If you are thinking of starting up a new business, then read our top tips below about how to go about it and the types of things you need to think about up-front.

Business Idea

While it may sound obvious; a successful entrepreneur will have spent time researching the line of business he or she intends to enter into, ensuring that it is based on sound financial footings.  When starting out, it is essential to be clear about how much capital is going to be required bearing in mind that the majority of start-ups will spend more than the income they generate in the early years, as they establish themselves in the market.

Business Plan

In order to be taken seriously by a bank or indeed any financial institution, a business plan is essential for the success of the business. The plan should incorporate:

• Evidence-based market research to demonstrate the viability of the business, including the anticipated number of people who will buy the product(s) and how customers will be reached.

• A forecast for both sales and expenditure and the cash position at the end of each month. It is imperative that the sales figures be realistic, bearing in mind that if, for example, the business is seasonal then there will be peaks and troughs during the course of the year.

• A breakdown of start-up costs such as the purchase of plant and equipment, motor vehicles, stocks, office furniture, etc.

• A forecast of several scenarios that demonstrate what will happen if sales turn out to be lower or if payments are received later than envisaged.

• How much finance is required?

Business Plan

Business Structure

There are many business structures, i.e. sole trader, partnership or limited company.  They each have different tax issues to consider as well as various personal liability considerations. It is vital that you engage with a fully qualified accountant. We would suggest that you see at least three different accountants to discover what services they can provide and more importantly, to find out if you get on with them. It’s essential that you get the feeling that your chosen accountant is approachable and on board with the venture. You need to be confident that they will work with you and are as enthusiastic about the growth of your business as you are, rather than merely preparing Annual Accounts.

Assess Which Funding is Suitable

• Meet with at least three banks and provide them with your business plan, including forecasts for sales and expenditure.

• Let the bank know the total amount you want to borrow, even if you want to borrow in stages.

• Be honest with the bank and explain where you believe there may be cash flow shortages as this will demonstrate not only your understanding of the business but also your command of the business plan.

• Banks and other alternative business lenders like to see a commitment from the business owner and therefore point out whether you intend to introduce personal funds as working capital and for how long those monies will be available to the business before you seek to recover them. To boost the accounts, it may be worth considering capitalising any personal funds introduced and taking an increase in share capital.

• In the worst case scenario, there may be a delay in the launch of a product, or you may lose a client and costs may increase so it may be necessary to consider contingency funding to cover unexpected issues.


Investment Finance

Potential sources of finance include the director/business owner, family and friends as well as other investors.

An overdraft is often the best and most usual way of funding working capital.  Interest and bank charges accrue on a daily basis. Never exceed your overdraft limited as this may incur higher interest rates and cheques issued by the business may bounce, which will then have an adverse effect on your credit rating.

Loans and other forms of borrowing are usually the most appropriate way to finance the purchase of vans, plant and machinery, etc. Loans are generally for a fixed period of 1 to 10 years.

Re-mortgaging the matrimonial home is an option but should not be the first option and should only be undertaken if you and your partner are completely satisfied that the business will be able to support the repayments via your director’s loan.

The government can also provide start-up small business loans and the Federation of Small Businesses and a good accountant should be able to assist in advising what is currently available.


Marketing and promoting your product or services will ensure a quicker return on your investment, and the associated costs should be built into any business plan. Getting creative with your marketing and finding ways to reach your audience will deliver real ROI and maximise your budgets, no matter how small. This will enable your business to combat any uncertainties that could be in the months and years ahead. You need to make your customers aware of who you are, what you do and where to find you.

With all the above in place and with enthusiasm, hard work and dare I say, good luck, there is every reason to believe the business will flourish.

As a Practice, we have built up over the years an extensive network of alternative business lenders, mortgage brokers, factoring companies, banks and business angels, all of whom have various specialities. If you require any assistance in the formation of a business plan or are looking for finance, then please do not hesitate to contact us so that we can arrange an informal/no obligation meeting which will be free of charge.