The basics of running a business
You’re an expert in your field, you’ve got big ideas, but there’s a problem: you’ve never run a business before. Well, don't worry – we’ve got you covered.
We were inspired to put this brief guide together by conversations we’ve had with real clients in the past year or two.
Because we work with a lot of startups and technology firms, we often find ourselves dealing with people whose energy and brain power are frankly intimidating.
At the same time, they’ve often skipped some of the steps most people go through on their way to owning a business – learning the ropes as a trainee, junior manager, middle manager, and so on.
Unfortunately, people often get to a point where they start to feel stupid asking questions. Generally, the relationships we form with our clients help them get over that fairly quickly – we want them to feel comfortable asking for advice on any aspect of business, tax or financing.
With that in mind, here are some of the top issues that come up time and again. We’ve given brief, straightforward answers and explanations here but would be happy to expand on any of this if you want to get in touch.
Make a proper business plan
Business plans aren’t just paperwork – they’re amazing. Atleast they are when they’re done properly. If you’re after financing from banks or want to engage outside investors, a compelling, detailed business plan smooths the way and heads off any questions they might have. We can help you put this together if you’re not sure where to start.
Should I set my business up as a limited company?
The main difference between operating as a sole trader or limited company is the level of personal liability you bear. If your business fails as a sole trader, you could lose your house and other personal assets. If it fails as a limited company, with you as a director, you’ve got a degree of protection. At the same time, you’ve also got more responsibility in terms of compliance and reporting. Most credible businesses will eventually want to incorporate (set up as a company), especially as they grow and seek outside investment.
Be aware of your obligations as a company director
The most important among your legal obligations, or duties, are the filing of statutory returns with Companies House, including an annual directors’ report and company accounts. This is distinct from filing your company tax return. For a full run down on your legal responsibilities checkout this list from the government website.
Don’t forget to pay tax
This might seem obvious but it’s amazing how often growing businesses overlook this fundamental. If your business is a limited company, you need to pay corporation tax every year – and, crucially, whatever your business structure, make sure you’ve budgeted for your tax bill and have the cashflow to cover it.
You need key performance indicators (KPIs)
Once your business gets serious, you need to get serious about measuring its performance. KPIs can be hard to define but it’s worth it. They give you the information you need to identify and fix issues before they get out of control; and give your stakeholders (lenders, investors and partners) confidence that everything is on track. Again, we can help you define KPIs and find smart ways to automate reporting on them.
Invest in systems and processes
Whether it’s cloud accounting or a decent customer relationship management (CRM) system, it’s always better to get set up sooner rather than later. The right technology will save you time and energy and help you operate more efficiently.
Hire at the right time
Inexperienced business operators sometimes wait too long to take on their first team members, bearing the burden on their own shoulders and inhibiting efficiency. Others are too fast to hire, taking on extra costs and responsibilities too soon. In the first instance, consider outsourcing functions such as finance and HR, working with delivery partners, or using freelancers.
That’s just a taste but an overarching point, really, is that you need advisers you can trust. Whether that’s a mentor, investors or professional consultants like us, you need to be able to test ideas and ask what might feel like daft questions.
For frank advice on running a business, from compliance to business structures, contact us today.