Starting your own business

[Gatt]

Anyone got any advice on this?

 

Pros/Cons

Hints/Tips

 

found businesslink.gov.uk which seems to have a load of information which is so confusing that I don't really know where to start..

[TheMan100]

Pros would be that you have much more flexability, you choose how to run your business, you choose when to work, you choose who you work with.

Cons: If you were a sole trader, you'd get little time off, it's time consuming, risky, high startup costs.

 

They're just ones I can think off of the back of my head.

[Gatt]

Yeah had a few of those running round my head too

I really dont know where to start with it all.. :-S

[contink]

Start with some research...

 

- Is there a market?

- do you have customers/income ready to take you on?

- How much reserve capital/ savings/ time do you have?

 

Actually starting a business comes down more to you deciding to do it, than paperwork but if I had just a few pieces of advice they would be to:

- get at least 50% up front

- get it in writing

- assume cost = original estimate * 2 + 2

- trust is earned, not guaranteed

- friends in business are not friends

 

It'd help if you could provide a bit more info on what you'd be doing, rough turnover, rough plan...

[Gatt]

Thanks @contink, these are the things I really need to think about before commiting to anything

 

I'm really sorta looking at a mix of PC installation/Repairs, SOHO installs...

 

At the moment I would have to admit that I have no real plans in place as Ive only really just started thinking about the possibility

[contink]

To be blunt I would seriously think twice as those sorts of service are two a penny. If you have a unique angle or service it's a plus though.

 

I would definitely:

-check what's already available

-see you can identify any holes in the market

-check range of prices and the quality received at the price level.

-look hard at ALL the costs for those services and be honest in whether they are sustainable

 

Basically be brutally honest with yourself about whether you would have a workable, profitable business or a money pit.

 

Perhaps it's worth noting I got out of schools because I realises costs were increasing along with competent competition, while prices were dropping

[wizzard]

Pros would be that you have much more flexability, you choose how to run your business, you choose when to work, you choose who you work with.

Cons: If you were a sole trader, you'd get little time off, it's time consuming, risky, high startup costs.

 

They're just ones I can think off of the back of my head.

 

The same can be said for setting up a Limited Company, however the risks are reduced if the business fails.

 

Not all businesses have high startup costs, depending upon what you sell or what services you provide, could cost you next to nothing.

[Andrew_C]

Worth talking to an accountant early. Could save you oodles of cash, and stop you making silly mistakes.

[Millgate]

It could be really good! Obviously weigh up the pros and cons but if you already have contacts that could get you work then it's worth doing. Every successful business had to start somewhere. It would be hard and risky, you just have to decide whether it's worth it.

 

Start up costs don't have to be high either. Advertising can be cheap as I'm guessing you'll be starting local and you could prospect local business and see how you get on.

 

Good luck with it!

 

Cheers

 

Luke

[Gatt]

Yeah I'd be starting local, and prob just as PC Install/Repairs.. gonna have a reckon up as to who else does what in the area, though not really seen many doing it...

[featured_spectre]

Get quotes from the companies around you and use that to gauge the prices for your area also. For example where I am its about £70 an hour to look at pcs and laptops but I charge £40.

 

Also build up a customer base by word of mouth, along side flyers and a newspaper article. For a one off business expense do a full page article, you'll be surprised at the amount of business you can get from it!

[featured_spectre]

Also, if you get registered, its worth signing up to computer2000 for cost price components and software.

[Gatt]

Yeah need to look into all these things and get some sort of ad done..

Thanks for the ideas guys

[Millgate]

Also, if you get registered, its worth signing up to computer2000 for cost price components and software.

 

C2 are massive and do pretty much everything however, they give you pricing depending on how big you are, how much you spend and your partner status. Obviosly when your starting out, it might be hard to get a decent credit limit too which is why I'd recommend using a reseller like me. I can get you better pricing than what C2 can get you and you'll find the level of service much better as distributors tend to only sign account managers to larger clients.

 

I'm not just saying this to drum up business either .

 

If you need any info or whatever, just let me know

 

Cheers

[featured_spectre]

Add on top of this that you will need to register with Company House and get a letter head sorted for your business....however if you rent your property you cannot use that as your business premises (I got turned down by Company House for this reason) so enjoy! lol

[Gatt]

I'm gonna need to sit down and go through the whole lot

Business Plans, Market Research, etc

Especially in what I want to offer. there is one company not far from me that mainly sells and does a few repairs so need to go have a nosy and see what their prices are, etc...

[Gatt]

Add on top of this that you will need to register with Company House and get a letter head sorted for your business....however if you rent your property you cannot use that as your business premises (I got turned down by Company House for this reason) so enjoy! lol

 

Lol, yeah though don't think the wife would be too happy if i had to use the family home for anything money related!

[contink]

Just on the premises angle...

 

I'm literally only moving into a business unit after nearly a decade of running things out of my bedroom, before getting our own house and using a spare room. You can designate a room as being used for business purposes and get a proportion of your household bills (electric, gas, water, etc..) taken as business expenses.

 

Getting a shop front, or workshop is a massive step though and increases your costs significantly so I really wouldn't jump in with both feet that way initially if you can avoid it at all.

 

My father has a similar operation to what you're considering down in Devon and he does everything out of a tiny workshop space in the house, that looks more like a cupboard, but it keeps his costs down, making his prices subsequently cheaper. All the competition are stuck at higher prices for two reasons:

1. Higher costs in premises, rates, staff, etc...

2. VAT

 

As it goes Dad built an extension and he's expanding into a bigger workshop but he deliberately keeps his turnover below the £70K to avoid the need for VAT registration and in particular he offers customers the option to drop off and pick up their computer or he charges £20 or so to get it from them. People like to save a bit of money so quite a few drop it off... It is a security concern though (he has BIG dogs!) so think it through but you get the idea.

 

 

 

As to starting out as a limited company... Don't... It adds massively to the administrative overhead.. an accountant is going to charge you between £50 and £100+ a month to manage it all for you, and it all starts to snowball... Start small, test the water, adjust and then test again... Oh and promise late/little, deliver early/more is a good mantra to go with (one I fail to apply regularly! ).

 

 

I have a spreadsheet that helps you figure out fixed/variable costs... and helps you ensure you are actually paying the bills instead of focusing on the direct costs (cost of the bit of computer kit) and ignoring the indirect (car running, fuel, electricity, book learning, paper, accountant, etc..). I'll see if I can dig it out for you when I get a chance.

[elsiegee40]

+rep for great advice @contink

Just on the premises angle...

 

I'm literally only moving into a business unit after nearly a decade of running things out of my bedroom, before getting our own house and using a spare room. You can designate a room as being used for business purposes and get a proportion of your household bills (electric, gas, water, etc..) taken as business expenses.

 

Getting a shop front, or workshop is a massive step though and increases your costs significantly so I really wouldn't jump in with both feet that way initially if you can avoid it at all.

 

My father has a similar operation to what you're considering down in Devon and he does everything out of a tiny workshop space in the house, that looks more like a cupboard, but it keeps his costs down, making his prices subsequently cheaper. All the competition are stuck at higher prices for two reasons:

1. Higher costs in premises, rates, staff, etc...

2. VAT

 

As it goes Dad built an extension and he's expanding into a bigger workshop but he deliberately keeps his turnover below the £70K to avoid the need for VAT registration and in particular he offers customers the option to drop off and pick up their computer or he charges £20 or so to get it from them. People like to save a bit of money so quite a few drop it off... It is a security concern though (he has BIG dogs!) so think it through but you get the idea.

 

 

 

As to starting out as a limited company... Don't... It adds massively to the administrative overhead.. an accountant is going to charge you between £50 and £100+ a month to manage it all for you, and it all starts to snowball... Start small, test the water, adjust and then test again... Oh and promise late/little, deliver early/more is a good mantra to go with (one I fail to apply regularly! ).

 

 

I have a spreadsheet that helps you figure out fixed/variable costs... and helps you ensure you are actually paying the bills instead of focusing on the direct costs (cost of the bit of computer kit) and ignoring the indirect (car running, fuel, electricity, book learning, paper, accountant, etc..). I'll see if I can dig it out for you when I get a chance.

[Gatt]

cheers @contink

 

The room within the house may be the best way to start (if i decide to go through with it)

The spreadsheet would be good to see so I can get a rough idea of whats involved

[wizzard]

Contink,

 

Not all accountants cost that much. Especially if you keep good records in the first place.

 

A Limited Company can save you a lot in tax if you speak to the right accountant. You can claim a lot more under a limited company than you can as a sole trader.

 

Also a limited company is a seperate legal entity so unless you provide a personal guarantee to any loans, if the limited company goes belly up for whatever reason, your personal assets cannot be touched, unless it can be proven you've acted improperly.

 

I see the same arguments all of the time from people who started out not engaging an accountant and then realised it was a false economy not having one.

 

Yes spreadsheets are all fine and dandy if your accounting is simple. But can be prone to errors which may not be picked up.

 

As for artificially keeping the turnover low to avoid VAT registration is playing with fire. BTW the threshhold is now £73k.

 

Sure there maybe an administrative headache, but worth it for the tax savings.

 

Speak to an accountant for them to advise on the best structure for your company.

[Chris_in_notts]

just go sole trader no need for limited until your profit hits 15K my accountany recons at that point the extra cost will be out weighed by the taxable benefits of being LTD

 

if you rent you cant designate a room and have it as a business expense you would have to get your landlord to break down your rent into personal and business use and then offset the business use against your tax bill although your can put a percentage of your gas, water, electricity, phone, internet, mobile phone, ect on your tax return. but if you own you can charge yourself a percentage for the room your account will advise you on this.

 

speak to an accountant make sure you get a good one from recommendation and remember good accountants arnt cheap and cheap accountants arnt good! but a good accountant will pay for themselves if they know what there doing.

 

good luck

[Flatpackhamster]

I've been self-employed, running my own business for 9 years. Some thoughts which may or may not be useful.

 

Setup - I have a Limited Liability Company. This means that if something goes horribly wrong I can walk away. The costs for this, and my payroll, come to about £1,500 a year. Unless you're a natural accountant then getting someone to do it for you is well worth it. By the way, accountants are all mean with money.

 

The Bank - Cashflow is all important. You need a trustworthy bank manager (or business manager). You have to go to see them in person, every couple of months. You need to build up a relationship. Online accounts are no good.

 

Setup costs - There are costs for setting up the LLC.You'll need printing for leaflets and cards (try Printcarrier.com - the printing people [ALL WE DO IS PRINT]).

 

Running costs - Transport (you will need a car). Fuel, food (never eat on on a job, always take your own, it'll save a fortune). Hardware. Christ, the computer hardware. You need to get that stuff shifted as fast as you can. If you've just bought £3,000 of computer hardware, the faster you get the money for that the better. It's better if you can get the client to buy the equipment. Why? Because, when your turnover hits around £56,000 you will have to register for VAT. Which means more paperwork.

 

Oh, and always take a deposit. No matter who it is. Nobody is your friend. Everyone is a client.

 

Breaking the law and taking cash without putting it through the books - This is illegal. It is also widespread due to the high costs of running a small business and the high costs of regulation. I've had eight tax rises (Income tax, NI, Employers NI, Corporation Tax) in the last nine years so I really can sympathise with the people who do it.

 

Discipline. This is the hardest thing. When you've just come in at 8pm on Saturday night, and you know you're back out again on Monday morning at 8am, and that Sunday afternoon is the only chance this week that you will have to do your invoices, do you have the discipline to sit down and do them while all your friends are having a barbecue and drinking beer? If the answer is 'maybe', then self-employment may not be for you.

 

Customer turnover - Unless your customer base is extremely loyal you can expect to lose 25% of them every year. Some move, some lose your address, some use someone else. You need to advertise constantly.

 

Reputation - Your reputation is the most important thing. If people trust you they will recommend you. 90% of my work comes from recommendation. Those people know that I'm good, they know that I can be trusted and that is worth its weight in gold.

 

Loneliness - If you love the office vibe you will hate self-employment.

 

Contacts - This is so important. One good contact is worth a year's advertising. If you can find someone who knows everyone (head of the Rotary, pub landlord, that kind of thing) and who knows and trusts you and has used you, that person will also be worth their weight in gold. Get in on local committees, local groups (all free ones), get to know everyone you can.

 

Don't expect to break even for 18 months. You can expect poverty and penury and misery.

 

And I wouldn't change it for the world. There hasn't been a day gone by in the last nine years where I've woken up and wished I worked for someone. Not. One. Day.

 

Oh, I've wished for the money and the security. But I'm not prepared to pay the price. And there's something quite special about getting up on a sunny Wednesday morning when you don't have any work on and going for a walk while everyone's at work.

[dhicks]

I'm really sorta looking at a mix of PC installation/Repairs, SOHO installs...

 

You're really thinking more along the lines of self-employed IT consultant rather than a small business owner with dedicated premises that manufactures anything. As such, working for an umbrella company might be a good option - they take care of the tax, PAYE, etc, and take a (fairly substantial) cut of your fees. @Will_Townsend might be the person to ask about this - his company (ESP - Education Support Professionals) seems to work with several, and he might be able to give some advice in this area. If you do need to register a business in premisis other than where you live, that's what places like Mailboxes, Etc and similar are for - they'll provide you with a registered business address and associated facilities for a monthly fee.

[Gatt]

Cheers, will try and PM him later and see if he can help with anything...