Tens of thousands of people decide every year to go it along. And while the risks are high, the rewards can be enormous. Working for yourself, earning your own money and controlling your work means much more than simply working for the man.
But there are no guarantees of success. A significant number of new ventures never reach their second birthday, and failure can affect your personal finances significantly.
So you need to do some homework before you risk your money. Here, we give you ten top tips to get on the right track from the start.
1. Focus on your product
Whatever your business, you need to make sure you really know what you’re doing. Who else is in the market? If there’s plenty of competition, what are you doing to make your business stand out? If you’ve found a niche – either a product that doesn’t exist, or a service not available locally – think about why nobody else is doing it. There may be a good reason for it not being available.
2. What kind of company are you?
“Deciding on what type of company you set up as is key,” says a spokesperson for the Federation of Small Businesses. “It affects the kind of finance you get to work with, the roles and responsibilities of the owners and your tax status.” For start-ups, there are effectively three main options – a sole trader, a limited partnership or a limited company. Each has its own benefits and disadvantages, and it’s well-worth doing some research on each to see what is best for you.
3. Which bank?
Despite the current economic turmoil, banks are still keen for business from start-ups, and many offer a range of incentives. While the benefits of free banking for a year or cheap initial overdrafts may seem vital, it’s more important to look at the long-term value, so compare the fees and charges once your deal period ends before you take the plunge.
4. Other financial services
No matter which bank you end up with, you don’t have to take all the products you need with it. If you need a small business insurance quote or a loan rate, compare the prices of the whole market to get the best deal.
5. Check your liabilities
As a business owner, you have responsibilities to your customers, your employees and your suppliers. If you fail in those responsibilities, you could be held liable for any injuries or damage that result. Make sure you have liability insurance in place to cover yourself against any claims.
6. Take advice
You can’t be an instant expert in all areas of running your business, so don’t be afraid to ask for help. Professional groups, such as your bank, will be able to give you information and advice on some areas, but it never hurts to canvas friends and family for their tips.
7. Don’t ignore the paperwork
There are legal implications for businesses that don’t keep up with their administration, but a disorganised approach to your paperwork means that you will miss opportunities and fail to spot any potential obstacles ahead.
8. Know the law
All businesses are subject to certain laws, and there will also be rules and regulations specific to what you do. Make sure you keep within the rules – the penalties can be huge and your reputation may never recover.
9. Get the marketing right
Understand where your potential customers are and build up a strategy to attract them – they’re unlikely to come to you. “The best strategies are usually the simplest, so when setting your marketing strategy make it achievable and ensure it fits within your budget,” says Julia Payne, co-founder of The Edge Business Club.
10 Don’t give up!
There will be obstacles and you’ll have good and bad days, but building up a new business is always going to be hard work and the biggest successes tend to come from the businesspeople who try the hardest.
Forty percent of businesses are failing to conduct fire risk assessments in accordance with legislation implemented three years ago, warns Aviva Risk Management Solutions (ARMS).
Based on this unsatisfactory level of compliance with the Regulatory Reform (Fire Safety) Order 2005, Fire and Rescue Services have issued businesses with 34,500 informal notifications, 3,200 enforcement notices, 442 prohibition notices and 84 alterations notices.
And fire authorities prosecuted 43 per cent more organisations last year for failing to comply with any part of the order.
Andrew Couch, health and safety consultant for ARMS, said: “Though fire service audits increased 20 per cent last year and the number of enforcement notices has fallen, satisfactory compliance rates have remained virtually unchanged in the past two years³.
“As the figures show, this is not going unnoticed by the authorities and is leading to enforcement action. And an increased level of audit activity focusing more on higher risk premises such as care homes, hotels and hospitals will bring more and more firms under the spotlight.”
Successful prosecutions can lead to significant fines. Last November, the high street fashion chain, New Look was fined £400,000 for fire safety breaches at a London branch*.
To help small businesses comply with legislation, ARMS has launched a service in which its risk assessors will conduct fire assessments on a firm’s behalf, producing formal documentation, identifying fire risks and providing evidence that the requirements of the RRO have been fulfilled.
If shortfalls are identified, risk assessors will advise businesses on how fire risks can be improved. This will include details of relevant preferred supplier solutions at competitive prices.
Couch continues: “Often businesses tell us that they either don’t have the time, don’t know where to begin when it comes to fire safety, or they need additional support and advice from someone who knows what they are talking about.
“But failing in the basic responsibilities of completing fire risk assessments means that firms are not only breaking the law but also not managing the hazards on their premises.
“The use of risk assessors to conduct health and safety consultations is a cost effective way to bring in the necessary expertise to ensure fire safety. It can be a useful business strategy until businesses are in a position to appoint their own suitably qualified employee to conduct fire assessments.”
The risk assessment will include a fire safety policy, which identifies fire risks such as combustible or flammable materials and incorporates procedures for evacuation, as well as making recommendations to improve fire risks.
The Government must put a stop to all new business regulation and simplify red tape if it is to seriously tackle rising unemployment, the Federation of Small Businesses (FSB) said.
John Wright
Ahead of the Conservative Party Conference in Manchester, the FSB outlined its proposals for creating and saving more than 300,000 jobs, and called for a moratorium on all new business regulations and a rapid simplification of confusing bureaucracy.
A survey of FSB members showed that nearly one in three businesses (27 per cent) that wanted to expand said they were too scared to do so, because they were put off by complicated regulation. Of those businesses planning to downsize or close, 50 per cent said their decision was strongly influenced by the regulatory burdens they faced.
According to the Government’s own figures, 60 per cent of businesses listed regulation as an obstacle to success. Based on these statistics, the FSB estimates that removing these regulatory obstacles could create more than 258,000 new jobs and save more than 55,500 from being lost.
In a new policy paper entitled Regulatory Reform – a route to economic recovery, the FSB is proposing an overhaul of the UK’s regulatory structures, calling for:
- A moratorium on business regulation: to boost the chances of job creation, the Government must halt all new regulation during the recession and for the first 18 months after recovery.
- Accelerated simplification of current laws: employers are currently confused and put off by maternity and paternity law; discrimination law; and health and safety legislation. All of these must be immediately simplified.
John Wright, national chairman, Federation of Small Businesses, said: “We cannot and must not underestimate the burden that unnecessary regulation puts on small businesses. Around half of all firms planning to close or downsize were influenced in that decision by the heavy impact of regulation.
“However, we know that small firms want to employ more staff and the Government should be making it easier for them to do so, especially as we pull ourselves out of recession and into recovery.
“The FSB is urging the Government to give the UK’s regulatory environment a strategic overhaul, to provide it with what will amount to a second economic stimulus, to boost growth and employment.”
Here’s our guide to what the new Companies House rules mean for your business.
From October 1st, the rules are changing for all UK limited companies. The Companies Act 2006 comes into force on that date, replacing the old 1985 Act. Here are the key issues businesses need to be aware of:
Directors’ addresses
Every director will have a service address and a usual residential address. The service address for each directorship will be publicly available, while the residential address will only be made available to public authorities and credit reference agencies. Unless you change the service address, your current residential address will automatically be listed under both categories.
Alternative address for registers
There will be changes to the arrangements for inspecting a company’s registers. These registers may be held at the registered office address or at a single alternative inspection location (SAIL). You must notify us if you set up a SAIL address or if the SAIL address is moved, and you may only have one SAIL address for a company at a time. Once the SAIL address is set up, you can move some or all registers to the SAIL address by notifying Companies House. The simplest way to register this address will be via the WebFiling service from October.
Easier to set up a company
A number of changes have been made to make it easier to set up a company. There are also changes to company articles for new companies. They will include the company’s objects, liabilities and assets – all of which were previously in the memorandum.
Notification of articles changes
You must send any amendments to the company’s articles to Companies House within 15 days. Otherwise you could be liable to a criminal offence and a civil penalty of £200.
UK wide company registry
Northern Ireland company registry will be integrating with Companies House.
Forms
All Companies House forms will change from 1st October 2009.
The new forms include:
- Companies Act 2006 information requirements
- new numbers
- additional guidance notes
- details of any fee (if applicable)
The new forms must be used for all company events that take place on or after 1st October 2009. If you use an old form it will be rejected.
Company events which take place before 1st October must be submitted on 1985 Act forms.
Fees
To cover the cost of running the register, Companies House charges fees for the filing of certain forms such as the annual return, change of name, mortgage and voluntary dissolution. Please remember to send the fee in with a paper form otherwise Companies House will be unable to accept it.
Protecting your company from hijack
From 1st October, the Registrar’s Protected Online Filing (PROOF) scheme will operate under the framework of the Act (section 1070).
PROOF customers are protected from unauthorised changes to their company details. They agree with the Registrar that they will only file certain documents electronically. If a fraudster tries to ‘hijack’ their company by filing a piece of paper, this will be rejected. The Registrar urges all companies to sign up to PROOF. It can now easily be done via the WebFiling service using the company’s authentication code (you no longer need the written consent of each director).
Important tips for companies to make the transition to the new Act a smooth one:
- Try to complete any business with Companies House under the 1985 Act well before the end of September.
- Make sure that you are ready to file electronically in October. If you use WebFiling, this will be easy – the menu screens will guide you through what you have to do.
- Get your company signed up for Protected Online Filing (PROOF).
- Watch out for the new rules in the Act on inconsistent filings. Keep your company’s record up to date and consistent with what we already have on the public record.
- File on time to avoid a penalty. You have one month less to file your accounts. If your company normally files its accounts on 31 January, remember that the deadline this year will be 31 December – nine months after the end of the year as opposed to ten.
- You must send any amendments to the company’s articles to Companies House within 15 days. Otherwise you could be liable to a criminal offence and a civil penalty of £200.
