The Key Decisions
The most important decisions a new – or changing – business needs to make. The sooner the better!
Business Identity and Market
- What specific group of people is your target market?
- What is their specific need / want that you are able to meet?
- Can you meet it at the right price?
- Will that price and the likely number of potential customers provide a good annual profit?
- Does your business logo generate positive feelings with your target people?
- Does your business name generate positive feelings with those people?
- Is your business name legal – especially if you are forming a limited company?
- Is your website domain name available – if so, have you registered it?
Budget and Pricing Strategy
- Have you got a clear, written pricing strategy?
- Do you have a pricing model which can be flexed for different customers?
- Does your average expected profit in this model tie in to your sales margin budget?
- Have you identified all the overheads of the business?
- For major items over 5% of sales, have you got quotes or agreed prices from suppliers?
- Have you included a contingency budget of at least 5% of your sales?
- Have you got a credit control policy for how quickly and when customers will pay?
- Have you decided how your customers will pay you – cash, standing order, credit card etc?
- Have you prepared a cash flow budget based on how quickly your customers will pay?
- Does your cash flow budget also reflect how quickly you’ll need to pay suppliers?
- Have you prepared a budgeted profit and loss which reconciles to your cash flow budget?
- If you are borrowing externally, have you prepared a budgeted balance sheet?
Accounting, Banking and Trading Structure
- Will you be a sole trader, limited company, partnership or other structure?
- If you are forming a limited company, have you carefully considered the pros and cons?
- Have you decided what date you’ll make up your accounts to?
- Who will the key users of your accounts be?
- What accounting system are you going to use?
- Are you confident your system will meet the needs of all the key users?
- What are the key controls in your accounting system?
- Are you clear on what the maximum external funding need will be?
- Have you obtained that, or at least are in the process of obtaining it?
- Have you opened a bank account for the business?
Health & Safety, Pensions and Insurance
- Is your plant & equipment safe? Can this be demonstrated?
- Are you putting enough money aside for your pension?
- Have you registered your business with the HSE, data protection etc. if applicable?
- Have you got insurance policies in place to meet the needs and obligations of the business and its owner?
- Have you considered the safety issues for electrical equiment, chemicals, etc?
If you are employing people in the business:
- Have you got employers’ liability insurance?
- Have your premises been checked out by relevant bodies e.g. fire service?
- Have you set up an accident book?
- Is your workplace a healthy environment not unduly hazardous to staff?
- What sort of pension scheme are you offering staff?
- Have you had legal advice on the employment contracts you are going to offer?
- Have you set up a robust payroll system?
Your business premises
- Do the premises meet the physical needs of the business?
- Do the commercial terms – length of lease etc. – meet the needs of the business?
- Do you fully understand how quickly you can exit the premises and stop paying the rent?
- Have you told the local authority and had the rates assessed?
- Are all the necessary utilities – gas, electric, photocopier, telephone etc. – connected?
VAT, legal and tax
- Are you legally required to register for VAT? If yes, do so when you get your first order.
- Have you registered with HMRC by phone or online?
- Have you chosen your accounting end date with tax in mind?
- Are you going to use annual accounting, cash accounting or the flat rate scheme for VAT?
- Have you registered for all of the VAT schemes you want to be part of?
- If you have a limited company, have you complied with all the statutory obligations?
- If you have a limited company, have you got a system to comply with ongoing obligations?
- Are your records clearly separating private spending from business spending?