Pictured: Rob Howell, director, Howell & Co
Rob Howell, director of Lutterworth-based accountants, Howell
& Co offers advice for anyone thinking about starting a new
business in the New Year…
"The old adage, 'fortune favours the brave' could certainly be
applied to anyone contemplating starting a business in the current
economic climate. Whether a new opportunity; prompted by redundancy
or a long held ambition - before the new enterprise is launched on
an unsuspecting world, it is essential professional advice is
sought and time taken to plan. A detailed business plan is
essential in helping to clarify objectives, demonstrating the
viability of the business and securing bank or other funding.
"The first thing to decide however, is whether you are the sort
of person who should be running their own business. Whilst it can
be highly rewarding it also brings stress, hard work, long hours
and personal financial risk. Be sure you have the resources and can
cope without a regular income whilst the business becomes
established.
"Still convinced running your own business is for you? Then
these are some key decisions you need to make:
• What will you sell and to whom?
• What is your USP (unique selling point)?
• What will the trading name be?
• What business structure best suits the business? Limited
company, sole trader, partnership or limited liability partnership?
There are advantages and disadvantages to each so it pays to get
professional advice.
• Do you need premises or can you work from home? If you
do, should you sign a lengthy lease or find a flexible short-term
let?
• Do you need a patent or trademark to protect your idea,
invention or brand name?
• How are you going to market your business?
• Do you need to employ staff? If so who will do the
recruitment and deal with the legal obligations?
• Where will you source materials or supplies? What payment
terms are suppliers prepared to give?
• Who will do the administration, raise sales invoices,
chase debts, pay suppliers, calculate wages, prepare accounts,
etc?
• What finance is needed to get up and running? How will
funding be raised?
"A good advisor will give you contacts for sources of funding
such as banks, grants, factoring and other trade finance. Most
lenders require security, which may take the form of a personal
guarantee, so it pays to take advice. A well prepared proposal
backed by a good business plan will have a much better chance of
success. The business plan should include:
• An executive summary giving a concise overview of the
essential points of the plan. This is your chance to sell the
business to anyone reading the plan, it needs to be well presented,
clear and concise.
• A description of the objectives of the business and how
you plan to achieve them. Highlight strengths and opportunities,
but also define threats and weaknesses and how to overcome
them.
• Details of your sales and marketing plan. This should
include an analysis of your intended market, target customers,
products, pricing and margins with a comparison of major
competitors.
• Details of important employees with particular attention
to their experience - investors need to know they can deliver
results.
• Details of any capital investment required and how you
intend to raise these funds.
• Financial projections of sales, overheads, profits /
losses and cash flow. These must be as realistic as possible, an
overly optimistic forecast will not help you plan successfully and
will result in a loss of credibility with potential investors /
lenders.
"If you still think you have what it takes to run your own
business then good luck, but try not to take short cuts. Do your
homework, take advice and prepare a detailed plan.
"There is a large amount of helpful information available on the
internet and many accountants give free initial consultations, so
seek advice. In addition to assisting you set up the business and
preparing the business plan they will also advise on the business
structure and on minimising any tax liability."