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Business Start Up

17/06/2008

STARTING a business from scratch is a daunting problem for anybody. The Bolton News

Even Richard Branson, who has done it many times before, probably has a few butterflies in his stomach when he signs on the dotted line and commits himself to launching a new business venture.If you have never done it before, then it can seem an almost impossible task. There are several steps you will need to take before you can go ahead and launch your business.

One of the most important is securing enough money to finance your plans, whether it involves buying stock, fitting out a building or marketing your services. The main way of obtaining money is with a business loan. If you can secure enough money this way, it is better, in the long run, than turning to business angels (ie the Dragon’s Den) who will want to own a chunk of your business in return for the money.

To get a bank loan you will need to put together a business plan which sets out your aims and gives projected finances, such as forecasted costs, revenues and profits. It will also include details of marketing and advertising and give an idea of how you intend to repay the money asked for.

If you are unable to secure all the finance you need from a bank or building society, then you should explore organisations such as Bolton Business Ventures (BBV). The firm promotes the North West Small Business Loan Scheme in Lancashire and Manchester. It applies for enterprise loans from Europe, the UK Government and private investors and then gets commercial banks to match fund those loans. You must have applied for an alternative form of finance and failed to get the amount you needed, before BBV will help you. They tend to limit loans to £10,000 but will go to £30,000 for more experienced entrepreneurs. Interest rates are typically around 14 per cent per annum. The best thing about this scheme, especially in today’s tough lending climate, is the fact that security is not taken and they only ask for a personal guarantee.

John Wainscott, loans funds adviser for Business Finance North West, the funding arm of BBV, said: “ We tender for European funding, local authority monies and funds from private investors, then we match fund that with a commercial bank. “The type of funding we have determines which commercial banks are willing to take part in the scheme.” He added: “We lend to start-ups and developing businesses and are particularly keen on those businesses looking to expand and take on more staff, creating employment in the community.” B BV also puts on workshops all around Lancashire giving advice to people considering setting up in business and working for themselves.

They have also teamed up with the Islamic Bank of Britain to create the North West Ethical Fund, which provides loans for between £5,000 and £25,000 to new businesses abiding by Shariah Law. With the right finances in place you will need to make sure your business is structured correctly legally. You must decide whether you want to go ahead as a sole trader, a partnership or limited company.

There are also legal issues surrounding employment law, terms of trading and regulations Jonathan Shorrock, partner at law firm KBL in Mawdsley Street, is an expert in corporate law. He advises potential business owners to make sure they understand all the essential requirements before putting their ideas into practice. He said: “If two or more people are collaborating on the new venture, you should consider a partnership agreement. It may be that establishing a limited company would be more appropriate. If that is the case then consider the company’s constitution (articles of association) and the advantages of a shareholders’ agreement.” he added: “Owner managers need to be aware of the duties of being a director and the differences in their relationship with the company as a shareholder, director and employee respectively.”

Mr Shorrock also highlighted several other concerns that must be addressed. He said: “Will the business need to acquire or rent a building, office space, storage, garaging, manufacturing or workshop space? There may be a requirement for planning permission for the intended use, or in relation to outside signage.” He added: “If taking on staff, you will need contracts of employment or written terms and conditions of employment. As a business owner there will be insurance such as employer’s liability, product liability, public liability and professional indemnity cover. “You must make sure terms and conditions of trading are included in contracts with clients. Specific licences and certificates may also be required, such as health and safety certification or waste licences.” Beyond these essentials that everyone setting up a business must think about, there are many more factors specific to your individual operation. These will include marketing, advertising, customer service, pricing etc.

The key is to make sure you have thought everything through, down to the minor details, before going ahead and investing in your dream.

ENDS For more information, please contact Gill Hart or Kirsty Carss at KBL on 01204 527777