Starting New Profitable Businesses in the UK
In 2015, the UK had 608,100 new businesses started by entrepreneurs.
Previously 2014 held the record with 581,173 new ventures, while 2013 saw 523,410 new incorporations beating the 484,224 started in 2012 and 440,660 in 2011.
People start businesses for many reasons ranging from serial entrepreneurs, redundant employees leveraging an opportunity and people that simply want to test their ideas.
Not all will succeed although support networks and central government funding improve the success statistics.
If you're thinking of joining this growing economy with your own products and services help and guidance could produce greater profitable results.
Starting With Your Ideas
Procrastination and lack of access to finance are the two main reasons people cite for not starting their company. If you're ready to begin your journey, then use these litmus tests and tips to guide you through the start-up jungle.
Start by asking yourself these three questions to help visualise if you're ready:
Is your idea profitable in the long term?
Most people start businesses to make profits, although some simply want a hobby. Some industry sectors are more profitable than others, so it's wise to research your idea before investing too much of your savings.
What do others think about your vision?
Sometimes we are blinkered and can't see potential pitfalls along the way. It's always best to ask for a second opinion for a sanity check. Select someone you trust and either runs a successful business of their own, or fairly senior in their organisation. If you can't think of anyone, then you could approach your bank or a financial adviser.
Are you ready to work long hours and sacrifice family time?
As the early days are the most critical for long-term success, long hours are often spent by the owner as the employment of staff is many months away.
How to Check if Your Idea is Profitable
Turning an idea into a profitable business is successful in less than 45% of cases. The best advice is to create a simple spreadsheet with monthly revenues and costs for your first 12 months. This forecast will highlight any gaps in your forecasts and the required funding for initial working capital.
A thorough understanding of the volume of sales required during the year shows at a glance if your venture is successful financially.
Receiving Feedback on Your Ideas and Plan
Once you have your forecast ask friends or colleagues for their opinion. Using an unbiased third party could highlight areas of concern by interrogating your data and may save you from making the wrong investment decisions. Selling at a loss or a small margin will lead to imminent failure.
Put the Hard Work in for High Rewards
Running any business is going to be hard work especially at the beginning. You may not be able to employ staff to help you initially, and the majority of work being undertaken will be by yourself. The early stages of growth could require working seven days a week up to ten hours per day. Once you're generating positive cash flow you can begin to bring in staff to take over some of the running activities.
Researching the Market
Enthusiasm can take you so far on your journey,. If there's limited demand for your products, then your business may be short lived.
Undertake research on your target customers by talking to them face to face. There may be valid reasons if there are no competitors where you're thinking of setting up.
Perhaps others had tried and failed with the same concept before and also failed?
Investing in initial market research before you undertake any personal monetary investment could save you a fortune in lost revenues in the short term.
Have You the Knowledge and Skills?
Failure often comes to people who start businesses where they have no previous experience. For example, if you haven't run a cafe or restaurant before it's unwise to start a business in this area. If this is your dream then partner with others who have the necessary experience. Training and qualifications can improve your chances, but first-hand experience always wins.
Setting up Your Company
Legally registering a new Limited Company takes a few minutes with the many online services available. If you're a sole trader, you simply need to register with HMRC your new self-employment status.
There are other requirements if you're employing staff such as PAYE registration and liability insurance. Self-employed people add their income to their self-assessment return each year whilst Limited Companies submit annual accounts and pay Corporation Tax.
You'll also need a company bank account to separate business income and expenses from your personal accounting records. Many banks will refuse cheques and payments with a company name, so it's wise to get this setup as soon as possible.
Types of Businesses Started Each Year
Below is data from The Office for National Statistics showing the different sectors for UK business start-ups.
- Communication & information 13.4%.
- Scientific, technical & professional 12.8%.
- Business support & administration 11.95%.
- Food services & accommodation 11.4%.
- Retailing stores and services 10.4%.
- Insurance & financial services 10.1%.
- Property 9.6%.
- Education 9.4%.
- Construction industry 8.6%.
- Wholesale 8.4%.
- Production 7.2%.
- Other 34.6%.