Running your own business can be incredibly rewarding - financially as well as personally. However, along with the many benefits come some inevitable risks.
Careful planning and an understanding of these risks will go a long way to avoiding the pitfalls and maximize the potential of your business.
Below are a few tips that we think will make the difference:
Get the right accountant
Whether you're just starting out and need help setting up, or you need advice as your business grows, a good accountant will make all the difference.
The ideal way to find an accountant is through recommendation by asking other business owners or friends. If this isn't possible then the best place to start is the Institute of Chartered Accountants. Sometimes, it may be tempting to consider handling all of your accounts yourself to save some money. But a good accountant should actually save you the cost of their fees - by ensuring you don't pay too much tax. They will also save you time, by handling all the complexities of the paper work so that you can focus on growing your business.
Become VAT registered
Businesses must register for VAT when their turnover within 12 months exceeds the VAT registration threshold - currently at £77,000.
But even if your business doesn't reach the legal threshold, you may want to consider registering. Being VAT registered means you can claim back VAT you've paid on business purchases. Plus, it can help make your business appear larger than it really is - at it could engender more confidence in your clients and suppliers. However, it does mean extra paper work and remember you can't charge VAT if selling to the public or to non VAT-registered businesses. Visit HM Revenue and Customs or ask your accountant for more details.
Manage your cash flow
Managing cash flow is one of the biggest problems for small businesses. But with simple planning you can keep the money coming in and out of your company flowing smoothly.
Start by forecasting ahead to identify any potential issues, such as increase in staff or low sales periods, that way action can be taken early to avoid any problems. Next, and most important of all, make sure you are accurate with invoicing. It may sound simple, but it's surprising how many businesses fail because they invoice incorrectly or don't stay on top of their creditors. Finally, make sure you maintain good working relationships with your customers and your suppliers - there may be times when a bit of flexibility on all sides could save your business from a potential nightmare.
Find the right staff
Hiring the right employees can make or break a small company. With the right people on board your business can go from strength to strength.
But get just one wrong person through the door and it could be very damaging - not to mention a legal headache - getting them out the door again. Careful screening and interviewing of candidates is essential. Never make a rush decision when it comes to hiring. The best candidate will have a balance of the correct skills and a suitable attitude that fits in with the ethos of your business. Once you have decided that they are ready to join your team, ensure you draw up legal Contracts of Employment. These are there to protect both you and your staff and to clearly outline roles and responsibilities. You must also ensure that you are aware of employment law, including discrimination. Make sure you know what your employees are entitled by asking at your local Citizens Advice Bureau. Don't forget the cost of employing people doesn't end with their salaries. There is holiday and sick pay to consider, plus the potential costs of maternity pay to take into account. So make sure when considering taking on a new member of staff you ask yourself whether their role is really necessary.
Follow health and safety
Whether you employ one person or 50, you have a legal obligation to ensure your staff have a safe environment in which to work.
But implementing health and safety regulations needn't be expensive or complicated. First, start by carrying out a risk assessment of your general premises to identify any obvious hazards, such as fire risks or poorly maintained floors or stairs. Second, you must provide basic welfare facilities, such as toilets, washing facilities and drinking water. You must also provide free health and safety training to your staff, make sure you are up-to-date with the regulations and display the health and safety regulations poster. Don't forget it is a legal requirement to have employee liability insurance if you employ anyone, even part-time staff. By taking a common sense approach to health and safety you can protect your business and keep your staff safe.
Have the right business insurance
From tradesmen to doctors, hairdressers to estate agents, having the right Business Insurance in place is essential to protect your assets and responsibilities.
Business Liability Insurance is there to protect your responsibilities to your employees and your customers. To begin with, if you employ even one member of staff you are legally required to arrange employer's liability insurance to protect you should a member of your staff be injured while working for you due to your negligence. You have duty of care to ensure your premises are safe. You should also consider public liability insurance to protect you should a members of the public visit your office or premises and suffer an injury or damage their property due to you or your employees fault. Businesses working away from premises need adequate cover to protect these activities. If your business involves giving any kind of advice to customers then you should also consider taking out professional indemnity insurance. Not only will it protect you and give legal defence cover should a client feel any advice your company has given was incorrect and they suffer financial consequences as a result. Increasingly you may find that some clients won't consider your services unless you can evidence this cover is in place.
As no two businesses are the same you should seek professional advice from an Insurance Broker that understands you and your needs. They will be able to advise you and can tailor an appropriate business insurance solution for you.