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20 things you need to know before setting up a company

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Being your own boss. That’s the dream, right? Not having anyone to answer to but yourself, setting your own hours, whilst raking in all the cash and doing something you’re passionate about.

Well, I hate to be the one to burst your bubble. Granted, that might happen, but there is a lot more to starting a company than that.

For starters, many of them just don’t work. According to some research published by The Guardian, three out of four new businesses fail. Luckily for you, I’ve compiled a list of 20 things that should help you stay on the right track.

1. Aim high

There is a misguided notion that setting up a small company is easier than setting up a big one. However, if you aim high from the outset, you’re more likely to reap the reward, without exerting any additional energy.

2. Legal structure

One of the first dilemmas facing any new business owner is whether to become a sole trader or limited company. A limited company does come with a whole host of pros and cons, but company checking professionals like RMOnline.com can help you with all the legwork.

3. VAT

Your company only needs to register for VAT if your turnover exceeds £81,000 a year. If it doesn’t you still have the option of registering, but it’s not mandatory.

4. Solve a problem

The best companies provide a solution to a problem. Not only does this make your product easier to market and sell, but

5. Marketing

Let’s assume you have a revolutionary product. This could change lives. You’re bound to make money. Wrong. If no one knows about it, how can you sell it? Marketing should account for a sizeable chunk of your budget.

6. Freebies

Doing pro bono work doesn’t pay the bills, but it can lead to money and bigger clients. If you go down this route, make sure you’re offering your time and effort in return for something. Ideally, a valuable connection.

7. Pricing

Whatever service or product your company offers, make sure it’s not exceeding the market ceiling price. High-end products don’t always result in customers. Your target market has to be able to afford it, but don’t go too cheap either.

8. Payments

Don’t make it difficult for customers or clients to pay you. Make sure you’re using the latest technology to accept payments, but if you have a physical location, cash shouldn’t be ruled out.

9. Less is more

Limit your product line to the essentials – what you’re best at and what makes the most money. This might just be one product. Look at Apple as an example, by focusing on a few products, it has become a market leader.

10. Hiring

Assuming your company isn’t going to be a one-man band, you’ll need some employees. The company will need to be able to pay the salary, as well as tax, National Insurance contributions, and possibly even a pension.

11. Firing

Don’t get on with your latest recruit? Tough. Your employees probably know the rulebook inside out. Make one wrong move and you could end up at an employment tribunal.

12. Be passionate

A new company will eat into your evenings, weekends, and every other part of your life. You must be prepared for it. And more importantly, be passionate about it, or you’ll soon come to hate it. And then it will fail.

13. Find a mentor

If you know someone that experience of setting up a company, ask them for advice and guidance. They will be able to help you avoid making the same mistakes as they did.

14. Raising finance

Hopefully you’ve got the funds to launch the company yourself. If not, you’ll need to find cash from somewhere. Research your options and don’t forget to look at grants.

15. Skip your salary

Even if the cash is rolling in, try and avoid paying yourself a salary until it’s absolutely necessary. That cash might really come in handy over the next few months.

16. Rent instead of buying

Office furniture and equipment can be a real drain on the finances of a new company, so see if you can rent the essentials. Or pick up freebies from Gumtree and Freecycle. At least until you’re up and running.

17. Keep overheads down

It’s important to spend as little money as possible when launching a startup. Instead of splashing out on a huge office, work from home if possible.

18. Use your business plan

You remember that 50 page document you slaved over before launching? Dig it out of the trash and use it. Your business plan should guide your company in the right direction and become a roadmap to success.

19. Network

Of course, you need to advertise, but networking is just as powerful. Make sure you’re moving in the right social circles and spread the word about your company.

20. The customer is ALWAYS right

Yep, sorry. The customer is always right. If your company is going to succeed, it has to have excellent customer service.

Damien Johnson spends his days trapped in the company office, but dreams and blogs about becoming an entrepreneur in his spare time.

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