Take Your Business from Sole Trader to Serious Enterprise
Starting a business from scratch is a wonderful scary but exciting time. It is when you find out if all your hopes and dreams are justified and begin to support yourself without any reliance on an external pay cheque, fulfilling your cherished desire to work in your chosen sector.
Starting a business from scratch is a wonderful scary but exciting time. It is when you find out if all your hopes and dreams are justified and begin to support yourself without any reliance on an external pay cheque, fulfilling your cherished desire to work in your chosen sector. You probably began offering your products and services to family and friends, and they have supported and recommended you to their families and friends and now, you find, you are busier than ever. Your home-based premises may feel a bit cramped. Your diary is filled to bursting and the orders are flooding in. There are not enough hours in the day for you to serve customers and take care of the admin and the ordering. In short, it is all getting a bit much for one person to cope with.
The Time Is Right Now
Now is the time to give serious consideration to switching from successful sole trader to limited liability (or similar) company. This means finding new premises, hiring some staff members and getting in touch with an accountant, and perhaps even a lawyer. New premises will give you the space to lay out your shop, workshop or office professionally and will allow customers to call in to see you – something that is not always suitable when working from a residential space like a home, shed or garage. New staff members can take some of the burdens of the job off your shoulders, freeing up your time to ensuring that the paperwork and accounts are fully up-to-date and submitted appropriately and on time as well as getting out there and getting even more new clients on board. Accountants and lawyers are worth their (sometimes quite expensive) fees as they have access to up-to-the-minute accurate information about how your company should be run and will be able to alert you to information that you need to know in order to be legally compliant.
How Do I Do This?
First of all, be sure that the transition to 'proper' business is necessary. If you are very successful as a sole trader: making enough money to support yourself, busy as much of the time as you care to work, and feeling the weight of obligation upon your shoulders – those are signs that you are doing very well as a sole trader. In order to need to transition to a more professional set-up, you have to have at least double the work available that you are physically able to do at present, your stock needs to be crammed into every available nook and cranny of your home or storage unit, and you should be feeling actively stifled by the constraints of your current environment. This is when you will know that the time is right.
Before you rush into anything, take advice. Speak to your bank about funding your expansion and ask what good deals they can offer you regarding loans, salary guarantees and credit fees. Ask your accountant if there is anything you need to take into account when it comes to running payroll for your employees: there are considerations such as National Insurance contributions, pension offerings, and holiday pay to take into account. Both will need to be consulted about the expansion of the business as you will need to show the bank projections and forecasts that your accountant will be able to draw up for you. Make time to contact the HMRC – although much of the information you will need can be found through their comprehensive online system these days – to make sure that you know exactly what information your will have to declare and how long you have to get it submitted to them.
Equally important, although often overlooked, will be the need to discuss this move with your family. Your partner or spouse will have to cope with you working long hours and not taking much time off for a considerable period of time – it will be a minimum of three to six months before your company settles into its new way of working. Your children will need to be told that you will be very busy and will not have very much time for fun and daytrips. It is also best that you explain how the business expansion will benefit them, asking for their patience and understanding. Do, however, make sure that you have some downtime – burning out just as your business booms is not the long-term objective you should be aiming for.
Taking this step will be alarming – but worth it in the long run. Your customers will be happy with the expansion of your business, being reassured by your more professional image, your family will benefit from the increased income, and you will have the satisfaction of knowing that you have made your mark on the business world.