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.”