The time and effort that goes into launching a start-up is immense, and whilst 60% of businesses in the UK fail within the first three years, do not let that daunting statistic deter you.
There is every chance your business venture could be in the 40% that prosper and thrive. While there are numerous challenges that businesses in their infancy may face, the benefits of running a successful business on your own can be extremely rewarding in more ways than one.
In this article, we go through the reasons for starting your own business and give you a look into the things you should consider if you decide to do so.
Why could starting a business benefit you?
For most people, the major advantage to owning your own business is that it lets you be your own boss. Sure, you cannot ignore the risk factor involved with being self-employed, but if you are willing to take the plunge, it can be a very rewarding experience.
You will be able to set your own hours and make your own decisions. You will have the satisfaction of knowing that you built your business from the ground up, and that you built it well.
Finally, the financial freedom a successful business can give you is something not many 9-5 jobs can provide. If you can grow your business sustainably, and with the right decision-making, the financial rewards can be immense.
Why you should start up your own business
If you are looking to start up your own business, beyond the idea itself, your mentality and approach is key to your success.
You should know that if you are passionate about something, and you are willing to go through the hurdles of starting up your own business, you can have a lot of freedom and a lot of success.
There are a lot of benefits to being an entrepreneur, including being your own boss, being able to choose your own hours, being able to choose your own location (especially if you travel a lot for business), and, of course, you get to choose what your own business is.
For a lot of people, the satisfaction of living life on their own terms is enough of a reason to start a business of their own. After all, not everyone is wired to deal with a 9-5 job, working for the betterment of their employer rather than themselves.
How should you set up your business?
Running a start-up business is hard work, but the rewards can be great. Some of the most successful companies in the world are start-ups. That does not mean you will be the next Google or Facebook, but if you do it right, you could be the next small business success story.
The first thing you need to do before starting your own business is determine the legal structure for your company. In the UK there are four main types of business structures: sole trader; partnership; limited liability partnership; and limited company.
Here is a summary and the differences between the most common forms of business entities:
Sole trader – As a sole trader, you pay no fees to get started, you have very little red tape, and you are in full control of business decisions. You also get to keep all the profits from the business, after tax. The main disadvantage is that your business and personal finances are not differentiated legally. This effectively exposes you to more personal risk than you would initially be comfortable with.
Partnership – In a partnership structure, one of the main advantages is flexibility and simplicity it offers, with the bonus of partners to run the business. In a partnership, all partners are jointly responsible for the entirety of the business debts, allowing you to spread risk.
Limited liability partnership – As with an ordinary partnership, each partner in an LLP registers as self-employed and submits a separate tax return. But if the business fails, each partner is only liable for the face value of his or her share.
Limited company – The main advantage of setting up a limited company is that its finances are separate from yours. Another big advantage is the tax benefits; companies pay corporation tax at 19 per cent on their profits. This can be significantly more tax-efficient than paying income tax on income, especially for higher-rate taxpayers.
However, a disadvantage is that a limited company involves much more administration work. It is likely you will need to hire a company secretary or accountant too (though these roles can be outsourced to others).
Once you have your business structure in place, you can begin to think about how your business idea can come to fruition whilst keeping in mind the different taxation and responsibilities you will incur from your chosen structure.
For more on business structures and tax obligations, read our previous blog here.
How to get started with your business?
Most people have at least one business idea that they would want to explore, but convincing themselves to take the plunge and start their own business is another matter.
But, if you need no further convincing and you’re set on launching your own business, there’s a few things to consider and keep in mind:
- Refine your idea – Define your business’ purpose, what problems it solves & how it will generate revenue
- Write a cohesive and detailed business plan, allowing you to make informed & thought-out decisions
- Conduct market research to refine your target audience
- Assess your finances – Determine profitability / price of service offering
- Determine your legal business structure
- Register with HMRC & keep on top of tax deadlines
- Get business insurance to safeguard yourself
If you need a little help figuring out how to get things off the ground, Cue Talent Advisory works with dozens of start-ups every year and can give you the assistance you need.
To find out more and set up a chat, get in touch via our contact form, email us directly or call us on 0203 815 8005.
