Start Up Company To Do List
Date: 03/05/2007
Start Up Company To Do List
Before starting down the following list, you need to know that the two main reasons for business failure are the inability to attract customers because the business (or its products and services) were not unique enough and/or the inability to control the cash as it enters the business. If you don’t do the former properly, you won’t have the latter to worry about – which makes ‘your ability to market your business ’ the biggest challenge facing new business owners.
1. Work out how much money you need for your personal ongoing survival each month. This is a key figure, because you’ll have to include your wages in the cash flow projections.
2. Do some very rough Cash Flow projections. If you’ve never been in business, or you’re not financially aware, don’t be put off by the words ‘cash flow!’ Calculate what your sales are going to be each month and when people will pay you, along with your monthly expenses. You list this in columns month by month with your opening bank balance at the top and your closing bank balance at the bottom of each month. Calculating sales and expenditure is a tough task because you’ll have to ‘read a crystal ball’ but there’s no other way. The amount you ‘go into the red’ in your cash flow projection which will tell you how much money you’ll need to put into the business – it’s as simple as that. Your expenses will include a wage for yourself which should be kept to slightly above what you need to survive.
3. Work out how much money you have. Calculate what you can gather together to put into the business. Does it equal or exceed the amount needed in 1) above? If it doesn’t, then do not despair – there is plenty of money around for those with a good business idea. You’ll need to be prepared to compile a great-looking Business Plan.
4. Gather your thoughts. Start to put your rough ideas down on paper. (Who, what, how, where, when, why, etc.)
5. Do market research. Conduct some fairly thorough market research to ensure people really want what you’ll be offering, and are prepared to pay the price you’ll be charging.
6. Check the internet. Sit on the internet undisturbed for at least a whole day and research how others do what you intend to do. (Learn from them, pick up the jargon, get to know the industry inside-out, try to ascertain costs, industry profit margins) Don’t be a smarty-pants – accept that you probably know virtually nothing compared to the amount you’re going to need to learn. If you think you know-it-all, chances are you don’t!
7. Find your USPs? USPs are unique sales propositions – the things that make your products or service different from everyone else’s. However, USPs are not better quality, best service, etc. – it’s ‘what makes you special?’ This is one of the most important things you can do. What’s the point of opening a business the same as others already doing it unless you can capture a market?
8. Find some expert advice. (From someone who has been successful in business. Beware of listening to those who’ve been unsuccessful in business.) You need to talk to people like Business Link and to go on their free ‘starting in business’ course at the very least, or discuss your business idea with your local enterprise Agency or Chamber of Commerce.
9. Calculate your production capacity.
10. Check competitor’s prices. Start working out what you will be charging.
11. Do three more projected cash flows. You need to be looking 12 months ahead, preferably 2 years – showing worst case, optimum case and best case financial scenarios. (Plenty of free training is available for this.) Include sensitivity checks – for example, what will happen if the price of raw materials increase sharply?
12. Calculate gross profits. i.e. profit before you start to pay overheads such as rent, lighting, etc. Get help with this if you don’t know how to do it.
13. Calculate Net profits. i.e. the profit after all expenses have been deducted but before paying tax. Get help with this if you don’t know how to do it.
14. Calculate your break-even figure. This is the point where you start to make profits. E.g. when we sell X amount, we cover our bills. If you don’t know how to do this, find some help from someone who is good with figures and finance.
15. Check when you will run out of money. You need to be prepared if things don’t work out as planned, and to know how long you’ve got!
16. Do you need money? Start to find out where you can borrow money from, if you’ve calculated that you’ll need it. Note that Grants for starting a business are very few and far between, although there may be grants around for social/community businesses connected to education, recycling, sport, arts, etc. Besides, the amount of time and effort involved in obtaining a small grant, may be better spent finding customers.
17. Trading Licenses. Check if you need special licenses to trade and whether you are eligible to obtain them.
18. Intellectual Property. Check what aspects of IP you may need to protect. (e.g. patents, trade marks, business name registration, etc.)
19. Compile a Marketing Strategy. This simply means writing down how you are going to market your business and to whom. Define who your customers are and where they are located.
20. Premises. What do you need, where should you be ideally located, do customers come to you, or do you go to customers? What do you need? Office space, workshops, manufacturing plants, etc. Could you work from home?
21. Plant & Equipment. What do you need? How much does it cost? Have you put everything into your projected Cash Flow?
22. Critical Paths. Draw up a critical path analysis (a time frame) of what will happen in what order and when.
23. Business Plan First Draft. Sit down quietly for at least a week and do a first-draft Business Plan. (There’s plenty of free training available if you don’t know how.)
24. Find some expertise. Find an experienced business person (or Business Link Adviser, or the like) to tell you how good (or bad) your Business Plan is and how to improve it. Listen to them as they are on your side! Willingly accept constructive criticism – don’t argue with people. Always thank them for helping you out.
25. Re-evaluate your position. If you’ve followed the steps so far, you should have a gut feeling about whether you have the makings of a business and whether you are prepared to take the risk, or whether you need to re-think. Remember, once you start a business, you cannot claim social security (unless in the government’s special ‘Into Business’ Scheme, and your business is you source of income from now on. AT THIS POINT…IF YOUR BUSINESS PLAN SEEMS VIABLE, CONTINUE. (IF IT’S NOT, YOU’D BETTER STOP RIGHT NOW, AND THINK AGAIN.)
26. Organise some business training. If you’ve never run a business before, the University, Business Link and local Enterprise Agency can help you here for free.
27. Finalise your product/service to saleable standards.
28. Legalities. Decide which legal framework to work under (Sole Trader, Ltd Company, etc.)
29. Accountant. If an Ltd company or partnership – organise an Accountant or solicitor to set it up.
30. Register your trading name and any unique trademarks.
31. Organise insurance. (Minimum Public Liability, equipment and vehicles.)
32. Open a business bank account. Put your initial capital into it.
33. Register with the Inland Revenue Dept. Start paying your NHI stamp. (Mandatory within 3 months of commencement of your business.)
34. Consider being VAT registered – this is optional if your turnover is expected to be below £58,000, but it has certain advantages and disadvantages. (e.g. you get to use the cash you’ve collected through charging VAT until it’s time to pay it to the government.) The main downside is the large amount of paperwork you’ll have to do.
35. Set up your office. This may be at home or elsewhere (the most suitable location) and establish a business address to work from.
36. Buy equipment. Organise computing and other office equipment, plant, machinery, etc.
37. Arrange a business phone/fax number
38. Arrange a suitable e-mail address. Try to avoid Yahoo, Hotmail or the like. These may be suitable for private home use, but don’t look professional as a business e-mail address. (Try to obtain dot.com, dot.co.uk, dot.biz, etc.)
39. Design and get a Business Card
40. Arrange corporate stationery. (letterheads, invoices, etc.)
41. Set up your financial systems. (invoicing, payments, journals, etc.)
42. Organise suppliers. Check they have the best prices.
43. Organise your first marketing campaign. Launch yourself with enthusiasm into the market place.
44. Organise a solicitor to draw up contracts and Confidentiality Agreements if your company has special secrets, or intends to enter into licensing, etc.
45. Join a few network associations. Most business marketing nowadays by start-ups is done through networking – getting around to various meetings and meeting people; establishing new contacts.
46. Set up a good web site. We don’t believe attract very much business because there’s so many of them. However, web sites are a great tool to show off your business once you’ve met your customer, or a place to direct people to assess your products, services and prices.
47. Set up an effective credit control system. You’ll need Application Forms to be completed by all those who want credit terms from you. Sadly, between 1 and 10 people in every hundred you deal with will not pay you. You need a system to check your customers out before you supply products and services to avoid giving credit to high-risk customers. The weaker your credit control system, the more you’ll experience bad debt – and ALL businesses experience some bad debts. If someone doesn’t pay you, it’s no use getting angry – you have to look in the mirror to find out how they got away with it!
48. Set up your trading Terms and Conditions. Have them printed on the back of your invoices. Ideally, they should be finalised by a solicitor, but you can get a feel for what you are going to need by ‘stealing’ your competitor’s Terms and Conditions to start yourself off. Terms and Conditions are particularly important if you are selling a service where staged payments may be involved or where there could be doubt about work quality, etc. What you don’t want is to spend two weeks working on a project for someone, only to be told in the end that they don’t like your work and so will not be paying you! In a court of law, your Terms & Conditions may be the only thing you can lean on.
49. Set up your invoicing and payment disciplines. You do not need a book-keeper or accountant in the early stages of starting a business, but you do need to keep strict records of every payment you make and every penny that comes in. If you do this, then you may be able to get an accountant at the end of the year to do your tax return for, say, £200 to £500. However, if you turn up at the accountants with a ‘Tesco bag full of receipts’ that don’t match your cheque stubs because you didn’t write the amounts down, then your accounting bill could run into thousands of pounds.
50. Business Launch. Clearly define how you will launch your business into the market place. Even those with ‘the best product since sliced bread’ have to launch their business – you’ll need to proactively tell people you exist. This list covers the main aspects of setting up any type of business. There may be many other issues you’ll need to address, depending upon the nature of your business, and you are advised to seek advice to determine what such issues might be.
