

Having one's own small business is a dream; a dream that many fulfil. Sadly, the dream can fade quite quickly, once the reality of the hard work and potentially long hours bite. If you are inspired, or your hand is forced by redundancy, unemployment or the need to work for yourself due to family commitments, this hub may help. It's claimed that somewhere between half and three quarters of small businesses in the UK fail withing the first five years, with the first year being the most dangerous time. Bearing in mind that some of these business owners will go on to run a different successful business, this still means that if you wish your business to survive you need to get real from the start.

Talk to others who are already running a small business. If it's still something you would like to go ahead with, consider working through the steps below to help you on your way. Good luck!

Do have a notebook handy for your thoughts as you go through the ideas below. It does make life clearer to jot things down to refer to later. You can also see the progress you have made as your business progresses.

A Few Pointers

1. Dream, dream, dream. Ensure that you have spent a goodly time dreaming about your business, You will need these dreams to keep you going in the tough times. Are you dreaming of hours that are flexible, being your own boss, making decisions, working out of the nine to five box, turing a passion such as pilates into your livelihood, working to help others improve their lifestyle or simply hoping to make money? Jot down the most important two or three blue skies of your dream to inspire you.
2. Be clear. What is your business going to be? If you are making cakes, start with making cakes. Do no be tempted to try too much too soon. Jot down what your business will be. Keep clear about this aim.
3. Your market. Is there actually a market out there for your product? It's useless trying to sell if no one wants your product. Ask around. Remember, family and friends will wish to be encouraging and may give a positive response to inspire you. You are better off asking those you know a little less well! Check out the population of your area. You should be able to do this on-line. Is your product suitable for the locals or would you need to sell on-line? Do not try to target everyone. Fix on a target group to market. Now jot down your target market.
4. Is another business already out there? There is little point in pushing a product locally if a successful company is already around the corner. You could give your product a different twist or try something else rather than compete against an established concern. Research this by asking around, exploring the local area and searching on-line.
5. Who will help you? Will family and friends be involved? Would you find working alone isolating or do you just love to do your own thing? Is there a friend you trust who has similar ideas and would enjoy working with you? Set clear boundaries as to who will help you. This may sound hard but it is essential to work with people who are trustworthy and reliable otherwise all your own hard work could fall apart due to the negligence of others. Write down your thoughts. You can refer to these later on.
6. Think of the skills your family and friends have. Is your son a skilled decorator who would decorate a future premises for you? Could your daughter design your website? We all know skilled folk who may help us or work for a reasonable price. Note down those you know who have useful skills you could tap into at a later date.
7. Are you qualified for the job? Check out the qualifications you will require. Note down any steps you need to take to obtain or update these. Consider whether anyone helping you also needs to be qualified and note this.
8. Think about insurance. If you are considering working from home, there may well be extra costs or conditions to your household insurance policy. You would need to consider any employees too. Your profession will also dictate insurance requirements such as indemnity for fitness professionals. There are often best obtained via the relevant professional body. Make a note of any actions you need to take to obtain these.
9. Working with the eldery, vulnerable or with children? You will either need or be best advised to obtain the relevent enhanced protection certificates. Also, check with social services of any requirements they advise. Make a note of steps to take.
10. Join your relevant professional body if applicable. Do you require licenses such as a PPL music license? Make a note to do this and of any fees concerned.
11. Where will you work? Will you need to adapt your home? Check out any requirements and if there are implications for tax on a later sale of your home. Will you require another premises? Could you work from an out-building in your garden, from a space on the landing, a corner in the kitchen diner? Take a walk around the house/ flat to find a space. Could you work from home or would you be disturbed too often? Talk to others who live with you to check any concerns. Make a note of any requirements such as a filing cabinet and desk. If you need to rent, check local rental prices. Try to avoid being tied into a premises rental contract you may not be able to pay for.
12. Cost your future business. Will you need materials such as fabric for craft, books for teaching or a laptop? Add in the costs of professional bodies, insurances, rentals etc, that you have listed above.
13. Think of how many hours you wish to work and when it will be convenient to work. Is this a business you wish to devote much of your time to or is this a lifestyle choice to work a set number of hours per week? If you have a young family or are a carer, you may need to fit in your working hours around this. If you don't have these responsibilities you may be prepared to work longer hours. Talk to your partner if applicable to sort out any concerns at the outset. It may save a divorce later on if you agree hours and stick to them! A small business can be all consuming, sadly at the expense of friends and family.
14. A FINAL PREPARATION MUST. If you are in the UK, contact Business Link. They give free help and advice to small businesses. I cannot stress how helpful this can be.

If you decide to take the plunge, think carefully about the following:

1. Budget, budget, budget. Many businesses fail due to poor finances. Try to spend as little as possible with your start up costs as efficiently as possible. Work out exactly how much you can afford to lose. Yes, to lose. This is the amount it's safe to invest. The reality check is that your small business may not exist in a year's time. Do not be flattered if your bank offer you a loan. This is money it could well be wise to do without.The bank is in life to make a profit - that's theirs not yours. It is unwise in the extreme to use your home as security on a business start up investment. If you have no money to invest, if it's possible, earn some first by conventional means even if it's working a second job a couple of evenings of week such as as a carer or bar tender. You will need dedication and determination to make a small business work, so you may as well start now.
2. Publicity. Your publicity is your window to the world. It's your company's image. Ensure that it looks good but do not throw money at it. Free or cheap sources of publicity are business cards left in local shops or given out by friends and family, posters at your local railway station, post office etc., leaflets or business cards through doors and websites such as Gum Tree and Viva Street. If you are providing a children's activity, your local school may be willing to give out flyers. Your best publicity is your reputation and your clients chatting to their friends so keep this to the forefront of your mind when dealing with the public. A website is a must these days for most businesses. For starters, try the free website constructors you can find on line such as Google and design your own or recruit a family member to do so. Few people can run to web designers in the first instance. Consider making a little money from your website with google ads or affiliate advertising. This may just cover any website costs as you will need to purchase a domain name. Remember, the internet is crowded with infrequently found websites these days. You will need to publicise your website yourself, using the web address in your promotional materials. For business cards etc. try a company such as Vista Print. There are frequent offers where you just have to pay postage so use these. Be careful not to accidentally join their subscription shopping club as you check out though! You will need a logo. Many professional bodies have a logo their members can use, design your own or check out the logos on Vista Print. My unique logos were created by a designer friend of mine. Facebook is also a possibile medium for free publicity, depending on your target market group.
3. Taxation and Accounts. Take advice from Business Link. You will need to contact the tax office to advise them of your decision to become self employed.You will need to complete a yearly tax return either on-line or in paper format. Some folk like to keep their accounts others prefer to pay an accountant. Remember, even if you have an accountant for your tax return, you will need to consider how to complete the day to day bookkeeping. You could have an accountant and a bookkeeper. one of the aforementioned who completes both tasks, keep the books yourself and just use and accountant for tax submissions, or do it all yourself if you are competent to do so.Remember, that although accountants can be expensive, they do know which tax reliefs are available to you. You will also most likely be required to pay your National Insurance contribution. If you do decide to keep your books yourself and prefer not to use a spreadsheet, you may find Peter Hingston's book, 'The Best Small Business Accounts Book' helpful.I'm using this and only wish I'd found it earlier. There are versions for non-VAT and VAT registered businesses and different formats for weekly and monthly takings. Be careful to have enough money set aside to pay your tax bill as it does take some time to come through. In the UK, it is possible to set up a monthly standing order to cover your expected tax and I highly recommend this as a way to keep on top of your payments. Beware, if you make more money one year than the previous year, you may get caught for extra tax not only for the amount you have underpaid, but as a prediction for the next year's estimate, giving a double whammy. Be careful to keep on top of your tax position ensuring that you put the correct sum away if your earnings become higher or you could have a nasty shock on payment day.
4. Ring-fence time off in your diary. You are not a machine.Set regular times to spend with family and friends. Plan and write in holiday dates now so that you have dates kept clear of appointments. If you cannot leave the business for a holiday, plan early on for someone trusted and knowlegable to substitute for you. When you book in appointments, try to group them together, otherwise you will have work times dotted all over the place. Most people can be a little flexible with appointments if pushed.
5. Keep a notebook and pen by your bed. This way, if you have a brilliant idea when you wake up you can jot it down for later. If you can't sleep at night with work buzzing around in your head, you can write things down and leave them to deal with another time which may allow you to sleep.
6. Set up a business banking account that is separate to your own personal account. This helps to keep things clearer. You can often manage to obtain your first year free of charge, which is a help. It also looks more professional to clients if a payment is being made into a business account. Watch out for ways to keep the charges low after you free year has expired.
7. Have a box to throw reciepts in to deal with later, otherwise you may lose receipts and hence pay more tax than you need.
8. If you keep information on your computer, ensure it has a password to protect it. This is required for client information.
9. If an idea doesn't work, don't flog a dead horse. Tweak your product. You may love yellow jumpers but other people may like blue.
10. As you succeed, look for ways to expand. Diversify at low cost when possible so that all your eggs aren't in one basket.
11. Enjoy your independence but don't forget to set up a pension. It's tax efficient too.
12. Remember, it may not have to be 'all or nothing'. Would it be possible to work in your exisiting job part time whilst you test the water with your business or to start the business alongside your day job. This is certainly a safer option to 'test the waters'. And plan, plan, plan but respond to the market flexibly too.

If other people out there have started their own small business and have helpful tips, we'd love to have them added to our comments box. This is such a vast subject that it's not possible to cover everything and other people will have different experiences to add.