Do you want to start a business but do not know where to start? Have you got the business idea but are unsure how to make it happen and what requirements you need to comply with from a legal perspective? This blog will explore some of the considerations to be contemplated prior to starting a business.
The business idea
Whether you are considering setting up a business offering a new type of service or selling a new product or app/digital content, it is important that you consider the ins and outs of your business idea. You must ensure that your idea is achievable in practice – i.e. have you got/can you obtain the equipment required for your business? Have you got the production means for a product/app/digital content? Do you require any employees/consultants/assistants to achieve your business idea? Do you require any licences or permits to be able to operate? Do you own the necessary intellectual property to protect your idea/app/digital content once created and put out to market?
One of the biggest challenges faced in setting up a business is obtaining the capital injection that is required to achieve this. Whether you require the funds to obtain premises for the operations or funds to invest in any equipment required or even to protect the intellectual property you are creating in the endeavour, it is likely that the sum required will be significant.
There are a few options that you may consider at this stage:
- Equity funding by way of capital injection from an investor: depending on your business idea, you may be able to find an investor willing to buy into your business; however, it is very likely that you will require a very well put together business plan and realistic projections of sales/profits in order to impress an investor at this stage as there is no tangible evidence that the business will meet any projections upon which an investment may be heavily based. The advantage of this is that, subject to the amount of the proposed investment, you may not require any debt funding and therefore are able to potentially protect your business from long-term ongoing debt.
- Debt funding by way of loan from the bank: same as equity funding, you will require a business plan and realistic projections for the bank to consider prior to obtaining a loan as well as need to offer the bank adequate security for those loaned funds.
You may also wish to limit you expenditure at this stage at what is absolutely crucial for you to be able to operate your business/get it up and running so that it is viable and attractive to investors.
The business plan
Putting together a good business plan has various advantages, including but not limited to:
- Clarify your business idea;
- Spot potential issues;
- Set out business’ goals; and
- Measure progress;
As confirmed above, a well put together business plan with realistic projections may attract investors and therefore support you in launching your business.
You can find guidance on how to write a business plan, including business plan templates on the Government website.
The Apprentice TV show
You may be familiar with this show – it is a UK series which follows aspiring businesspeople competing against each other in a series of business-related challenges to win a prize – i.e. funding for their business or a joint venture with the show host – Lord Sugar.
The challenges are designed to test the candidates’ business skills such as salesmanship, negotiation, leadership, teamwork, and organisation, and include making the most profit (including margins), achieving the highest sales figures and/or branding. In the final episodes of the show, the candidates also have to put together a realistic business plan for their business, which they wish for Lord Sugar to invest in/go into business with them in.
The tasks in this show are both practical and offer a good indication of things to be considered, as well as challenges that may arise in a business start-ups at an early stage, whether contemplated or not.
Whilst the TV show may be a good indication of considerations in a business start-up and its practicalities, it is also very important that you comply with the legal requirements regardless of whether you intend to incorporate a company, set up a partnership or pursue the business as a sole trader.
The Corporate and Commercial Department at Fisher Jones Greenwood LLP can help you set up your business, incorporate a new company at the Registrar of Companies and ensure compliance with all legal requirements arising therefrom; as well as assist you and guide you through the process of incorporating a company or any issues arising thereafter.
Should you require any further information or assistance please do not hesitate to get in touch – call 01206 700113 or email [email protected]