10 Steps you need to take when setting up a business
You need to ascertain who your customers are, what are their requirements, who are your competitors, market trends and conditions, the strengths and weaknesses of the business and your unique selling point.
You should find more than one source for any of your raw materials and obtain more than one quotation for any machinery and supplies required.
Find a premises that is adequate for your production and administration requirements. When deciding on location, you should take planning permission, building control and access into account. If you depend on passing trade for business, check the location thoroughly for car parking, number and types of customers. If purchasing machinery, the cost, sources, warranty and maintenance aspects of the price should be considered.
Fixed and variable costs should be taken into account when working out total costs. Break even point i.e. the level of sales required to cover all of your costs should be calculated at this stage. Fixed costs or overheads are those costs which occur even if no sales are made. Examples are rent, rates light and heat. Variable or direct costs relate directly to the production of your goods or service. Examples would be raw materials and direct wages.
All costs should be taken into account when calculating your selling price. Other considerations should include competitor's prices, the price the market will bear and what your customers are prepared to pay.
If you can't sell it, don’t make it! In order to sell your product people need to know what and where you are selling, and why they should buy from you rather than a competitor. It is important to create the right image for your company and product and this can be done by proper marketing. Remember the best form of marketing is word of mouth and a satisfied customer. Other forms of marketing include advertising, press releases, flyers and brochures. The most expensive form is not always the best.
You should decide on which legal form your business should adopt before commencing. You can be a sole trader, a partnership, a limited company or a co-operative. The decision you take will affect taxation and the records you need to keep. It is best to consult a solicitor before making your decision.
You may need to register your business name and/or arrange a patent, copyright or trademark. Any business that buys or sells goods is affected by trading laws. You are required by law to keep records in support of tax and VAT payments. Before committing to a property you should consider planning permission, building control, environmental health regulations etc., and look closely at any lease agreement if renting.
Check your own resources. Remember that any loan or grant will not cover all the costs of setting up, you will be required to match any grants.
This document should be used to set targets and measure the success of the business. It will also be used as a basis for discussion with third parties e.g. Banks, State agencies and potential investors.