Laura Howard, Wednesday March 19, 2008
Why be an apprentice when you can be the boss? Make your entrepreneurial dreams a reality with our 10-point guide to starting your own business
The UK has always been a nation of entrepreneurs - as figures from Barclays show. In 2007, a record 471,500 new businesses opened their doors, the bank says - 3% up on 2006 and the highest annual volume since Barclays started tracking the market in 1988.
The surge in start-ups came despite increasingly difficult trading conditions in the second half of 2007 after the credit crunch hit home.
If you want to go it alone, here are 10 top pointers that will help pave the road to success.
1: Finding the right idea
It's tempting to think that everything has been invented but, of course, this can never be true. If you think you have hit on something, you will need to register your idea with the UK Intellectual Property Office. A patent costs £30 for the initial application and around £200 if it is granted - but a patent only protects the technical and functional aspect of a product or a process.
You may require the other forms of intellectual property protection in addition or instead of a patent. These are Copyright, which protects material such as literature and art: Design, which protect the visual appearance or 'eye appeal' of a product: and Trade Mark, which protects signs that can distinguish the goods and services of one trader from those of another.
2: Finding the right company name
This will be with you for a long time and, albeit superficial, can make or break a business. While you may be proud of your business, choosing an objective name that reflects what it does is likely to be more beneficial than naming it after your cat. And if you've decided to form a limited company, you'll need to register your name and other details with Companies House.
3: Finding funding
Most start-up businesses need funding of some sort as, even if you don't need to buy materials, you'll need money to live on. Business loans are available through almost all retail banks and are usually capped at £25,000. Business current accounts, also available from the high street, will come with an overdraft facility - typically in the region of £5,000.
There are other avenues open to you - check to see if you qualify for a government grant at the business link website. The Prince's Trust also offers entrepreneurs aged between 18 and 30 loans at very low rates of interest.
4: Pitching to investors
Another way to obtain funding is to pitch your idea to investors who might give you cash in return for a stake - known as an equity share - in your company. But be warned; even if you are successful, you will often have to compromise on how much you give away - just ask candidates on the TV show Dragon's Den. And as your investors will now own part of your company, they will also have say in how it's run.
5: Drawing up a business plan
Before you attempt to raise funds, you'll need to be armed with a good business plan. This should incorporate a financial forecast for each investor over a three to five-year period as well as set down clearly what your business is and what it will achieve.
Sample business plans are available from some local high street banks or the Federation of Small Businesses. You can access further help and information at the Government's Enterprise Directorate website and Business Link.
6: Getting your tax in order
The bad news is that HM Revenue & Customs will want a slice of anything your business earns. The rules surrounding what tax you pay vary depending on whether you are setting up in business as a self-employed individual or as a limited company and whether you will be employing anyone.
7: Marketing your firm
Your sales and marketing strategy is of paramount importance and will therefore account for a large proportion of your business costs. As well as thinking about advertising and public relations, you'll also need a robust and well-designed website which is search-engine optimised.
8: Building a safety net
According the Federation of Small Businesses, the majority of firms that start up each year fail due to lack of finance. That's why it's recommended that all new businesses put by a contingency sum of between 10% and 20% of initial start-up costs.
9: Keeping the faith
Every start-up will have a bumpy ride up to and beyond its launch - but rather than give up, simply prepare for and expect it. John Boyd Dunlop from Scotland took this literally when he invented the air-filled pneumatic tyre (as well as the word pneumatic) back in 1888. At the time he was dismissed as a lunatic but his determination and faith in his idea is why we are now able to drive cars at high speeds without our teeth rattling over the bumps.
10: Boosting your profits
Five years down the line when your business is profitable is still no time to relax as profits can always be boosted. And even if that initial 'Eureka moment' has turned into a multi-million pound empire, you should never rest on your laurels. Just look at Gerald Ratner who, in 1991, managed to wipe £500m from his own high street jewellery company when he joked that a prawn sandwich would last longer than a set of 99p earrings purchased from one of his stores.
