FREQUENTLY ASKED QUESTIONS

When you are starting your own small business, there are so many things to think about, you wonder how and where you should start. These are some of the questions which new entrepreneurs often ask themselves and other people, together with some suggested solutions to your problems.

Q: I’ve got an idea. How do I get started?

A: You try out your idea on family and friends to start with, but before launching into your actual start-up, you should, if possible, do a small market research exercise. Then contact your local Business Link, a government-funded organisation set up specifically to help small businesses.

Q: Do I have to register my business anywhere?

A: Not if you're a sole proprietor or a partnership, but you must let Her Majesty’s Revenue & Customs know that you are self-employed.

Q: Do I have to be VAT registered?

A: Not until your annual turnover (the total of your sales) reaches £67,000 (2008 figure). However, if you have to buy in a lot of equipment and materials on which you have to pay VAT, you might want to register for VAT anyway, so you can claim back the business VAT you have paid. If you are VAT registered you must charge your customers or clients VAT.

Q: Will I get enough work?

A: It depends so much on the nature of your small business, whether you can find a niche in the market and how well you do your marketing. If you are currently employed it might be a good idea to start your business in the evenings and at weekends, and keep on with the day job for a while. You can’t do this if you are opening a retail outlet or eating establishment.

Q: How can I fund my business?

A: In various ways. Local Councils often offer grants to new entrepreneurs and special terms for setting up a workshop on a small industrial site, for example. Again Business Link is a good source of help and advice. If you are under 30 The Prince’s Trust might be able to help, as might PRIME for the over 50s. If you need to borrow a large sum, you will probably have to approach a bank for a loan. Of course, you may also have some savings or redundancy money of your own you can use.

Q: How soon should I appoint an accountant?

A: Early on, as soon as you are pretty sure you're going ahead. A good accountant  who specialises in small businesses can be a great help from the start, advising you on doing the books, your method of trading, funding and many other things. You will need someone to do your accounts and tax returns at the end of the year, unless you are in that line of business yourself.

Q: What does ‘doing the books’ mean?

A: It means either electronically or manually keeping good, accurate records of all your income and expenditure. It also means making VAT returns if you are VAT registered and doing all the admin necessary to pay your employees, if you have any, even just one part-timer.

Q: Do I need a business bank account?

A: Not if you are working on your own in a very small way – you can use your personal bank account. However, it is wise to open a business bank account whatever the size of your business. It helps to keep your business and domestic finances separate and gives you access to a bank’s other business facilities (such as a loan). A new business account is often free of charges for the first year  – it’s worth asking around.

Q: Do I have to pay my other half for doing the admin and the  books?

A: No, you don’t have to if he or she is willing to work for free. On the other hand, if you do pay your other half, you can count it as part of your expenditure for tax purposes. If your other half is a fellow director of your Limited Company, he or she may expect to be paid director’s fees and/or a dividend at the end of the year. It depends how much your other half contributes to the business.

Q: Do I need a website?

A: Probably, and if you are selling online, definitely. Most businesses these days have a website, and are more or less expected to do so. Get your website professionally designed, unless that happens to be your business. Remember to include your website address on all your marketing material.

Q: How do I get started selling online?

A: Try it out for yourself by buying something on eBay, and then selling something yourself, however small. Then you'll need an e-commerce selling platform, such as ZenCart, and a method of payment, such as PayPal. You may well need professional help for this.

Q: What does working from home entail?

A: It entails being very disciplined and self-motivated. It means being able to focus on your business, often all on your own, rather than procrastinating, drinking coffee or gardening. It most certainly means ensuring the support of your family, or anyone else you live with. And finally it means finding enough space, preferably a separate room, from which you can do all your admin.

Q: How do I let people know about my new business?

A: In many ways. These are some of them: join local business clubs to network; create good marketing material and always have it with you; advertise in a small way (local freebies, small ads, shop windows, local magazines); create a good website; seize every opportunity to promote your business; take a stand at a small trade show, if that suits your business; make a splash about opening a new retail outlet or eating establishment.

Q: What do I need to be successful?

A: You need drive, self-discipline, energy, good health, perseverance, good communication skills and good administrative skills. You need a good product or service and excellent customer service skills. You need to be able to learn from your mistakes and listen to your customers or clients. Above all, you need to believe, whole-heartedly, that your product or service is wonderful.

 And the best of luck!