As we enter 2022, things are looking up in terms of the pandemic. Despite the recent spread of the Omicron variant, there is hope that a transition to normalcy will happen this year due to the high vaccine uptake and the development of antiviral Covid pills. Consequently, people can make future plans with much more confidence, including prospective entrepreneurs.
The pandemic has been particularly tough for business people, with lockdown restrictions thwarting the very existence of many companies, and making it extremely difficult for others to operate. But as we learn to live with Covid, now could be the perfect time to start a business. However, there are certain things you need to do to succeed.
1. Write a business plan
Writing a business plan will not just help you determine the funding you require (more on that later), but will give you the direction needed to become a profitable business. It will enable you to work out your corporate goals and procedures, such as your staffing and marketing plans, total costs and company structure, as well as attract investors and partners, and position your brand.
You will need to perform market research to gauge your business idea’s potential for success, particularly as consumer behaviour has changed as a result of the pandemic. For instance, ridesharing was once considered the future of taxi transportation, but interest has cooled as a result of social distancing. By identifying and analysing your competitors, you can assess whether there’s scope for your business to succeed or not.
2. Register your company
The next step is to register your business, either as a sole trader, limited company or partnership, with each having different reporting, management and accounting responsibilities. For instance, limited liability business owners have limited liability, meaning the company — and not them personally — is liable for any debts. After analysing the options and making a decision, check out the registration process details for each on the UK government’s website.
While not required unless your annual turnover is expected to exceed £85,000, you may want to register for VAT too. This enables you to charge this tax on the products or services you provide, and then claim it back on your business purchases.
3. Obtain insurance
No matter which industry you’re in, you’re sure to encounter hazards of some kind. Whether it’s physical danger or the risks involved with giving customers advice, it’s crucial that you have a comprehensive insurance policy in place to protect your company financially if something goes wrong. This ensures your insurance provider and not you pays out if you’re ever sued or lose money due to things like theft, injury or illness. In addition, having such a policy makes you more attractive to prospective clients by showing that you’re trustworthy.
Although the insurance you require depends on the type of business you run, there are certain covers you shouldn’t ignore. One example is public liability insurance, which protects you against injury or property damage caused to third parties.
As noted by insurance expert Tradesman Saver: “Accidents are always possible if your business involves direct contact with others, especially if your work is often carried out on client sites, or you frequently welcome visitors to your premises. Therefore, it’s vital to be prepared for the worst by protecting your business financially.”
Another crucial cover is employer’s liability insurance, which is legally required if you hire staff. While other useful covers include tools insurance, professional indemnity cover and financial loss insurance.
4. Secure funding
In order to make your entrepreneurship dream a reality, you’re going to need some funding. And unless you have significant savings, a lender is your best bet here. Your main options are:
Friends and family
Getting your loved ones to help you is a potentially easy way of securing funds, though it can be awkward bringing this up and may cause tensions if there are any problems with repayments. If you pick this option, be sure to draw up a loan agreement, as well as a shareholder agreement should you want to directly involve them in your business.
Obtaining a bank loan is a great way to secure money, though do bear in mind that you’ll need to provide a huge amount of information to be accepted for one. This includes things like cash flow forecasts, proof that you’ll meet the repayments, and a good credit history.
Going down this path may involve giving shares to the lender in return for funding, as well as involving them in the company’s strategy and management. As such, it’s crucial that you’re happy with this relationship and the potential dynamics.
You might also be able to secure funding through a government initiative aimed at new businesses. For instance, The Start Up Loans Company lends up to £25,000 and provides valuable advice and mentoring. Be sure to check out the Business Finance & Support Finder tool on the GOV.UK website to view all the options available to you.