Having worked with start-up companies for over 50 years, we’ve seen, first-hand, just how essential they are to the development of innovation, technology and new ways of working. Now, more than ever, we're seeing new companies in a range of industries challenging the status quo and serving customers in a way that works today, not simply following what has worked before.
It’s never a bad time for a new idea
//Content
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Introduction // I’ve always believed there’s never a bad time to come up with a good idea.
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Top Tips
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Funding, Grants and reliefs
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Spotlight on ... Cloud technology
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Case Study // Mobile Mechanic
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Case Study // Bar and restaurant
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Next steps and useful links
Learn to say no to anything which doesn’t get you closer to your business or personal goals
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“Just because someone is willing to pay you, doesn’t mean you should take them on as a client.”
I’ve always believed there’s never a bad time to come up with a good idea.
Having workedwith start-up companies for over 20 years throughout my career, I’ve seen, first-hand, just how essential they are to the development of innovation, technology and new ways of working. Now, more than ever, I’m seeing new companies in a range of industries challenging the status quo and serving customers in a way that works today, not simply following what has worked before. We know that recent global events have reshaped how businesses are run. Changing customer demands, whether as a result of social responsibility, to support local firms, or as a move to online services, are having a real impact on which companies will thrive in the future. I feel this gives a window of opportunity and advantage for new enterprises, if they can offer a compelling story to people wanting to do business differently. Taking the first step to start your own company is not always easy but with the right research and support, your business idea can really flourish. Whether you have a product, service or a combination of the two, I believe there’s a great chance for you to succeed with effective preparation and guidance along the way. To achieve this, my advice is to find the support which is truly right for you and your specific business. There are many different business services and advice paths but the trick is to find those which not only understand your industry, but also, those which will work, day in, day out, helping new companies get off the ground. There will, of course, be obstacles to overcome and new skills and obligations to learn along the way. I believe that by taking time at the start of your journey to understand the commitments and requirements you face, you can save a great deal of time, money and energy in the long run, leaving you to get on with growing your business. In this guide, we’ll take you through what we believe are some fundamental things you will need to consider when getting started. We’ll also take a more in-depth look at maximising the benefits of technology, as well as the funding and financial support available to you. Finally, we’ll explain how we can help, and where you can find further support from elsewhere.
Stuart Sheldrick // Director
P4
“Hack // Stick to what you are good at and only you can do, delegate or outsource everything else.”
//Top tips
There’s so much to do when you start your own business. Whether you’re creating a new product or offering a new service, you want your focus to be solely on making your idea succeed.
There are, however, a number of decisions and responsibilities that need to be addressed when creating your company. So, to avoid these issues getting in the way of your creative dream, we’ve put together some tips on how to tick the necessary boxes and prevent any problems arising while you’re focusing on your new strategy.
1.
Choose your set-up
How to set up your company is often the first important decision tomake. There are different tax structures to consider and your adviser can help you decide which route to take when you discuss your business plan with them. If you intend to start working on your own, and you value the speed and ease of your business reporting, then becoming a sole trader could be your best option. However, if you want to employ others, copyright your products, or take advantage of a greater range of financial aids, then a limited company might give you the flexibility you need to grow. If you feel you fall somewhere in between, there are other structures which may suit you even more.
2.
Protect your business
Whether it’s professional indemnity and public liability, or life insurance and key person cover, there is a range of protections available for companies, their owners and staff. Make sure you understand which are compulsory for your type of business and which you may need for extra security and peace of mind if the worst should happen to yourself or your team.
3.
Get your advisers in place
We know you’re keen to get started! You want to get straight out to meet new clients and win that first piece of business. It’s important, however, to make sure you have your business advisers on hand from the word go, so they can ensure you start heading in the right direction, provide the support you need and help you avoid the tricky job of playing ‘catch up’ with paperwork and finances later on.
4.
Understand your finances
Before you start to spend, or bring in, money, make sure you understand exactly where you stand. Firstly, decide where you want to bank. Themost common options are either the convenience of high street chains or the potential lower fees of online challenger banks, although this is not always the case. Separate your personal and business finances from the start too, to avoid confusion and difficulty identifying funds later on. You should also look into, or get some advice with, what kind of expenses you can and can’t claim for before you start spending your money on building your new empire.
P6
“Plan your week in advance on the weekend, this way you hit the ground running come Monday first thing!”
5.
Technology is king
There has never been a better time to make use of technology for your new business. From real-time, cloud accounting, time and inventory systems, to digital marketing and online sales, making the most of technology from day one saves a great deal of time and effort as well as also ensuring your company is equipped for a modern-day customer.
6.
Plan ahead for the second phase
Many new small businesses start strongly, with real enthusiasm for their venture and income from existing connections. It’s crucial though to have a plan for the next stage when the launch period is over. Identify, in advance, your next target audiences, where you can market yourself next, and whether you will expand to offer any additional services. Don’t let your confidence, or motivation, fall away once you’ve got started: it’s only the beginning!
7.
Be pro-active with your cashflow
Managing money is one of the hardest things when you start a new company but it’s important to be efficient with how you handle your funds. Invoice promptly so the money is in your account, not your client’s, for longer. Stay on top of your day-to-day accounts too. Many businesses fall into the trap of either taking too much money out of the company, and facing a struggle to pay a later tax bill, or being overly conservative and leaving surplus money in the business, sitting there, doing nothing. Having a handle on what money you do, and don’t, need at any one time is a great skill to learn and one your advisers can help with.
P8
“What do you wish you’d known when you first set up your business? More about tax and how to manage it more efficiently”
Funding, grants and reliefs
Not every business can be started from a laptop on a kitchen table. Many need a financial commitment from the beginning for products, materials, staff and premises among other things. No matter what kind of business you are starting up however, there is a range of ways through which you can find some support with either your initial outlay, or your ongoing, financial situation.
In this section, we’ll look at options you can explore which may be suitable for you, whether for initial capital borrowing, reducing your tax liabilities or bringing outside investment into your business.
Business loans and grants
The most common support you might need is for initial costs and money required to buy the essential elements you will need to get the business set up and off the ground. One possibility may be a loan from the bank where you hold your personal or business accounts but there are other options available too. You should investigate whether you would be better served by applying for a government-backed, Start Up Loan, run through the British Business Bank, which also comes with free business planning and mentoring support. Also, if you intend for your business to support local regeneration or employment, there are grants for apprenticeships, Smart Grants, community funding and enterprise allowances out there too.
Tax reliefs and R&D
When you start your new business and are looking to stabilise your finances after initial spending, the first tax bill can seem a daunting prospect. There are, however, a number of ways in which you canmitigate this through a range of tax reliefs and allowances. If you are self-employed, speak with your adviser about the expenses you are able to claim for ongoing costs and items you have bought for the business that will reduce your tax liability on your Self-Assessment return. Your business may also be eligible for other tax relief in the form of capital and annual investment allowances for the equipment and premises you require in order to run the business, as well as anything provided to employees to use from home.
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“There’s no shortage of remarkable ideas, what’s missing is the will to execute them”
One other key area which is often overlooked is tax relief for research and development (R&D). A range of businesses can claim this relief against their corporation tax bill for the relevant qualifying costs if they are either developing new technology, or are working alongside other firms who are doing so. Make sure you get some advice if you think you might be eligible for this.
Bringing in investment
If you are wanting to scale up your operations and expand your growing business once it’s off the ground, then outside investment could be a beneficial way of securing the funding you need.
The Seed Enterprise Investment Scheme (SEIS) offers tax relief to those willing to invest in small and growing companies like yours. You are required to have SEIS status in order for your business to benefit from this financing route. Your advisers can help you apply for this. Youwill need to drawup relevant business plans and forecasts, as well as a proposal for investors. You could, instead, pursue an opportunity with an angel investor, who may have useful experience and contacts that can help grow your business further, or more quickly. There are networks of these entrepreneurs you can be connected with, although you will need to be willing to give up part ownership of your company in many cases. This is something you will need advice on before committing to anything.
In summary
Spend some time with your adviser to discuss the particular financial support which is available to your specific type of company. Start by understanding the start-up and running cost expenses and allowances you can claim that will mitigate your tax bill. If you do need specific lump sum funding on a bigger scale, get the right advice for the best support for your needs which doesn’t leave you either giving up control of your brand new company, or saddles you with regular payment commitments that can impact your financial position and limit your flexibility as you start out.
Research and guidance are key from day one. There’s help out there for you so you don’t need to struggle or put yourself into debt to set up your business. Getting the right help, not just any help, is vital.
P12
“If you look closely, most overnight successes took a long time”
Spotlight on… cloud technology
As you prepare to take your first steps towards putting your business idea into practice and setting up your new company, committing to new technology may not be the first thing on your mind. I would suggest it should be very high on your list however. The fact is, it’s almost always easier to introduce technology when your business is smaller. Introducing systems which can then grow with you as your business expands, removes the initial administration demands on your time, setting you up for efficient management of the business finances right from the off. A good adviser should always discuss digital first principles with you early on and work to identify your current processes and how they can adapt to the technology available. Taking this approach also means that you can make appropriate decisions on hiring and reporting processes as your company develops. Recruiting roles to work alongside your existing technology at a later stage is far easier than replacing your people with systems further down the line. The key is to look at value, rather than cost alone. I’ve seen many new businesses concerned about incurring costs, but then spend hours of their potential working time on lengthy, manual processes and data entry in order to keep up. More often than not, the value of the time lost to admin when you could have been working will be far more than any outlay you spend on cloud technology for your business. It will also help keep your adviser fees lower, as your income, costs and tax figures will be automatically updated, saving your accountant time going through your pile of papers. But it’s not just behind the scenes where you will see the benefits. I firmly believe an effective use of cloud technology will also improve your interactions with customers. An online presence where customers can contact you, make appointments, view their orders and make payments, gives your business a more professional status – something valuable when starting out and gaining traction. As well as all this, being able to invoice your work digitally not only gives you a better record-keeping solution, it also gives customers a much faster and easier way to pay you. Creating barriers and time delays in producing quotes, sending bills and enabling payments can cost you repeat business with those customers looking for a quicker, more modern transaction. Last but not least, in my experience, embracing cloud technology really can make you more informed as a business owner. Staying on top of your cashflow and planned income is so valuable in helping you understand and prepare for your tax liabilities and potential dividend options. By integrating other functions, such as payroll, inventory management, appointment booking and staff timesheets, much of the hassle is removed. This means that your time is not being wasted on admin which can often cause a loss of momentum and enthusiasm. In an uncertain future for business, with the need to adapt to remote and flexible working practices and evolving customer demands, having a real-time, accurate picture of your company’s finances could be crucial, both for your own plans and the effectiveness of your adviser’s guidance.
Philip Menown // Financial Technology
P14
“Even if you are on the right track, you’ll get run over if you just sit there”
Across a range of industries, we have a number of recommendations and strategies for different types of business to consider, using technology to help streamline their processes. Here are a couple of case studies to illustrate some of the ways in which we have helped our clients through the use of cloud technology.
Amobile car mechanic
Our client, a new business for a mobile mechanic, wanted our support in using integrated technology for interactions with customers, and has benefited from it ever since. The systems we introduced not only bring greater speed and efficiency to their work, but also, certainty and ease of payments, both of which are crucial to the ongoing success of the business. Quotes, invoicing and administration are three big obstacles to securing, and completing, work for small companies, particularly those working remotely at customers’ homes, as in the case of our client. By using a cloud accounting and invoice system, they are able to quickly arrange an invoice on site, as soon as the work is completed. We helped set up default items for repeat products and services which are fundamental to the work undertaken, so invoices can be produced much faster than manually adding items and quantities, and calculating VAT and cost totals. Getting the money quickly for the work was equally important to the company, to enable new and replacement parts to be purchased for the next jobs. Under the systemwe recommended, the invoice can be emailed immediately to the client, who can then follow steps on the digital invoice to pay by card, on the spot. Given the improved audit trail, should a client not pay right away, they will automatically receive email reminders to settle the invoice. This helps our client reduce bad debt and avoid the issues of disputes and lost paperwork. Then, once a month, they can analyse their performance and maybe, adjust pricing based on recognised trends, or experiment with how they can price their products and services to maximise value to their customers. Aside from the direct customer interaction, the automated system also gives further benefits in how we work with the client on their accounting and tax requirements – issues that many new companies find hard to deal with. The invoices and other bank transactions the client completes are automatically connected to the accounting app, with the correct VAT treatment already applied. The efficiency of this process means we can see live records for the client’s business and provide our guidance quickly and accurately, whenever required. By digitally capturing receipts as well, our client was able to minimise their year-end responsibilities and save a huge amount of time for both us and themselves, by avoiding a ‘shoebox’ full of receipts and the manual entry of a range of payments and data. This level of accuracy and record keeping means our own costs to the client are never unnecessary and always appropriate.
P16
“Forget failures. Forget everything except what you’re going to do now and and do it”
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A bar and restaurant
Another great use of cloud accounting technology is in the retail and hospitality sectors. Connecting the whole of the business, from tills in store to inventory and tax records, is a highly efficient and effectiveway for start-ups in these sectors to handle their administrative burden.
That’s exactly what happened when our client, a bar and restaurant owner, came to us, looking to use technology to help their business flourish.
With our guidance, the client was able to link their tills to their accounting system. Then, by configuring all food and drink items available, as well as the VAT rates for each, they can now easily generate sales data, VAT returns, profitability and food and drinks splits at the close of each day. Not only did this provide us with a clearer picture of their finances and tax liabilities, allowing us to give the right support at the right time, it also gave our client the chance to see just howwell the business was doing and how different food and drink sales were performing. However, it’s not just with sales that this commitment to cloud accounting has proved beneficial for the owners. Staff management and costs are often a real issue for new, small businesses to tackle and one that can take a substantial amount of time and effort to keep on top of. With clever integration of different systems, our client has managed to bring the time recording and payroll functions into their accounting software with ease. Staff log in to the till system at the start of their shift and log out at the end. The hours logged by the system are then automatically used to populate the payroll data for the week or month, meaning the owners don’t need to process employee hours and pay them manually. Staff then use a secure online portal to access their payslips and book annual leave which automatically feeds into the payroll calculations for the next period. Embracing the opportunities that this technology provides has streamlined a number of processes for our client and greatly reduced the time they need to spend on administration and paperwork. They can now concentrate on dedicating their time to the business itself, safe in the knowledge that we have access to accurate data to support them, when needed.
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“Plan your week in advance on the weekend, this way you hit the ground running come Monday first thing!”
Next steps and useful links
As a forward-thinking company, we are ambitious on behalf of our clients and recognise the need for supporting new companies which understand the changing business landscape. By believing in the need for innovative and disruptive companies that embrace new technology, we are able to provide the right advice to those looking to meet the evolving needs of their customers. Our team of experts aims to create an environment where innovative thinking can flourish. Transparency, honesty, integrity and professionalism are key components in everything we do. We work together with businesses as they start and as they grow – it’s a partnership, not simply a service.
If you have recently started your business, or are looking to take the first steps in a new direction, our team of specialist advisers would be happy to talk to you about anything you need to know.
You can also attend our monthly webinar, which gives some real insight and guidance to businesses on a range of key topics. To see the next themes we’ll be covering, visit:
Click here
You can also get some further support for your new business by visiting some of the following:
Government Business Support Helpline www.gov.uk/business-support-helpline
British Business Bank www.british-business-bank.co.uk/start-up/
Money Advice Service www.moneyadviceservice.org.uk/en/articles/thinking-of-starting-up-in-business
Federation of Small Businesses www.fsb.org.uk/
Small Business www.smallbusiness.co.uk/
P20
// lbgroupltd.com
// lbcorporatefinance.com
// lb-fs.com
// lb-ms.com
// lbinsolvency.co.uk
// lbrecruit.uk
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