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Setting up a new business - #1 Introduction

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Introduction

Welcome to the small business startup guide (Version 2).

Setting up a small business involves a number of important steps if you want to get things right first time. There will always be an element of trial and error in starting up a business, however we hope this overview will guide you through the initial steps, based on the experiences of the Bytestart team and our contributors. This initial version will be expanded over the coming months to incorporate more topics as they are added to the site.

We cannot cover every element of small business startups in a single guide, so we have provided links to further information (both within our site and to external information sources) where more detailed information is available - particularly in areas such as taxation. Finally, this guide is written from our point of view, based on our individual experiences - particularly aimed at web-based small businesses, and you should seek professional advice before taking the plunge!

The Small Business World

Of the four million businesses in the UK, over 99% are 'small' (0-49 employees), according to government data. At the start of 2003, 46.2 per cent of business employment was in small businesses. Even more interesting is the fact that 2.9 million of these small businesses have no employees at all - the majority of small businesses are operated by individuals, or by a small group of people.

Small and medium-sized enterprises (SMEs) together accounted for more than half of the employment (58.2 per cent) and turnover (52.4 per cent) in the UK.

In terms of the legal status of these companies - again using the same government data, over 2.5m are sole proprietors, just under 1m are companies (limited companies in the main), and 540,000 are partnerships.

The slowing economy has caused the number of small business start ups to fall to an extent in 2005, according to Barclays.

According to the research, 388,300 new firms started up in 2005, compared to 446,500 in 2004. The picture is not as bad as it might seem as both 2003 and 2004 were particularly strong years for business start ups with benign economic conditions and a temporary incentive in the taxation system.

Before You Start

Setting up and running a business is a time consuming task - you need to be dedicated and focused and able to structure your time in order to be successful. The rewards of starting up your own business can be great, but think carefully if you have the attributes and right sort of personality to cope with going it alone.

Never underestimate how helpful the business planning stage can be. Even if you never consult the plan again, it is amazing how many thoughts and ideas can evolve if you put all your thoughts down on paper in a structured format. Not only will you require a well thought-out business plan when seeking funding or new business partners, but a decent business plan will help you focus on your goals and ensure you are less likely to stray from your real priorities.

• Guides to writing a Business Plan

The biggest causes of failure for start ups are - setting your sights too high, not researching your market thoroughly, hiring the wrong staff and not putting enough funds aside for contingency.

Setting up and running a business is a time consuming task - you need to be dedicated and focused and able to structure your time in order to be successful. The rewards of starting up your own business can be great, but think carefully if you have the attributes and right sort of personality to cope with going it alone.

We'd recommend you take a look at our Top 10 Tips to consider before taking the plunge.

• On to Part 2 - Legal Status (Sole Trader or Limited Company)

Posted January 6, 2006