Thinking of founding a Startup? Dan answers some burning questions fielded by various clients over the years.
What common question do you get asked all the time?
The short answer is….lots of questions.
Especially in the early stages of a business start-up, as there are so many things to sort out! To streamline these, we created a blog with many of these questions, linked below.
The two most common questions we get asked are:
What can I deduct against my tax bill?
The answer to this, is anything ‘Wholly and Exclusively’ for business use.
If only it were that simple! To give you some more specific advice, have a good read of our Start Up Guide blog (section 8).
And… How should I keep my records?
This is a very practical concern.
Depending on how your business operates, but key (and a very important time saver), is the use of technology. We would always recommend using technology to help you. Even better? Outsource your book-keeping function (usually in collaboration with technology!).
It can be anything from a simple spreadsheet, or one of the many great apps and cloud software available. Technology is very much the preferred method of record keeping. In fact, for some areas of tax, digital record keeping is already mandatory (such as VAT).
For a little more commentary on this, be sure to read section 7 of our Start Up Guide Blog.
What stops people from taking the leap into starting up on their own?
We all know at least one person who’s said “I’d love to start my own [Insert Blank} Business”
So often though, nerves around the uncertainties are what hold people back. It could be the lack of security of income, not having the know-how or network of support to help you get started and often just that ‘aha!’ moment that gives them the nudge to give it a go.
The statistics are also not great reading, at only around 50% of businesses making it past the 5-year point.
With so many startups funding options now, online resources and specialist services to help budding entrepreneurs get started, however, it’s never been easier.
Also, the mind-boggling amount of ‘advice’ online from different areas. We know that accountants can make a huge difference to your trajectory in the early days, so a good partner is key to a long business life.
What patterns do you often see?
There are few common themes we see with start-ups:
An expectation of losses in year one
This always seems an odd one, but it’s one of those myths that we hear a lot. Whilst in many super-funded startup businesses with long term business models, early year losses are often common and expected, at ground level most founders of their startup business should expect to make a profit in year one – otherwise you will often run out of money! In our experience, we actually don’t see that many small businesses with year 1 losses.
Difficulties with growth
As businesses start to grow, more ‘00’s appears on the end of figures, there are more elements to balance (such as IT needs, cashflow, HR, employment law, VAT, increased taxation concerns) and as a result it can feel overwhelming.
Luckily, with the right support all of this is a manageable part of the challenge. The guidance on this is often split amongst coaches, mentors, consultants and accountants (to name a few).
Are there any ‘Startup Seasons’ in the year?
Oddly late September – December seems to be a very predictable time for us to have a ton of new businesses enquires around people starting up.
In the office we’ve often discussed why this might be and our best assumption is that people return from their family holidays after having time to consider their life and look to make some changes on their return. This time away to gain a fresh perspective seems plausible!
Is the number of startup businesses that fail % true?
The stats show that around 50% of new businesses fail to make it to the five-year point. It’s hard to say if this is actually true (these figures come from the official studies however), as in our own experience with clients, this figure is more like a 90%+ success rate. This may just be that we’ve been lucky with clients or their success may in some way correlate to the fact that they’ve invested in good professional advice around their finances from the get-go.….
Any success stories?
Over the past 13 years we’ve seen some amazing startup success stories.
Sometimes it’s not the pound value of the company turnover that can be impressive, it can be as simple as a small idea that starts off as a lifestyle business, turning into a successful multi employee company that generates jobs for the local economy.
Some of the most striking success stories have been:
- A raw dog food company that went from manufacturing dog food in the spare bedroom to a multi-million-pound turnover factory in a very short space of years and continues to grow.
- A care agency that went from again operating out of their spare room to employing around 100 staff and enjoying a turnover in excess of £1 million over a five-year period.
- A small motor trader going from a few cars a month to a multi employee, multimillion turnover business inside 18 months.
- A swimwear brand launching to a very difficult market, utilising modern marketing practices.
There are loads, but these are some of our favourites!
If you are just starting out in the business world and would like to get the best start, with the greatest chance of bucking the statistics, please get in touch with our team – we’d love to be with you on the journey.