So you’re thinking of starting a business? You’ve come to the right place.
For most, the beginning of their start-up journey is working out if being their own boss is really what they want.
If you decide to take the start-up plunge then you will need an accountant to represent you in front of the revenue and to help learn about the initial stages of self-employment from developing your business idea to creating a business plan, working out start-up costs, managing cashflow and promoting your business. Find out if you’ve got what it takes to be an entrepreneur or freelancer
The first thing to recognise when starting your own business is that qualifications may be essential for some self-employed professionals, such as dentists and barristers, it is personal drive, attitude and confidence that generally define key entrepreneurs, and self-employed individuals with qualifications need these attributes, too.
Essential qualities include:
- total commitment to hard work;
- acceptance of uncertainty;
- originator/investor characteristics;
- planner/organiser characteristics.
Sir Richard Branson and Sir Alan Sugar are all examples of successful business people who possess these traits.
How do you want to establish a business?
Businesses can take a variety of forms, ranging from sole traders to public companies trading their shares on the stock market, or from a group of friends operating as a partnership to a formally established cooperative with rules and guidelines.
When choosing the format of your business you may wish to consider:
- the types of customers you want;
- whether you want people to invest in the business;
- the risks involved in providing your products or services;
- how many people are involved in the business.
Most people who start in business do so as sole traders, working on their own, often from home. They alone receive the income and they alone are therefore liable for any losses or debts. Having no colleagues can be liberating, but may equally be isolating with no one to provide motivation or inspiration.
You could set up in business with one or more colleague(s), relative(s), or friend(s). This form of business relationship is usually known as a partnership. All may be equal partner(s) or some may have a larger share of the business than others. Your income and liability are proportionate to your share in the business.
As a limited company, the business is registered with Companies House. There are more regulations associated with running a business this way, but these are generally offset by tax advantages. Those directing the company have shares proportional to their involvement.
Franchises provide a way for individuals to start their own businesses with the backing of an established brand and business process. Well-known examples include Body Shop, Clarks Shoes, McDonalds restaurants and Prontaprint.
These companies expand by getting other people to buy into their business, making an initial payment which secures equipment, raw materials, training and a well-known commercial name, and then running a branch of the business to make an individual profit. The British Franchise Association (BFA) provides information and advice on buying a franchise.
Buying a business
Taking on an existing business may cut out some of the legwork involved in starting up on your own. But try to find an established firm with a solid customer base and a motivated workforce, rather than one with liabilities or a poor reputation. You can find a business to buy through the local press, estate agents, trade associations and websites dedicated to this sort of provision.
Freelancers offer a skill or service to other businesses which employ them as needed for particular projects or for set lengths of time. They may be given office space or work from home, delivering work to (often tight) deadlines.
Some freelancers actively market themselves. Others obtain work through agencies or by a direct approach from employers.
Social enterprises and charities
This is an expanding area and has evolved from a desire to help the disadvantaged, providing much needed resources or services and sometimes offering employment to those who would otherwise be unwaged. A well-known example is The Big Issue newspaper.
The The Charity Commission for England and Wales can provide advice and you will have to register with it to qualify for certain tax advantages. Certain trading activities are barred to organisations with charitable status.
The UK Government has recently introduced a number of policies to support the growth of charities and social enterprises. Visit the Office of the Third Sector to find out more.
Our free guide to contracting outlines the choices you have as a freelance contractor and shows you the benefits and the pitfalls of each choice so you can make an informed decision on what is best for you, your circumstances and your lifestyle.