Telling the truth about SME life today

Setting up a business in six easy quotes

Share on facebook
Share on twitter
Share on linkedin
Share on email

Last year, more than 523,000 new businesses were formed, according to Startup Britain. Thats up from 484,000 in 2012 and 440,000 in 2011.

The financial crisis has, of course, helped swell the number of new businesses. But it’s also a healthy sign that entrepreneurial Britain is alive and kicking.

Indeed, SMEs account for a whopping 99% of all private sector businesses, 59% of private sector employment and 33% of turnover.

In Scotland, 30,263 new businesses were set up. Best postcode for new starts was G2. Second and third were in Edinburgh EH3 and EH6. Of interest, we have two offices in Edinburgh, in EH3 and EH6 and have helped many of those businesses get off the ground.

The number of active businesses in the UK stands at 2.82 million, up from 2.73 million, according to the latest Entrepreneurs Index report from Barclays and the Business Growth Fund.

Setting up in business is a huge step for anyone and, for the best chance of success, whats needed are strong foundations.

I find out what the world needs, then I proceed to invent.” (Thomas Edison) 

First, have a clear idea of what your business will be about. Most entrepreneurs start businesses in sectors theyve worked in. From experience, theyve spotted a gap in the market an opportunity waiting to be exploited. 

At this stage, with a germ of an idea, whats key is research. Your idea might be a good one, but does it add up to a viable business  Be honest, dont assume. 

Also, ask yourself this: what does success look like Is it a comfortable living Is it to build a business that you can sell Is it to only have to work part-time In other words, set longer-term personal goals.

A goal without a plan is just a wish. (Antoine de Saint-Exupery)

Turning dreams into reality needs a business plan. An honest assessment of likely income, month by month, in the first years of trading and, of course, an equally honest assessment of likely costs.

The business plan should clearly set out the practical consequences of different trading levels. If the business is a roaring success, that might mean having to buy unbudgeted stock a cash flow issue. 

Likewise, if turnover isnt what you expected, but costs are fixed, that will also have an impact and should be planned for from the outset.

While this crucial step is best accomplished with professional advice, you can get help and tips from government or more specifically from the taxman.

About the time we can make the ends meet, somebody moves the ends. (Herbert Hoover)

Okay, you now have your business plan. The next step is finding the capital to make it happen: to pay for equipment, stock and other outgoings (premises etc), and as a cushion against limited income while the business picks up. 

There are many sources of funding, not forgetting banks. Other sources include family and friends (but beware of emotional entanglements!), business angels and crowd funding.

This is where good advice can pay dividends, because what you need is the best deal possible. You also need to understand precisely the terms and conditions you’re signing up to.

As a first step, have a look at www.gov.uk which has helpful hints, or the National Enterprise Network (England and Wales), or Business Gateway (Scotland). If you’re under 25, theres also the Princes Trust.

George McKenzie is senior partner with Edinburgh accountancy firm Gillespie LLP.

Trending

Topic

Share on facebook
Share on twitter
Share on linkedin
Share on email

Related Stories

More From

Trending

If you enjoyed this article,
why not join our newsletter?

We promise only quality content, tailored to suit what our readers like to see!