The new government coalition has been formed, and with an emergency budget looming entrepreneurs can be sure of yet more changes that will affect them and could add to the administrative headache that they already face.
However, under the new government George Osborne, the new chancellor, is pledging to support a private sector recovery by reducing tax and red tape which means the UK is once again open for business!
It’s expected that the Emergency Budget on 22 June, Osborne will make the first moves to reduce the main and small business rates of corporation tax.
With this in mind now is the perfect time for budding entrepreneurs to take the plunge and turn their hobby into a small business. Many people would love to get paid for doing something they are already doing and passionate about, so building up a small business from a hobby is the ideal way to make a living.
Here are some top tips for prospective entrepreneurs on setting up your business and making it successful.
- Put your plan on paper – Your hobby may seem like a fantastic idea, but without a proper plan in place it’s going to be tough to turn that idea into a viable business. It’s also more than likely that at some point you are going to need external funding, so whether you’re approaching a bank or friends and family, you will need to have a strong business plan in place in order to secure it. Your plan should not only lay out your business idea, but also explain how you plan to attract customers to your business, as well as what your contingency plans are for when things go off track or in unexpected circumstances.
- Talk to like-minded people – It’s all very well talking to friends and family about the business, but it’s also advisable to test the water by sharing ideas and getting advice from other small business owners. Online communities and forums are an ideal way to do this and also provide a welcome insight from people who are going through the same experiences as you. There are several online forums dedicated to small businesses as well as live community tools to help with more intimidating issues such as tax returns.
- Keep on top of cash flow – The biggest cause of business failure is lack of money and it’s tragic when great businesses go under simply due to a lack of readily available cash. Make sure you have a good financial management tool in place so you can quickly understand how much money is coming in and how much is going out of your business. Many British SMEs are still using outdated and error prone methods for managing their business finances. Get in front of the pack by automating the process and get on top of bookkeeping right from the start.
- Don’t get bogged down with tax submissions: It’s more than likely that with the UK’s huge deficit problems, the government will increase VAT again this year. As one of the most straightforward ways to raise money, it’s rumoured that the VAT rise will range anywhere between 18.5% up to 20%. This will cause yet another headache for businesses who, at an early stage in their life, want to be putting energy into running their business not managing their finances. Start planning for this now and ensure you have the tools in place to file your VAT in line with HRMC requirements so you don’t get caught out by the tax man.
- Encourage timely payment – Another easy hole for new businesses to fall into is late or delayed payments. Make sure you start off on the right foot by encouraging timely payment. Get customers to agree payment terms in advance and set out the terms in writing. Offering discounts for early payment is also a great incentive as well as the clear setting out of penalties if a payment is late.
Turning your hobby into a business is the ideal way to be your own boss, work at something which you love and get paid for it. However, failure to plan and manage your finances could result in you paying the price later. Bookkeeping is something most of us don’t like but it’s an unavoidable job that any new businesses must stay on top of if they want to be successful. There’s lots of information and products out there designed specifically to help you on your way.
About the Author
These tips were provided by Catherine Harrell, Small Business Specialist at Intuit UK. For more information and top tips, visit www.QuickBooks.co.uk.
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