According to the Centre for Entrepreneurs’ analysis of data provided by Companies House, more than 650,000 businesses were started during 2016, the most ever recorded in a single year.
Around 13,000 of these firms were established in the North East, based around exciting new ideas for products and services, and a firm belief among the entrepreneurs behind them that they had everything in place to make their new ventures a success.
There are, sadly and unavoidably, lots of pitfalls that waylay a proportion of these new firms before they’ve had a chance to get properly established, but as the saying goes, forewarned is forearmed.
If you’re among the army of entrepreneurs behind one of these new businesses, and you know the things to look out for, avoiding them is going to be more of a possibility.
Cashflow is more often than not the key issue for start ups, and managing it properly as you take your first few steps forward is essential. Identify where your budgetary priorities lie, spread your costs where you can, and find partners and advisors that are willing to buy into your long-term strategy, rather than just being after a quick buck.
If you’re going into business with one or more partners, make sure the lines of communication between all parties are open, clear and honest. Work with your advisors to put agreements in place which cover both today and the future that you see for the business, ensure everyone knows their responsibilities and agree the strategic approach that will take you towards whatever you mutually think ‘success’ looks like.
If intellectual property forms a valuable part of the company’s assets make sure it is protected as early in the process as you can, through patents, trademarks and any other relevant measures that your advisors identify as being necessary.
Once your product and services are out in the public domain, it is very difficult to retrospectively apply protection to it, so it is paramount you think about this from the outset.
You should also look to take advantage of any available tax reliefs that are available, either generally to start up firms or relating to any research and development work you’re undertaking – the definition of the latter covers a lot of different activities, and proper consideration may reveal that you qualify for more R&D tax relief than you might think.
If you’re looking for outside investment, make sure you find the right long-term option, not just the first one that comes along – this may be debt, equity, angel or even crowdfunding-related, and your advisors should be able to point you in the right direction.
Finally, have a clear recruitment policy in place, and protect yourself and your assets through the employment contracts that you offer to new recruits – failure to do so could potentially put the business at risk in the early days.
There’s a huge amount to think about and get right when setting up a new venture, but the benefits of going about it all in a strategic, planned out manner will be felt by the business as it grows, develops and hopefully becomes everything you dreamed it would be at the start.
RMT provides the full range of financial and business advisory services through its specialist tax, accountancy, corporate finance, healthcare, information technology and recovery & insolvency teams, and works with firms of all sizes both within and outside the North East.