There are approximately 5.6 million businesses in the UK, of which 98% are considered small to medium sized businesses. So, we small businesses are crucial to the UK economy, there is no denying this.
Whether you are a start-up and excited for the times ahead, or an establishment renewing your challenges, we all want to be successful with our business. In our latest blog, we talk about tips we think are vital to any business.
We all have a vision in mind, of where we’d like to see our business in the future. This vision needs to be translated on paper as your business plan. A business plan is a must for all business owners. This can help outside investors get an insight of your business, for if ever you need funding to grow your business.
Business Plan
A business plan should consist of;
· Summary – What is your purpose, what is your vision?
· Target market – Who are you likely to sell to
· Competitors – What is your rivals weakness? Why are you different?
· Staff – Do you need people to help run your business. What level of skill and pay is required?
· Suppliers – Who will be your main supplier?
· Marketing Plan – How will you advertise yourself to the world
· Operations – Which is the best way to run your business.
· Finance – How much money do you need? Determine the profitability of the business.
Business Structure
As well as a business plan, you will need to have a business structure. Sole trader, partnerships and limited companies all have their own pros and cons. Deciding which structure to choose is not always straightforward. If an asset is owned outright, then you would need to consider retaining personal ownership on incorporation. If you’re not sure which structure model you should go for, then here at Cross Accounting we can give tailored advice to you.
Year End
We cannot stress enough the importance of doing your year end as early as possible. Once completed, this will give you peace of mind as you will not have to worry, until next year. It will also give you more time to budget for your tax bill. You will not be in a rush to find the money for the tax bill and not kill your cashflow. Keep all receipts for your expenses, these will all help lower the tax bill. If you buy equipment or tools, mobile phone bills, petrol, these are all deductible. HMRC can conduct random spot checks, so it’s important to keep paperwork, recommended for 6 years.
Budgeting
Having budgets in place for your business can help you predict the near future. This allows you to have a spending plan, so you can make sure you have money for the things you need and the things that are important to you. You can see what is eating up your cash and avoid spending on unnecessary fees. Below is an example of a very simple budget.
| Month 1 (Budget) | Month 1 (Actual) | Variance | Month 2 (Budget) | Month 2 (Actual) | Variance | Month 3 (Budget) | Month 3 (Actual) | Variance |
Starting Cash | 10,000 | 10,000 | 0 | 11,630 | 11,600 | -30 | | | |
Income | 2,500 | 2,500 | 0 | | | | | | |
Total Income | 2,600 | 2,600 | 0 | | | | | | |
| | | | | | | | | |
Rent | 800 | 800 | 0 | | | | | | |
Mobile | 50 | 55 | 5 | | | | | | |
Travel | 20 | 50 | 30 | | | | | | |
Gas and Electricity | 100 | 95 | -5 | | | | | | |
Total Expense | 970 | 1,000 | 30 | | | | | | |
| | | | | | | | | |
Income - Expense | 1630 | 1,600 | -30 | | | | | | |
These tips will keep you motivated and more importantly give you an idea of where your finances lay, helping you to quickly identify if there are rainy days ahead.
If you need expert tailored advice, please do get in touch as we are always happy to help.
