General / Off-Topic Setting up a new business

[Darren Grey]

I know a few people here have talked about running their own business, so I'm wondering if anyone can provide a bit of advice...

A friend and I are looking into starting our own business as a specialist tour operator for scientific sites - currently a niche that no company serves. We'd arrange days out with a series of co-ordinated visits to research sites, places of historic interest, operating power plants, etc. It's something we do a lot of in our day jobs, and we're looking at starting it up in our spare time and then taking the full-time plunge if there's enough demand.

The operational side of things we have a good understanding of, but the whole bureaucratic element of starting up a business is completely foreign. I've been doing some research but I'm wondering if anyone has some practical advice? Hidden costs and pitfalls to be aware of when starting up, that sort of thing.

 

[Commander Thane]

I can tell you that the advice I had from the government local advisers was that the only firm legal requirement in the UK is to inform Inland Revenue of your tax status.

I would say though you should look into the pros/cons of being sole traders, limited company, or limited partnership (since there is two of you).

If your target market is businesses rather than tourists, they may want you to be VAT registered, which is optional while your turnover is less than c.£75k.

I hope that helps. The only other hot tip I'd give is coming up with a business name you don't need to explain the spelling.

 

[Caribou]

I know a few people here have talked about running their own business, so I'm wondering if anyone can provide a bit of advice...

A friend and I are looking into starting our own business as a specialist tour operator for scientific sites - currently a niche that no company serves. We'd arrange days out with a series of co-ordinated visits to research sites, places of historic interest, operating power plants, etc. It's something we do a lot of in our day jobs, and we're looking at starting it up in our spare time and then taking the full-time plunge if there's enough demand.

The operational side of things we have a good understanding of, but the whole bureaucratic element of starting up a business is completely foreign. I've been doing some research but I'm wondering if anyone has some practical advice? Hidden costs and pitfalls to be aware of when starting up, that sort of thing.

I'm sure you've thought of this (and I realise it isn't answering the core of your question ), but just in case, one target market would be schools. They tend to get a lump of budget to spend on this (trips/activities) in the last term of the year so it's a bit limited, but would be a great thing to do to promote science. Maybe a specialist "womens" option, that could be very desirable in the current climate.

In terms of the question, one practical thing I can offer is to make sure you keep your business and personal life separate. As much as the business is likely to be your passion don't neglect partners, yourself (Health) and other things. I say this as the son of someone who did and ultimately lost his marriage and Business.

I wish you every success .

 

[Darren Grey]

I'm sure you've thought of this (and I realise it isn't answering the core of your question ), but just in case, one target market would be schools.

Have thought of that, yes, but the price per head you can get from students is much lower since many school budgets tend to be tight. Also kids can be a lot of effort to deal with... What we'd really like to aim for is PhD students and foreign academics who will pay premiums for catered multi-day trips. However that's a longer term goal - initially we're focussing on single-day trips for set groups and seeing how that works out.

In terms of the question, one practical thing I can offer is to make sure you keep your business and personal life separate. As much as the business is likely to be your passion don't neglect partners, yourself (Health) and other things. I say this as the son of someone who did and ultimately lost his marriage and Business.

Well-noted! My girlfriend is sure to keep me in line She already tells me when I'm over-doing it with my many hobbies...

 

[Bingo Brewster]

If your target market is businesses rather than tourists, they may want you to be VAT registered, which is optional while your turnover is less than c.£75k.

Sheeesh I wish that were true here (Spain)

 

[Bingo Brewster]

In terms of the question, one practical thing I can offer is to make sure you keep your business and personal life separate. As much as the business is likely to be your passion don't neglect partners, yourself (Health) and other things. I say this as the son of someone who did and ultimately lost his marriage and Business.

Very true. I have worked from home for myself and the government for many years and its very difficult to keep a home life where you can switch off. I almost never have a Sunday 100% off. I miss the journey to and from work, which were for me real switching periods

 

[Majere]

Darren,

As has already been said, make sure you talk to HMRC and get tax sorted properly. Also, be prepared for it to take a long long time to get going, especially in the economic situation we are in. Have faith, pick a great name and good luck.

Very true. I have worked from home for myself and the government for many years and its very difficult to keep a home life where you can switch off. I almost never have a Sunday 100% off. I miss the journey to and from work, which were for me real switching periods

I have head stories of people who get dressed up in a suit, go outside, walk round the block and come back in before they start work, just to get into the mindset.
You have to be very disciplined in both directions. When you are working, you are working. No distractions. When you are home, you are home. No working.

 

[ianw]

If you haven't already seen it this website has a ton of info;

https://www.gov.uk/business-support-helpline

The last one I setup was about 8 years ago. I think we bought a pre-formed company off the shelf and then just changed the name and director details.

I had conflicting advice over the years about the pros and cons of partnership v Ltd etc. so wouldn't like to say on that. Mine is Ltd but some accountants I've spoken to have suggested LLP or whatever might be better.

A good accountant is worth a heck of lot - mine was good - he kind of semi retired and the replacement has been utterly irredeemably ****e - have got to replace them - which is a hassle.

The only other thing I'd say is get super organised and stay that way if you possibly can. Sounds blindingly obvious and if you're one of those people that already are then you have a head start!

Good luck!

 

[withnail]

Get a really good book keeper/accountant and really nail down what you need to do with HMRC and other taxes.

The HMRC are ruthless and if you do not know what you are doing you'll end up with fines.

There are 3 aspects to working for yourself: doing the work that you are good at and enjoy, looking for new work and administering the company.

When I worked for myself I ended up so busy that I could not look for new work and administering the company was taking up more time that I thought it would. At one point I was working 6 long days a week.

Also make sure you have about 3-6 months salary saved up whilst you establish cashflow.

On the other hand I would say that this part of my working life was one of the best and most rewarding.

It is definitely worth doing but do lots and lots of research before you make the plunge!

 

[psykokow]

An Accountant is a luxury item, a luxury item that will save you a lot more than you pay him.

So having set up in business myself 5 years ago, having done it myself, sole trader then ltd company, doing accounts myself to getting an accountant I feel I can give you some good advice.

Setting up is easy, few fee's here and there and your done.
TIP 1. DO NOT BOTHER WITH VAT till you have to.. Its a lot more paperwork and will cost you 20% of takings. If you need to be OR you hit the threshold then its time to do it.. Remember to PUT YOUR PRICES UP by 20% to cater for VAT. If you are running a business with a good profit and you need to pay VAT and you don't put up your prices, you are losing 20% of your takings, which can make you run at a loss.
Once you get to VAT time, it is EASY to do, its is afterall 20% of the price you charge the customer. PUT IT aside and pay the HMRC every quarter!!
ITs not your money so you can't use it... if you do.. its hard to get back on track and they will DEMAND their money.

TIP 2. An Accountant saves you more money than they charge you.. If this is not the case, get a new one. Most accountants can give you a wide range of services from the FULL Set up, book keeping, end of year filings etc.
SO if you are new it may be too expensive to take these on, but they save you time and effort.. so pick what suits to your budget.

TIP 3. Keep on top of paperwork (I am currently trying to catch up). It is easy to fall behind and it can lead to extra stress and fines.. Get a good system and stick to it. If your accountant is doing your book keeping EVEN EASIER.

Tip 4. Don't do it if you don't love it...

Tip 5. Get a contract checked/set up by a lawyer for you both...
as a partnership in business friendship has to end... SET IT IN STONE first... it will protect the friendship. GET A LAWYER IN CONTRACT LAW to do it.. make sure you update it annually with any changes you both feel need catered for..
example. If one dies, who get their share? then you find out you have a terminal illness or life changing illness... what happens now? Get it in the contract as things develop. Ltd company is a good way to go over partnership.. It allows for contracts etc

Tip 6. Do remember to get good boundaries in your home life... it is the best thing in the world, My wife and I will never regret it, sadly we didn't expect her to end up so badly disabled in our 2nd year of business, I have had to take up all the slack... we're married so thats fine... IF we weren't I may not be so willing to carry on with the business and thats why tip 5 is important. My wife was terrible at turning off, so I set her boundaries... if it needs to be done at 1am something is wrong.. Keep a realistic end of day (it does not need heavily policed..) and try to stick to it for sanity.


I hope these are helpful to you... if you have specific questions im happy to help.. Oh and we Started out Ltd Business 2008 and went VAT registered. It was a mistake as we didnt hit the threshold till 2011.. 20% loss

Live and Learn and share the lesson

Good Luck

 

[psykokow]

The HMRC are ruthless and if you do not know what you are doing you'll end up with fines.

they're ycats!!! The VAT man is evil incarnate..

HMRC are flexible if you are getting in touch and keeping in time with submission... same for VAT.... but VAT gives much less leeway.

From my own experience...

 

[ianw]

they're ycats!!! The VAT man is evil incarnate..

HMRC are flexible if you are getting in touch and keeping in time with submission... same for VAT.... but VAT gives much less leeway.

From my own experience...

I had a vat inspection in the late 80's with my first company.

Back then I was the classic accountants nightmare with literally carrier bags full of receipts etc. and paperwork all over the place.

He turned up at Mum's house and I tipped everything all over the table with a sheepish grin. Best part of a day later after lots of tea and biscuits he declared rather dejectedly that he wasn't entirely sure how but they owed me £900.00.

 

[psykokow]

NOw you are screwed, you have to PAY them for the time taken to inspect you..
HOw CRAP is that??? so keep your **** together... its SO MUCH EASIER..

I did it wrong and NOW have got a good system..

This is typical of jumping in to something you dream about and good intentions then you forget some of the discipline and regret it.. it will sour the fun.

 

[withnail]

they're ycats!!! The VAT man is evil incarnate..

HMRC are flexible if you are getting in touch and keeping in time with submission... same for VAT.... but VAT gives much less leeway.

From my own experience...

I agree with that. VAT man = evil.

I work in consulting and get paid 3-6 months after I invoice. The VAT man didn't care though, he took his share the same month I invoiced! I found this really tough.

 

[psykokow]

I made the choice to swallow the vat rise out of profits... it hurts..

and When my wife had her ill fated op, we nearly lost it all.. and the HMRC and VAT man were as supportive as they could be... even though it still causes issues today...

Paperwork due doesnt take account of Wife needing extra care or ME being wiped out... still This year 2 returns thus far.... ontime and PAID.

Just need to clear up last years mess now.. (paperwork is about 30% done)

 

[Darren Grey]

Thanks for all the honest advice Going to be taking this slow and easy and keeping on top of things.

 

[Oddball]

Hello Darren.

Some tips for you....

1. Do your research, get a good client base first before you start.

2. Do not spend any money what-so-ever unless it is absolutely necessary.

3. "Surround yourself with good people and the rest is easy."