99% of all enterprises in the UK today are classed as small businesses. Many of them are sole traders providing services to local communities.
Whether you plan to be the next big internet ecommerce sensation or have just started a construction company or opened a bar serving your local area, the initial stages of business development when you first start are critical to get right.
These form the solid foundation on which all your other business activity and potential growth in the future are based on. Our team at VW Taxation in Portsmouth have been looking and have summarised what sort of advice they would give new and developing businesses.
What small business owners need to know
While it’s never been easier to set up a small business in the UK, that still doesn’t guarantee success. According to the National Office of Statistics, as many as 80% of small businesses fail within the first year. This is often because of bad planning, poor commitment and lack of understanding of what it takes to run a business.
It pays to have a core infrastructure in place before you launch your business. This includes a coherent business plan that looks at how you are going to set everything up, how much that set up is going to cost and your outlook for growth over the next few years.
Want to start a small business but don’t know what to do?
Running a business isn’t easy and things have certainly become more difficult over the last year for those who are just starting. In the beginning, you may be content to exist in sole trader status as this is the easiest to do, particularly if you work in an area like construction or have freelancing skills that can be sold online.
Later on, as your business begins to prosper and grow, you may find it beneficial to change to limited company status, especially once you start to employ others and revenues grow. This may require more paperwork and greater legal obligations but does offer numerous advantages to small businesses of all types.
It’s important to take your time to put all the right building blocks in place. Many small businesses fail because they don’t have adequate pre-planning and a clear roadmap for their future growth. Others don’t make it because they fail to understand who their audience is and don’t put the resources into marketing or anticipate potential problems.
Sometimes failure is just down to bad luck – many new businesses that started last year walked straight into the storm that was Covid and the subsequent lockdown.
Top 10 tips for every small business owner in 2021/22
There are no guarantees when it comes to building a small business. Whether you survive and thrive depends on several different factors. Here are our top tips for getting it right:
- Have a business plan: This is top of our list because it’s the most important. You need to have planned what you are going to do and have a detailed idea of what the next few years are going to involve. If you don’t put the hours in here, whether your business is successful or not is likely going to be down to luck more than anything else.
- Choose the right people: If you’re a sole trader, you may not have any staff. Many small businesses, however, have between 10 and 50 employees. Who you choose to work for you can have a direct effect on your success. Look for people who want to engage and support you on this journey.
- Be customer-focused: There’s a fairly old marketing adage that people buy off people. If you are a customer-facing and customer friendly business, those you engage with will start talking about and promoting you. From your customer support to how you deal with people face to face, make sure you create the right impression at all times.
- Invest in marketing: Even if you only operate for a local customer base, investing in marketing is essential to small business success. At the very least that means putting up a professional-looking website, getting on social media and creating a brand that resonates with your customers.
- Keep good financial records: Even small businesses have quite complex financial structures, with everything from invoicing and receipts to PAYE and NICs for employees. When you want to hit the ground running, ensure that your small business has a strategy for financial management.
- Create a great culture: People want to work for a good brand. It doesn’t matter that you’re only a small fish in a big pond – create a working environment and culture that people want to get up in the morning for. That enthusiasm for your business will also transfer quickly to customers.
- Get billing and payments out on time: One thing small businesses can struggle with is billings and payments. Those that deal with supermarkets, for example, often find payment for their products delayed, sometimes by months. This can cause major issues with cash flow so it’s important to chase up bills and get them paid as quickly as possible.
- Build the right partnerships: Many small businesses work with other enterprises. If you run a construction company, for example, you may contract out to other builders, plumbers and chippies when you need to get work done. Strong partnerships generally make for strong businesses, so choose yours wisely.
- Network with local businesses: Networking is vastly underrated in some circles. Look for opportunities in your local area, go to meetings and events and make connections with local business owners. You’ll build strong friendships and learn a lot about running a small business too.
- Find small business support: Finally, financing is often a problem for small businesses. Most new entrepreneurs don’t realise that there are grants and other incentives that can be accessed via local councils and small business initiatives.
What services do small businesses need?
Any small business is going to need at least one or two services. These could include:
- Infrastructure: Whether it’s cloud computing or IT or office space and equipment, infrastructure needs can vary from business to business. Your average gas maintenance team may only need a van and some tools. A sales team might require banks of telecoms and other communication equipment, a large office and a fleet of vehicles to do their job.
- Marketing: This can cover a whole range of activities nowadays from web design, SEO, pay per click advertising and social media engagement. For most businesses, it’s far too complex to handle on-site which is why third party partnerships are often favoured.
- Accounting: As small businesses grow, so their accounting needs become a lot more complex. It’s not just about running payroll but how the finances are managed and tax burdens reduced. An external accounting team can often help achieve more as they have access to more expertise.
Contact VW Taxation today
If you run a small business and wish to see how a specialist accounting service can help, contact the friendly team at VW Taxation to find out more.