Top 10 Tips To Running Your Own Business

The Idea

Put a lot of energy into your business idea

Things to think about

Is my business a new start up
Have I bought the goodwill of an existing business
How am I going to turn it from an idea to a real working business
What type of business is it.
How am I to market the business
Do I have the necessary skills to make it work
Do I need the help of others
Do I need premises or can I work from home
How saturated is my market, how can I stand out from the crowd
Low cost price/versus high volume
High cost price/versus low volume
Services/Product mix
Costings of the service/product

Your USP

Unique Selling Point

Why should a potential customer buy from you?

Put together a plan detailing your USP and start promoting this from day one. This can change over a period of time as your business develops.

Think about your branding at this stage. You want to be familiar make it stand out.

Put together a business plan

I spend a lot of time mentioning putting together a business plan. It will focus the mind and highlight any potential issues you make have to face and overcome. The financials and the competition being the main parts of the plan. Spend a lot of time on these and you will have a well thought out plan ahead for you to work to.

Soletrader, Partnership or Limited

Tax relief available for Limited, but increased paperwork. Decide your status at the beginning of the life of the business. It can change at a later stage as it needs to.

The Cashflow

In the early days you will find yourself paying out and not seeing the instant reward for a period of time. Put this together with open eyes. The Sales income may be slow to start off with.

Put together a simple cashflow and complete with actuals month on month, and always roll it ahead. You can see instantly where your surplus/deficit cashflow is.

Goal Setting or KPI’s

Set yourself some goals to achieve in year 1, 2 and 3.

Sales targets
Gross margin
Net profit
Sales enquiries/website traffic
Segmentation i.e. sales types split up by category versus margin from each type

Whatever you decide to choose, keep this in both numerical format and graphical format and compare month on month, year on year. You can see instantly that you either are going the right way, or need to take action to get back on track.

The Competition

Always stay one step ahead of the competition

Review key words on the web
Price testing of the market
USP
Value for money
Unique product/service

Find out what the competition are doing and stay up to date. Look at both the smaller companies (they tend to grow) and the larger companies. (they may have a bigger marketing budget) you can learn from them. They were small once.

Your Customer

Know your market inside out. This needs to be specific, not too general.

The demographics. Is your business local or can it be national or international.
Age group, gender
Financial budget of the customer you are targeting
Seasonality

By knowing your customer you can sell to them better.

Get a website

Not all businesses need a website but most need a web presence of some kind. Look into your competition if they have a website then you need one too.

There are many low cost examples to start off with, and as you get bigger this can be something you can develop over time.

Accountant

Keep your accounts in good order and you will always know where you are financially. It is key to know you’re making a profit and staying that way.

Taking action if your finances need a pick me up.

Use your Accountant as someone who you can telephone from time to time to discuss your strategy. It should be a two way street.

It’s not just about preparing tax returns and accounts, this should be part of your strategy.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Use your business plan to get funding

The essential elements of a business plan

Potential investors and lenders will look closely at your business plan to help them decide whether to risk their money.

There is no standard format but most plans include:

• An executive summary highlighting the main points - to catch people's attention.
• Details of key personnel with an organisational chart showing individual responsibilities.
• Market research - details of competitors and how your product or service fits into the market - eg who your potential customers are and why you think they will buy your product or service.
• Your marketing plan - how you are going to get your product or service in front of potential customers, together with any assumptions made when setting your targets.
• Financial information - eg key ratios. These can be used to compare your business' performance against industry benchmarks. It's also a good idea to give details of any major expenditure you have made on long-term assets and explain the reasons behind any changes in working capital items, such as stock, debtors and creditors. Remember to include balance sheet and profit and loss account details. Many lenders ask for three years' financial information. If this is not available, supply details about trading to date.
• How you will manage credit, expenditure, stock planning and control, and debtors and creditors.

When seeking funding, include:

• A cashflow forecast indicating the amount of funding you need and why. For a start-up, include estimates of how much finance you will require for two to three years or until you start to make a profit. Indicate contingency funds that might be needed for rough patches. This is usually between 10 and 20 per cent of the total funding requirement. See our guide on cashflow management: the basics.
• Financial forecasts for a three to five-year period. Try to present this information in the same way as historical financial information, so that straightforward comparisons can be made.
• How a loan will be repaid, how investors can get their money back, and when.

Sources of fund are available in the form of

Bank financing in the form of Invoice financing. This allows you to raise your sales invoice and use a bank or a finance company to get a large percentage of the income immediately. Which will allow you to ease your cashflow

Overdraft facility with the bank - this is normally short term and can be recalled on demand.

A secured long term loan funding equipment or property.

Car financing with your local bank or car retail store.

There is some financial assistance to companies based in deprived areas for equipment, websites and training needs for staff. These are very few and far between and strict rules apply.

There is business assistance and courses available for new start up businesses in the Cardiff and Wales areas.    www.businessinfocus.co.uk

Equity financing.  This is related to gaining finance from private investors, they take a percentage of your company. In return you get business advice and mentoring, along with funding.  This option is normally suitable to fund large expansion plans, or to take your business global.  There is normally a contract in place confirming payback terms, interest and purchase of your shares back.

The Business Link website has an article dedication to informing small businesses about financing available.

Business Link Website

Another link that might be useful is the European Social Fund.  There are trained experts in the field who can apply for funding on your behalf.

http://www.dwp.gov.uk/esf/funding-opportunities/

What banks look for in a business

All investors assess applications for loans or investments using different criteria, and you should ensure you are aware of any specific requirements before making your application to particular lenders or investors.

However, if you are applying for finance from a bank or just setting up a new business bank account, there are some general points that almost every investor will want to take into account:

• a good financial track record and credit history for you and your business – see the page in this guide about credit rating and scoring
• a good management team with the right skills and expertise – involve your senior team from the start
• a business plan that shows clear thinking on ideas and strategy – this is an essential tool for your business and should include up-to-date financial information
• commitment from management and (as appropriate) other shareholders - the investor will need to be assured that the investment is one that everyone at the top of the business is happy about
• security - most lenders will want their money to be secured against tangible assets, so they can be sure of getting their money back
• your understanding of your market - the investor will probably want to make their own investigations of the market, but will need to know that you understand it as well

Even if your proposition is good, there are some things which will weigh against an application for loans or other funding:

• unauthorised overdrafts
• missed loan repayments
• County Court judgements against the business or its directors
• adverse credit rating data, against the business or its directors

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Get Your Financial Check Up

Writing a will

60% of the UK population a staggering 29.5 million have not made a will.

Many of which assume that their money will automatically go to the relatives of their choice when they die.

If your money is left unclaimed and no blood relatives can be found, your money will go to the Treasury. A record breaking £10billion in 2010.

What happens to your business if you either cannot work or die. These are things that business owners need to look into.

Inheritance tax

Take a look at your overall assets, your business, your home, other property, other sources of income, valuable and movable chattels.

The current threshold is £325,000. This has not changed since 2009

There are a lot of tax reliefs available for this depending on how you have set up your estate. Could you be giving away 40% of your estate (the current inheritance tax rate), to the treasury over and above this threshold.

Most financial advisors do not charge for a first visit consultation.

Savings

Take advantage of the ISA limit. Rates have recently gone up to 3%.http://www.moneysupermarket.com/savings/ is a great website for finding out the best rates of return. Its tax free too.

Pension

The pension system has taken a knock over the last couple of years with the financial services industry being in turmoil. The government has a new scheme of automatic enrolment starting in 2012. Directors are exempt, but do you have an alternative plan. There are many schemes which still offer tax relief on income tax. Could you be an employer who is going to be affected by the scheme, have you included this cost in your budget.

Sickness and Disaster Recovery

How have you planned your business in the event of you or a key member of staff becoming long term sick. Set up your risk assessment and come up with a solution. Keyman insurance, sickness policies, protection of income policies.

What would happen if there was a fire or flood at your premises, or your computer system had a virus.

Loans and debt management

There are still many companies out there that offer assistance if you have got yourself into trouble with debt. Don't put off what could be causing you stress. Consult a professional who can not only help, but give you stress relief too.

Loans and mortgages

The banks are still lending and looking for your business. Yes the system has been tightened up, but there is still credit out there to have. We have access to private investors as well as the banks. So give us a call if this is something we can help you with.

The Grant System

There are still grants available to the small business, it does depend on your industry but they are still out there to be had. http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&topicId=1073858790

Your business and its future

Could you benefit from a business review, do you use your business plan as a focus to plan ahead.

We look at your sales margin
Cost of Sales
Stock turnover
Your overheads
Comparison year on year
Give ideas on tax planning and working capital and liquidity ratios.

We can even help you with your marketing strategy by talking to our professional partners. Let us help you put a comprehensive business plan together. A tool that can be updated as you develop your business.

How is your business structured, if more than one director/partner is there a partnership/Directors agreement, setting out each partners job role, split of the profit etc.

The paperwork, do you have a good advisor that is keeping you up to date with all the current legislation. Putting your important dates in the diary and reminding you of them as they arise.

What is your exit strategy, do you plan on living off the income of the business into retirement, or is the business your pension plan. What is its value in the open market. You need to take into account Capital Gains Tax here.

Ive given you a lot to think about, but looking at all of these areas in turn, will set you up for the future, and will save you money, whether it be by looking at the cost of things, saving time and energy or saving you tax.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

I do get asked a lot of questions about going Limited and the timeframes that small companies should consider and the options available to them.

For Soletrader

• Your records are not public and your competition cannot see any financial information on you.
• The paperwork is fairly simple to upkeep and the Self Assessment online is straight forward, which is why a lot of soletraders do their own filing.
• Suits small companies with turnover of under £100,000 with not too many transactions and complications in their accounts.

Against Soletrader

• Your personal assets are at risk in the event of bankruptcy or liquidation.
• As your records are not public, your credit score is more likely to be lower than your Limited company counterparts.
• The fact that a lot of soletraders do their own filing, eventually costs them money, as they are not necessarily aware of the tax reliefs available to them.
• They may have a limited sales market, a lot of the larger firms will not deal with small companies under a certain size as they are more risky.
• More likely to pay a little more tax as you pay profit on everything you earn, whether the money has been spent by the soletrader or is sitting in the bank.

For Limited

I tend to start asking my soletrader clients to at least consider investigating into going Limited once they hit the £100,000 turnover threshold. They are probably VAT registered and have staff working for them so are already used to extra regulatory paperwork anyway.

• Increased credit score, as your records are now public record.
• Give the impression of a profession company of a certain size. Making you more desirable to gain larger sales contracts.
• Limited Liability, your personal assets are not at risk in a bankruptcy or liquidation, unless you have placed these assets as guarantees for the company.
• There are better tax reliefs available as the Directors/Shareholders are a separate entity to the Company.

Against Limited

• More regulatory paperwork, accounts need to be prepared in a certain statutory format to be accepted by Companies House. Including the preparation of a balance sheet, which a lot of soletraders do not have prepared for Self Assessment. The requirement of an annual return, corporation tax form along with the self assessment return still required for the individual director/directors.
• There can be an increased Accountants cost for the extra paperwork required.
• Your records public, which means anyone can see them competitors, customers and suppliers too. Small companies qualify for abbreviated accounts, which contains only limited information that is statutory, so you’re not giving away your trade secrets.
• There is a lot more financial jargon, contained within the wording required for statutory accounts, and you have increased risk of getting fined if you are late in submitting the accounts.

We keep a great diary system, which reminds clients, when their dates for particular submissions are due which has been greatly received.

I hope you find this blog helpful in deciding your future business focus for the company.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Don’t be one of the £2 million people who leave the updating of their Self Assessment to the last minute, or worse miss the deadline altogether. Bite the bullet if you need help then pick up the phone to an experienced professional.

Many clients that come through our doors, still needing reminding of what information is required to complete their Self Assessment online without a hitch.

Please see my 6 point plan

Your UTR Number and National Insurance
To be able to submit a Self Assessment you first have to be registered with the Inland Revenue as Self Employed. They will then issue you with a 10 digit reference number call a UTR number. This can be done over the telephone 0845 900 0444

Or online, follow the link below.

https://online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dept

This takes about five to six weeks for the Inland Revenue to register you, you will then have to telephone them to get your 10 digit UTR number. This is not automatically sent to you.

The Government Gateway
To register for Self Assessment online which allows you to send your Self Assessment online, you are issued with a 12 digit reference number which is printed out, and a password gets sent to your nominated address. If you are using an Accountant they will give you an 64-8 form to sign so that they can act as your agent with the Inland Revenue. They will then be able to send off your Self Assessment online through their agency number.

Partnerships
There is mis-conception that Partnership accounts are as straight forward to submit as your normal Self Assessment. You can only send out a paper version if you do this yourself by the deadline 31 October. Or you can submit the form online provided you have professional software, your Accountant professional can assist you with this.

Do not leave these to the last minute or you may find a £100 fine per partner you weren’t expecting if you miss the deadline. This needs to be completed along with your normal Self Assessment as an individual.

Paperwork Required
Self Assessment covers ALL income you receive during the financial year, 6 April to
5 April for in the UK and the rest of the world. This is determined by your residency status, all UK residents are to disclose their whole income.

All records of purchases during the financial year including any equipment or capital expenditure.
VAT return’s if that’s applicable
Your full 12 months bank statements, personal and business including saving accounts.
If you have had other employment all P60’s or P45’s
Dividend and interest payments.
Benefit payments
Property income and foreign income
Selling of personal assets and stocks and shares

All other records of income not covered above.

What you get in return
We will provide you with a full record of your income for the year for your business, along with a tax computation recording all of your other income. This takes into account the relevant tax reliefs available. Ie

Your tax code, – your tax free allowance
Capital gains tax free allowance
Pension payments
Charity payments
EIS and venture capital schemes – Investments
Capital Allowances
Rent a room relief – Property income
Wear and Tear Allowance – Property income

Deducting any tax that you have already paid.

You may be liable for tax on your trade income, and national insurance.

This is not complicated if you give yourself plenty of time to get everything together. We take you through every step of the way.

Payment
You have to make payments on account if your turnover is over £70,000, these are taken at the 31 January deadline and 31 July. We will notify you of these deadlines as they approach.

Monthly you can set up a direct debit with the Inland Revenue

Bill Pay or cheque, any balances then can be settled through the online system Bill Pay, credit card charges apply or by cheque in the post, or through the Giro system at the Post Office.

Self Assessment can be submitted anytime after the 6th April, so if theres a refund due to you why wait until January to get the paperwork to your Accountant. You can do it anytime.

These records need to be kept for six years even if you returned to the PAYE system.

Give us a call today, and make it a stress free process. 02920653995 or email Nicola@crossaccountingservice.co.uk

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.