Before Starting A Business Start Up Checklist

Before starting a business - Start-up
checklist
Table of contents
Reasons for going into business
Introduction
A good business idea
A tried and tested business model
A specific business opportunity
A change in circumstances
Taking control and changing your lifestyle
Going into business full time
Going into business part time
Helplines
Related guides on businesslink.gov.uk
Related web sites you might find useful
Research and develop your business

ideas
11
Introduction
11
Finding and developing your idea
11
Is there a market for my idea?
12
Plan the development of your idea
13
Finance the development of your idea
14
Sharing your ideas with others
14
Test the market
15
Helplines
16
16
16
Prepare a business plan
18
Introduction
18
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checklist
The audience for your business plan
18
The entrepreneurial quality check
33
What the plan should include
19
The business skills check
33
The executive summary
19
The market research check
34
Your business, its products and services
20
The financial commitment check
35
Your markets and competitors
21
Find out if you've got what it takes
36
Marketing and sales
21
Here's how I decided I was ready to start up my
Your team's skills
22
business
36
Your operations
22
Helplines
37
Financial forecasts
23
37
Presenting your business plan
24
38
helped my business
24
Common mistakes when starting up - and

how to avoid them
39
Helplines
26
Introduction
39
26
Poor or inadequate market research
39
26
Weak financial planning
40
Write a marketing plan
27
Setting sights too high
41
Introduction
27
Taking your eye off the competition
42
Marketing plan summary and introduction
27
Poor supplier and customer controls
43
External and internal analysis for your marketing
Poor stock and asset management
43
plan
28
Hiring the wrong people
44
Your marketing objectives
28
Helplines
45
Marketing strategy for your marketing plan
29
45
Plan your marketing tactics
29
45
Implementation of your marketing plan
30
Choose and manage a business adviser 47
Tips for writing a marketing plan
30
Introduction
47
31
What a business adviser could do for you
47
31
Find an adviser
48
Are you ready to start up?
32
Get the right adviser on board
49
Introduction
32
Manage the relationship
49
The day-to-day reality check
32
Set a timescale
50
Here's how having an up-to-date business plan


checklist
Is the relationship working?
50
Helplines
64
End the relationship
51
64
65
Ten things you need to know about your

prospective business adviser
52
Helplines
52
52
52
Choose and manage an accountant
54
Introduction
54
How an accountant can help
54
Where to find an accountant
55
How to choose the right accountant
56
Checklist: ten things to ask your prospective

accountant
56
Managing the relationship
57
58
Here's how I used an accountant to help me in

my business
58
Helplines
59
59
60
Choose and manage a solicitor
61
Introduction
61
When will I need legal advice?
61
Find a solicitor
62
Choose a solicitor
62
Manage the relationship with your solicitor
63
Ten things you should ask your prospective

solicitor
63
What to do if things go wrong
64

Subjects covered in this guide
Introduction
Introduction
Every year, thousands of people decide to

set up their own business.
This guide looks at why you might opt to run
your own business and different ways of
making the move.
Taking control and changing your lifestyle
It considers the positive and negative

aspects of each approach, and tells you
where you can find out more.

Helplines
A good business idea could be an invention,

a new product or service, or an original idea
or solution to an everyday problem. It might
also be:

You can find this guide on

http://www.businesslink.gov.uk by
navigating to:
Home > Starting up > Considering starting
up? > Reasons for going into business
a gap in the market that you can fill

a business related to the work you do
already
an interest or hobby that you can turn
into a business
Whatever your idea is, you need to be sure
that it fits with your needs as an individual,
as well as being a viable business
proposition.
Questions to ask yourself
What is it that you will personally
bring to the business in terms of
relevant experience and expertise?
Is there a market - a need for the
idea, and customers who will pay for
it?
How big is the market, and how will
you reach it?
Who will be your main competitors?
What is special about your idea,

making it different from similar
products or services already out
there?
How will you fund your idea?
What might go wrong?
For information on turning your answers to
these questions into key documents for your
business, see our guides on how to
prepare a business plan and write a
marketing plan.
Other sources of help
You can get free professional help
from your local enterprise agency find your local enterprise agency
on the National Federation of
Enterprise Agencies website and
make an appointment with one of
their advisers to talk over your plans.
Discuss your ideas with friends and
colleagues, particularly those who
know about the business.
Help for people under 30
Help with setting up your own
business is available from the
Shell LiveWIRE scheme. Find out
about the Shell LiveWIRE scheme on
the Shell LiveWIRE website.
If you have a good idea for a
business but can't get funding, the
Prince's Trust scheme can help
you by offering a low interest loan, a
grant or a mentor. Find out about
the Prince's Trust scheme on the
Prince's Trust website.
fewer risks than going it alone.

Advantages
It is usually easier to get finance.
A market for the product or
service will have already been
demonstrated.
A business plan and marketing
method will be in place.
You should have valuable
experience to draw on.
Many of the problems will already
have been discovered and solved.
A franchise comes with financial
support too.
Disadvantages
Some businesses that are up for sale
may be experiencing difficulties.
Make sure you fully understand the
reasons for selling, as you may need
to invest quite a bit more on top of
the purchase price to give it the best
chance of success.
The rights to a franchise or to sell
particular products or services may
be expensive.
With a franchise, there may be a
particular way to run the business
that you have to stick with.
For more details of acquiring a going
concern, see our guide on how to buy an
existing business.
For more on franchises, see our guide on
how to buy a franchise.
Some self-starters choose a well-trodden

path - such as buying an existing business
or rights to a franchise - which can carry
Sometimes the possibility of owning

your own business can come as a complete
surprise. Perhaps you are offered the
opportunity to buy out your employer, or

take on a family business.
You can find your local Business Link

through our Contacts Directory.
Opportunities like these are like any other

business start-up. You still need lots of
personal commitment, you may need to put
your own money on the line, and you'll need
to do some careful assessment to make
sure that the business really is viable.
Talk to people already in the business about

your plans and ideas. What can they pass
on from their own experiences?
For more detailed information, see our guide
on how to buy an existing business.
Advantages
Development, planning and market
testing should already be in place.
There may be established
customers, a reliable income, a
reputation to capitalise and build on,
and a network of useful contacts.
You probably already have expertise
in the product or service and a good
understanding of the business you're
taking on.
Disadvantages
You may be taking on someone
else's problems when you take on
the business. Ask yourself if there
are problems with the business, and
if so, can you solve them?
If you are buying out your employer,
you may lose support services that
you take for granted now. You won't
just be responsible for your core role,
but for everything else as well, such
as accounting, staff
management and payroll.
More help
You can get free professional help from your
local enterprise agency. Find your local
enterprise agency on the National
Federation of Enterprise Agencies
website.
A major life change can often enable you or push you - to set up your own business.
Maybe a dramatic personal event kick-starts
you into action, or your job situation means
that now is the time to take the plunge. Such
changes might include:
unemployment
redundancy
a change of family circumstances
coming into money
Advantages
A change in your circumstances
might be an opportunity to start again
or do something you've always
wanted to do.
Redundancy payments or receiving a
lump sum of money can provide an
opportunity to invest in the business.
At its best, being your own boss can
give you the flexibility to work around
family commitments.
Disadvantages
Major life events can also be very
stressful and are not always the best
time to make big decisions.
Starting your own business is
unlikely to provide a speedy return

on your investment and you should
be prepared for a long haul.
In the early stages especially,
running your own business can mean
putting in long hours and making
sacrifices elsewhere in your personal
life.
Starting a business when you're
unemployed
If you're on jobseeker's allowance and
want to get back into employment by
starting your own business, find out how
the New Deal can help you become
self-employed on the New Deal website.
To check what would happen to any
benefits you may be receiving if you start a
business, you can find out where you stand
at your local Jobcentre Plus or Social
Security Office.
chance to have the lifestyle you want.

Advantages
Starting a business can offer a
career with built-in independence
and flexibility.
Being your own boss can give you
the choice to work more convenient
hours - such as working around your
children's school hours and holidays.
You will be able to choose to do
some professional development or
training.
You will be the one in the driving
seat, making the decisions that
enable you to lead your chosen
lifestyle.
If your business takes off, the payoff
in financial and lifestyle terms can be
huge.
Disadvantages
Try not to be put off - there are many

schemes designed to help people on
benefits start up their own business. You
can find out about local programmes
through your nearest Jobcentre Plus. Find
your nearest office by entering your
postcode on the Jobcentre Plus website.
You may also be entitled to Working Tax
Credits. These are payments to top up the
earnings of working people on low incomes,
including the self-employed. You can find
out about the Working Tax Credit at the
HM Revenue & Customs website.
You may find that you have to work

longer hours.
You may find it difficult to separate
work and home life, especially if you
run the business from home and this
can put extra demands on your
family.
Some business owners suffer stress
when things are not going so well.
You should be prepared for the loss
of perks such as pension schemes,
holiday pay and sick leave.
It's quite common to have financial
difficulties, especially when you're
starting up.
Taking control and changing your

lifestyle
For many people, the biggest attraction of

setting up a business is the independence
provided by being your own boss and the
The kind of business you've chosen - or

your individual circumstances - may mean
that you want to take the plunge and jump
straight in full time.

Advantages
You can devote all your time and
enthusiasm to realising your
ambitions for your business.
You can react to new developments
as they arise.
If your business depends on a gap in
the market or a new idea, time will be
of the essence while you get it up
and running and attempt to get
ahead of your competitors.
Disadvantages
You will have to manage without an
income while your business gets off
the ground.
If you decide to go into business full time
you have a few options to help you over the
early days:
Live off your spouse or partner's
income - however, it can be hard to
live off one salary if you've been
running the household on two.
Use your savings - if you've been
putting money aside for a rainy day,
this could be it. Ask yourself: Do you
have enough to cover your living
expenses and fund your business?
For how long? Will you have
anything to fall back on if your
business fails?
Get a loan - banks will often help
new businesses with a loan, which
you pay back at agreed intervals.
However, they can be inflexible. You
may have to pay back the loan
immediately if your business fails,
and there will be expensive penalties
if you don't pay it back at the agreed
times.
Use your home as capital - if house
prices are buoyant, you may be
tempted to use your home as
additional capital. However, this is
risky. Rises in house prices may not
be sustainable. Also, if your house is
guaranteed against a loan and you
cannot keep up replayments, you risk
losing it.
Borrow money from family or
friends - you can save a lot of
money if your friends and family don't
charge you interest. But if your
business doesn't work out, it could
put a big strain on your relationship
with them. For practical tips, see our
guide on family loans.

If your business allows, you could take a
cautious approach by working on it part
time, fitting it in with your current job. Then,
when the business is robust enough, you
can move over to it entirely.
Advantages
You can still earn an income while
you're getting your new business off
the ground.
Technology such as answerphones,
the Internet and email make it
possible to communicate out of hours
when you're not available in person
because you're doing your other job.
Disadvantages
It can be difficult to manage the extra
hours you need to put in.
Putting in very long hours can be
stressful and tiring. There won't be
time for much else.
It could take much longer for your

new business to take off.
You'll have to pay tax on both
incomes.
Must I tell my employer about my new
business?
Legally you don't have to, although there
may be a clause in your contract preventing
you from doing other work.
You might want to ask your employer for
more flexible working arrangements. These
could involve reduced hours or just
re-arranging your existing working hours using compressed working weeks, nine-day
fortnights or different shift patterns, for
example.
Helplines
Business Link Helpline
0845 600 9 006
New Deal Information Line
0845 606 2626
HM Revenue & Customs Tax Credits
Office Enquiry Line
our Contacts Directory | Use our

interactive tool to find the best finance
for your business needs | Choose the
right legal structure for your business |
Buy an existing business | Prepare a
business plan | Write a marketing plan |
Starting a business when you are young |
Know your customers' needs | Are you
ready to start up? | Common mistakes
when starting up - and how to avoid them
| Buy a franchise | Family run businesses
| Family loans | How do I survive until my
business is off the ground? |
Related web sites you might find

useful
Find your local enterprise agency on the
National Federation of Enterprise
Agencies website
Download the guide to defining the
purpose of your business from the
smallbusinessjourney website (PDF)
Find out about the Prince's Trust scheme
on the Prince's Trust website
Read guidelines on choosing a franchise
on the British Franchise Association
website
0845 300 3900
Search for businesses for sale on the

Daltons Business website
Related guides on
businesslink.gov.uk
Find out how the New Deal can help you

become self-employed on the New Deal
website
Create a personalised list of start-up

resources for your business | Book a
course on Setting Up Your Own
Business through our Training Directory
| Find your local Business Link through
Find your nearest Jobcentre Plus on the

Jobcentre Plus website
Find out about the Working Tax Credit at
the HM Revenue & Customs website
10
Research and develop your business ideas
Introduction
Introduction
Finance the development of your idea
Test the market
Helplines
Developing your business idea into a viable

product or service is a critical part of building
a business. Thorough assessment and
market research at an early stage will help
you to establish whether there is a market
for your product or service.
This guide will help you assess whether
your idea can form the foundation for a
successful business and put a process in
place to monitor and measure its progress.
It also offers hints and tips on how to finance
the development of your idea and how to
protect it if other people get involved.

navigating to:
up? > Research and develop your business
ideas
A new idea is often the basis for starting up

a business. Many entrepreneurs spot a gap
in the market and start businesses that
provide a product or service that fills it.
Others come up with ways to improve an
existing product.
Coming up with a new idea
If you want to start a business but don't yet
have a an idea to work with, there are many
ways to go about identifying one. The
following questions may help:
Do you have any particular skills that
could form the basis of a new
business?
Do you have a hobby that could be
turned into a business?
Has there ever been a time when
you have needed a particular service
or product which no-one else
provides? If you needed it, there is a
11

good chance that other people will
too.
You can learn how to generate strong
ideas and encourage creativity in your
business at the Design Council website.
Young entrepreneurs can search for ideas
on the Shell LiveWIRE website
(registration required).
Develop your idea
Once you've got a business idea, take time
to refine it. This will help you to decide
whether it could be the foundation of a
successful business.
There are various established methods of
developing a business idea. You can:
conduct market research to
discover whether your idea fills a gap
in the market - see our guide on
market research and market
reports
brainstorm your idea with friends,
colleagues or staff - they can give
different perspectives on the idea
and may know if anyone else is
doing the same thing
think about whether your idea can
take advantage of an opportunity
created by new technologies, eg by
trading online
consider whether social trends will
affect demand for your product, eg
the increasing demand for organic
food
You can read about generating and
refining business ideas at the Innovation
Toolkit website.
It's a good idea to assess the viability of

your idea, that is, will you be able to build a
profitable business around this product or
service?
There are certain criteria you can use to
establish this:
Does it satisfy or create a market
need?
Can you identify potential
customers?
Will it outlive any passing trends or
capitalise on the trend before it dies
away?
Is it unique, distinct or superior to
those offered by competitors?
What competition will it face - locally,
nationally and globally?
Is the product safe for public use and
does it comply with relevant
regulations and legislation? You
should seek out legal advice before
proceeding. You can get a
personalised list of regulations
from our Regulation checklist.
Market research can play an important role
in answering many of these questions, and
increasing your chances of success.
Market research techniques can be basic or
sophisticated. You could:
informally canvass the opinion of
friends and colleagues
survey the public about whether they
would use a product
ask customers of competing products
what improvements they would like
to see
use focus groups to test your product
or service
monitor your competitors' activities

12

look at what has and hasn't worked
in your industry or market niche
hire a market research agency - you
can search for a market research
agency on the Research Buyer's
Guide website
For more information, see our guide on
market research and market reports.
It is very important that you are as thorough
in your market research as possible, as
mistakes made at this stage of development
could prove costly later on. Remember, the
more information you have, the better you
will be able to understand your potential
customers, the marketplace and how your
product fits in. For further information on the
problems of poor or inadequate market
research, see our guide on common
mistakes when starting up - and how to
avoid them.
be sold
prototyping - creating a useable
example of your product or service,
which can then be tested
financing - raising the money you
will need to get your business started
operations - setting up the structure
of your business, eg finding a
suitable location, hiring staff, etc
marketing - working out how you will
sell your product or service to
customers, see our guide on how to
write a marketing plan
For further information about the stages of
product development see our guide on how
to develop new products and
services. You can also learn about
managing the research and development
process from the Cranfield University
website.
Judge your progress
Read a guide on market research from

the Chartered Institute of Marketing
website. You can also find
market research techniques from the
British Market Research Association
(BMRA) website.

You should try and identify the key stages or
checkpoints in your product's development
and list what should be achieved at each
stage. Each checkpoint should give you a
chance to evaluate the progress of your
product or service, and decide whether you
need to make any changes.
These checkpoints may include:
designing - turning your idea into a
product or service that can actually
If the goals of any of your checkpoints are

not met, you need to analyse why this is the
case. Ask yourself whether your objectives
were unreasonable. If so, you may need to
revise your objectives.
There are circumstances when you should
totally reconsider your original idea.
These include:
developing a product or service that
isn't commercially successful
developing a product that turns out
not to be technically viable, eg it
cannot be manufactured or it doesn't
meet performance requirements
someone else releasing a product or
service which is very similar or
identical to yours
13
Finance the development of your

idea
Securing adequate funding is one of the
biggest obstacles many entrepreneurs face.
Your funding needs may also change during
the course of product development as it may
take longer or cost more than you first
expected.
Loans and overdrafts are probably the most
common way to raise money for a new
business. See our guide on loans and
overdrafts.
However, there are plenty of other ways to
get the finance you need, especially for
setting up a new business. Grants and
government schemes that offer support to
new businesses are widely available. To find
programmes that may help your business
you can search our Grants and Support
Directory of grants, subsidies and
advice.
Furthermore, there are specific funding
schemes for entrepreneurs under the age of
30. For further information on these funds
and how to apply for them see our guide on
starting a business when you are young.
disadvantages of each type of funding use

our interactive tool to find out how to get
the right finance for your business
needs.
Remember that your funding needs may
change during different stages of a product's
development. You should look at the state of
your funding at each development stage or
checkpoint to help evaluate your finance
options.
Business plan
Whenever you approach banks, potential
investors, business partners or government
departments for money you will need to
show them a business plan. This should
explain:
the goals of your business

what the purpose of the business is
your marketing plan
what you intend to spend the
invested or borrowed money on
how this will benefit both the
business and the investor or lender
how you intend to repay any lenders
To find out about how to approach potential
investors or lenders see our guide on how
to use your business plan to get funding.
Other sources of finance include:

realising, or cashing in, the value of
shares
investment from business angels or
venture capitalists
family loans
joint ventures
At some stage you will probably wish to

discuss your idea with a third party. This
could be informally, such as seeking advice
or encouragement from friends or family, or
formally, by hiring a professional consultant,
or forming a partnership or joint venture with
another company.
To find out about the advantages and

14
Remember, once you put an idea into the

public domain it can no longer be
considered confidential or a trade secret.
You should therefore take steps to protect
your intellectual property.
Intellectual property
Your intellectual property is what sets you
apart from competitors. It could be your
company brand, invention, design or
creative work. Protecting your intellectual
property makes strong business sense.
There are several legal ways to do this:
trademarks restrict others from using
your brand or logo
copyright protects original literary,
dramatic musical and artistic works
patents protect inventions
design rights and registration protect
a product's appearance
For more information, see our guide on how
to secure your intellectual property.
If you form a partnership or joint venture,
draw up a contract defining who owns the
idea and what the share of future profits will
be.
You must seek professional legal advice
before taking any final decisions. A good
place to start is by contacting your local
Business Link. Find your local Business
Link through our Contacts Directory. You
can also search for a solicitor through the
Law Society website.
Test the market

Product testing is important throughout the
design process. While you are developing

your product or service, it's a good idea to
keep testing the market to make sure you
are still on the right track. You can do this by
using the following:
Focus groups - ask small groups of
your target customers what they
want from your product or service.
Questionnaires - try to get as wide a
sample as possible.
Prototypes - show an early version
of your product to customers. You
may find that your prototype will go
through several stages of
development as you refine your idea.
You can find out about market testing
techniques at the BMRA website. For
more information on market research, see
our guide on market research and market
reports.
You may need to respond to any
suggestions from users by modifying the
design. Don't be discouraged, as most
successful entrepreneurs do not view this as
a failure, but as a learning curve. One
entrepreneur went through more than 5,000
prototypes while developing a household
product.
It's a good idea to send your product to a
large or very reputable organisation. A
positive testimonial will prove invaluable as
you approach other customers.
You may want to consider testing even after
your product goes on sale. Ongoing contact
with customers can uncover both the
shortcomings of your product and possible
opportunities that you may have missed.
Once you have a final product, you can then
15
set about building a brand. A brand includes

everything that is visible to the customer,
such as the product name, its packaging
and its delivery. For more information on
branding, see our guide on branding: the
basics.
You also need to consider your pricing
policy. You can determine your pricing
through comparison with competitors and
price your product or service so that you
make a profit.
Helplines
0845 600 9 006
Chartered Institute of Marketing General
Enquiry Line
01628 427 500
Shell LiveWIRE Helpline
0845 757 3252
Prince's Trust Helpline
0800 842 842
Patent Office Enquiry Line
resources for your business | Manage

your research, design and development |
Develop new products and services |
Market research and market reports | Are
you ready to start up? | Common
mistakes when starting up - and how to
avoid them | Know your customers'
needs | Understand your competitors |
Write a marketing plan | Book a course
on Working to a Budget through our
Training Directory | Use our interactive
tool to investigate the best finance
methods for your business | Use your
business plan to get funding | Prepare a
business plan | Loans and overdrafts |
Starting a business when you are young |
Book a course on Building Effective
Relationships through our Training
Directory | Secure your intellectual
property | Choose and manage a
consultant | Design right and registration
| Get patent protection for your business
| Joint ventures and partnering | Price
your product or service | Branding: the
basics |

useful
Learn about generating and refining
business ideas at the Innovation Toolkit
website
Learn how to generate strong ideas and
encourage creativity in your business at
the Design Council website
0845 950 0505

Search for ideas on the Shell LiveWIRE
website (registration required)
Related guides on
businesslink.gov.uk
Read about market research techniques

from the British Market Research
Association website
16
Search for a market research agency on

the Research Buyer's Guide website
Learn about managing the research and
development process from the Cranfield
University website
Search for a solicitor through the Law
Society website
17
Introduction
Introduction
The audience for your business plan
Every business should have a realistic

working business plan - and it's essential
when you're starting up a business.

Your business, its products and services
Marketing and sales
Your team's skills
Your operations
A business plan is a written document that

describes the business, its objectives, its
strategies, the market it is in and its financial
forecasts. It has many functions, from
securing external funding to measuring
success within your business.
This guide will show you how to prepare a
high-quality plan using a number of
easy-to-follow steps.
Financial forecasts
Here's how having an up-to-date business
plan helped my business
Helplines

navigating to:
up? > Prepare a business plan
The audience for your business

plan
Many people think of a business plan as a
document predominantly used to secure
external funding. This is important - as
potential investors, including banks, may
invest in your idea, work with or lend you
money as a result of the strength of your
plan.
But there are other benefits to creating and
managing a realistic business plan - even if
you just use it in-house. It can:
help you spot potential pitfalls before
they happen
structure the financial side of your
business efficiently
focus your development efforts
work as a measure of your success
The following people or institutions may
request to see your business plan at some
18
stage:
banks
external investors - whether this is a
friend, a venture capitalist firm or a
business angel
grant providers
anyone interested in buying your
business
potential senior partners
You should also bear in mind that a
business plan is a living document that will
need updating and changing as your
business expands. And regardless of
whether you intend to use your plan
internally, or as a document for external
people, it should still take an objective and
honest look at your business. Failing to do
this could mean that you and others have
unrealistic expectations of what can be
achieved and by when.

Your business plan is a statement of intent.
It should provide details of how you are
going to develop your business, when you
are going to do it, who's going to play a part
and how you will manage the money.
start. It's vital. Many lenders and

investors make judgments about
your business based on this section
of the plan alone. See the page in
this guide on the executive
summary.
A short description of the
business opportunity - who you
are, what you plan to sell or offer,
why and to whom. See the page in
this guide on your business, its
products and services.
Your marketing and sales strategy
- why you think people will buy what
you want to sell and how you plan to
sell to them. See the pages in this
guide on your markets and
competitors and marketing and
sales.
Your management team and
personnel - your credentials and the
people you plan to recruit to work
with you. See the page in this guide
on your team's skills.
Your operations - your premises,
production facilities, your
management information systems
and IT. See the page in this guide on
your operations.
Financial forecasts - this section
translates everything you have said
in the previous sections into
numbers. See the page in this guide
on financial forecasts.
Clarity on these issues is particularly

important if you're looking for finance or
investment. The process of building your
plan will also focus your mind on how your
new business will need to operate to give it
the best chance of success.
You can read sample business plans at

the bplans.org.uk website or see a library
of business plan templates on the
Microsoft Office website.
Your plan should include:
An executive summary - this is an

overview of the business you want to
The executive summary is often the most

important part of your business plan.
Positioned at the front of the document, it is
19

recognise hype and this will
undermine the plan's credibility.
the first part to be read. However, as a

summary it makes sense to write it last.
It may be the only part that will be read.
Faced with a large pile of funding requests,
venture capitalists and banks have been
known to separate business plans into
"worth considering" and "discard" piles
based on this section alone.
What is it?
The executive summary is a synopsis of the
key points of your entire plan. It should
include highlights from each section of the
rest of the document - from the key features
of the business opportunity through to the
highlights of the financial forecasts.
Its purpose is to explain the basics of your
business in a way that both informs and
interests the reader. If, after reading the
executive summary, an investor or manager
understands what the business is about and
is keen to know more, it has done its job.
It should be concise - no longer than two
pages at most - and interesting. It's
advisable to write this section of your plan
after you've completed the rest.
What it's not
A brief description of the business
and its products. It's a synopsis of
the entire plan.
An extended table of contents. This
makes for very dull reading. You
should ensure it shows the highlights
of the plan, rather than restating the
details the plan contains.
Hype. While the executive summary
should excite the reader enough to
read the entire plan, an experienced
investor or businessperson will
You can read sample business plans

at the bplans.org.uk website.
Your business, its products and

services
If you want other people to invest in your
business or if you're writing your plan to
focus your existing business activities, you
must be able to clearly convey what your
business does.
This part of your plan sets out your vision
for your new business and includes who you
are, what you do, what you have to offer and
the market you want to address. It answers
the question - is your idea viable?
Start with an overview of your business:
When you started or intend to start
trading and the progress you have
made to date.
The type of business and the sector
it is in.
Any relevant history. For example, if
you acquired the business, who
owned it originally and what did they
achieve with it?
The current legal structure.
Your vision for the future.
Then describe your products or services as
simply as possible, defining:
what makes it different

what benefits it offers
why customers would buy it
how you plan to develop your
products or services
20

whether you hold any patents,
trademarks or design rights
the key features of your industry
Remember that the person reading the plan
may not understand your business and its
products, services or processes as well as
you do, so it's important to avoid jargon. It's
often a good idea to get someone who isn't
involved in the business - a friend or family
member perhaps - to read this section of
your plan and make sure they can
understand it.

In this section you should define your
market, your position in it and outline who
your competitors are. In order to do this you
should refer to any market research you
have carried out. You need to demonstrate
that you're fully aware of the marketplace
you're planning to operate in and that you
understand any important trends and
drivers.
You should also be able to show that your
business will be able to attract customers in
a growing market despite the competition.
Key areas to cover
Market - its size, historical data
about its development and key
current issues.
Target customer base - who they
are and how you know they will be
interested in your products or
services.
Competitors - who they are, how
they work and the share of the
market they hold.
Future - anticipated changes in the
market and how you expect your
business and your competitors to
react to them.
For further information, see our guides on
market research and market reports and
understand your competitors.
You also need to know how your
competitors' advantages and disadvantages
compare to your own. Describe any
competitive analysis you have carried out
and include some what-if scenarios that
show how your business would deal with
customers' changing needs or any other
market changes.
Download a guide on getting to grips
with your competitors from the Chartered
Institute of Marketing website (PDF).
Marketing and sales

This section should describe the specific
activities you intend to use to promote and
sell your products and services. It's often the
weak link in business plans so it's worth
spending time on to make sure it's both
realistic and achievable.
A strong sales and marketing section means
you have a clear idea of how you will get
your products and services to market.
Your plan will need to provide answers to
these questions:
How do you plan to position your
product or service in the market
place? For further information, see
our guide on how to create your
marketing strategy.
Who are your customers? Include
details of customers who have
shown an interest in your product or
21
service in the plan and explain how

you plan to go about attracting new
customers. See our guide on how to
know your customers' needs.
What is your pricing policy? How
much will you charge for different
customer segments, quantities etc?
See our guide on how to price your
product or service.
How will you promote your product
or service? Identify your sales
methods eg direct marketing,
advertising, PR, email, e-sales. See
our guide on sales & marketing: the
basics.
How will you reach your customers?
What channels will you use? Which
partners will be needed in your
distribution channels? See our guide
on how to reach your customers
effectively.
How will you do your selling? Do
you have a sales plan? For example,
will you sell by phone, via a website,
face-to-face or through retail outlets?
See our guide on sales methods.
Find out how to create a sales and

marketing strategy on the Chartered
Institute of Marketing website.
Your team's skills

Your business plan needs to set out the
structure and key skills of both your
management team and your staff. It should
identify the strengths in your teams and your
plans to deal with any obvious weaknesses.
The management team
If you're looking for external funding, your
management team can be a decisive factor.
Explain who is involved, their role and how it
fits into the organisation. Include a
paragraph on each individual, outlining their

background, relevant experience and
qualifications. Include any advisors you
might have such as accountants or lawyers.
If you're looking to satisfy your bank
manager or other investors, you need to
demonstrate that your management team
has the right balance of skills, drive and
experience to enable your business to
succeed. Key skills include sales, marketing
and financial management as well as
production, operational and market
experience.
Your investors will also want to know that
you and your team are fully committed.
Therefore it's a good idea to set out how
much time and money each person will
contribute to the business and the salaries
and benefits you plan to draw. You can find
more practical tips in our guide on how to
use your business plan to get funding.
Your people
Give details of your workforce in terms of
total numbers and by department. Spell out
what work you plan to do internally and if
you plan to outsource any work. Other
useful figures might be sales or profit per
employee, average salaries, employee
retention rates and productivity.
Your plan should also outline any
recruitment or training plans, including
timescales and costs.
It's vital to be realistic about the commitment
and motivation of your people and spell out
any plans to improve or maintain staff
morale.
Your operations
22
Your business plan also needs to outline

your operational capabilities and any
planned improvements. There are certain
areas you should focus on.
For more information, see our guide

providing an overview of managing IT and
e-commerce.
Location
Financial forecasts
What are your long-term

commitments to the property?
Do you own or rent it?
What are the advantages and
disadvantages of your current
location?
Production facilities
Do you need your own production
facilities or would it be cheaper to
outsource any manufacturing
processes?
If you do have your own facilities,
how modern are they?
What is the capacity compared with
existing and forecasted demand?
Will any investment be needed?
As part of your plan you will need to provide

a set of financial projections which translate
what you've said about your business into
numbers.
You will need to look carefully at:
how much capital you need if you are
seeking external funding
the security you can offer lenders
how you plan to repay any
borrowings
sources of revenue and income
You may also want to include your personal
finances as part of the plan at this stage.
Financial planning
Management-information systems
Have you got established procedures
for stock control, management
accounts and quality control?
Can they cope with any proposed
expansion?
For more information, see our guides on
stock control and inventory and financial
and management accounts: the basics.
Your forecasts should run for the next three

(or even five) years and their level of
sophistication should reflect the
sophistication of your business. However,
the first 12 months' forecasts should have
the most detail associated with them.
Include the assumptions behind your
projection with your figures, both in terms of
costs and revenues so investors can clearly
see the thinking behind the numbers.
Information technology (IT)

IT is a key factor in most businesses,
so include your strengths and
weaknesses in this area.
Outline the reliability and the planned
development of your systems.
What your forecasts should include

Cashflow statements - your cash balance
and monthly cashflow patterns for at least
the first 12 to 18 months. The aim is to show
that your business will have enough working
capital to survive so make sure you have
23

considered the key factors such as the
timing of sales and salaries. See our guide
on cashflow management: the basics.
Profit and loss forecast - a statement of
the trading position of the business: the level
of profit you expect to make, given your
projected sales and the costs of providing
goods and services and your overheads.
Sales forecast - the amount of money you
expect to raise from sales. See our guide on
how to forecast and plan your sales.
You can download our sample profit and
loss forecast template (XLS).
Edit the plan carefully - get at least

two people to read it and check that it
makes sense.
Show the plan to expert advisers such as your accountant - and ask
for feedback. Redraft sections they
say are difficult to understand.
Avoid jargon and put detailed
information - such as market
research data or balance sheets - in
an appendix at the back.
Make sure your plan is realistic. Once
you've prepared your plan, use it. If you
update it regularly, it will help you keep track
of your business' development. See our
guides on budgeting and business
planning and how to prepare a business
plan for growth.
To make sure your business plan has the

maximum impact, there are a number of
points to observe.
Further help and advice
Keep the plan short - it's more likely to be

read if it's a manageable length. Think about
the presentation and keep it professional even if you only intend to use the plan in
house. Remember, a well presented plan
will reinforce the positive impression you
want to create of your business.
Your local Business Link has specialist

advisers who can help you with business
planning. You can find your local
Business Link through our Contacts
Directory.
Tips for presenting your plan

Include a cover or binding and a
contents page with page and section
numbering.
Start with the executive summary.
Ensure it's legible - make sure the
type is ten point or above.
You may want to email it, so ensure
you use email-friendly formatting.
Even if it's for internal use only, write
the plan as if it's intended for an
external audience.
Your accountant, if you have one, or your

bank can offer support.
Enterprise Agencies offer free business

counselling and can help you prepare your
business plan. You can find your local
Enterprise Agency on the National
website.
Here's how having an up-to-date

business plan helped my business
Darren Jones
AKC Home Support Services
24
Consult the plan

Darren's top tips
"Make sure your business plan
reflects your personal vision - don't
just put things in because you think
its what someone else wants to
read."
"Be objective. It is important to weigh
up the pros and cons."
"Get assistance whenever you can."
Darren Jones launched his care business,
AKC Home Support Services, in 1991 with
his wife Sharron. Although writing their
business plan was one of the first things the
couple did, Darren admits he originally saw
it as a bit of a chore. Now, he takes a
different view, believing it has helped the
business stay on track and true to its goals.
What I did
Write the plan
"When we started the firm I knew we
needed a business plan but saw it more as
a document for everyone else than
something to help us. If I started another
business tomorrow I would write one much
more willingly as it brings a number of
benefits - from helping you secure finance to
keeping you focused on your goals.
"We got help from our local enterprise
centre, looked at examples from other
businesses and a template from the bank.
We mixed and matched bits from these
sources because not everything applied to
us. For example, because we were going
into a new market we couldnt write about
our competitors but needed a lot of
information about the market for care
services."
"We used our business plan to set out the

financial and strategic goals we wanted to
achieve in the short and long-term. We
review it annually now unless theres a
significant shift in our market and then we
use it to immediately re-evaluate our goals.
"Our business plan has also helped us to
avoid expanding too quickly. Early on, we
were offered work in another county. This
seemed great but when we looked at our
business plan and particularly our
cashflow forecasts - we realised it was
important to establish a firm base in one
county before taking on work in another
otherwise we would overstretch ourselves."
Use the plan
"We purchased a residential unit four years
ago and our business plan definitely helped
us demonstrate why the bank should lend
us the money. Without it being put down on
paper I dont think it would have sounded
like a very viable suggestion.
"The home added a different dimension to
the business in which we had no trading
record so the bank lent us the money
according to our past performance. We
could also show that we would offset some
of the cost by using part of the new building
as office space.
"Our plan also helped us to get support from
Shell LiveWire - the organisation that assists
16-30 year olds to start and develop
businesses - as you must have a business
plan to enter its competitions. We were
awarded prizes twice - not only bringing in
extra money but publicity too."
What I'd do differently
25
Work on the plans presentation

"I would have tried to get more assistance
and perhaps made the document look a bit
more professional. It's your way of gaining
support for your business and is the one
thing that your bank manager will remember
apart from how you were dressed."
Get as much help and advice as possible
Show the plan to an independent third party
- such as friends or family who have run
their own businesses - who will be able to
point out if anything is missing. It's much
better to make mistakes on a practice run
than when it really matters.
Helplines
0845 600 9 006
for your business | Create your

marketing strategy | Reach your
customers effectively | Sales methods |
Financial and management accounts: the
basics | An overview of managing IT and
e-commerce | Stock control and
inventory | Download our sample profit
and loss forecast template (XLS) | Book a
course on Finance for Non-Financial
Managers through our Training Directory
| Use our interactive tool to investigate
the best finance methods for your
business | How do I survive until my
business is off the ground? | Cashflow
management: the basics | Forecast and
plan your sales | Here's how I used an
accountant to help me in my business |
Here's how I applied for a grant |

useful
Read sample business plans at the
bplans.org.uk website
Related guides on
businesslink.gov.uk
See a library of business plan templates

on the Microsoft Office website

resources for your business | Find your
local Business Link through our
Contacts Directory | Budgeting and
business planning | Use your business
plan to get funding | Are you ready to
start up? | Common mistakes when
starting up - and how to avoid them |
Prepare a business plan for growth |
Know your customers' needs | Price your
product or service | Sales & marketing:
the basics | Research and develop your
business ideas | Market research and
market reports | Understand your
competitors | Write a marketing plan |
Use our interactive tool to investigate
what will be the best advertising media
Download a guide on getting to grips

with your competitors from the Chartered
Institute of Marketing website (PDF)
Find out how to create a sales and
marketing strategy on the Chartered
Institute of Marketing website
Use the business planning software from
the Alliance-Leicester Commercial Bank
website (registration required)
26
Introduction
Introduction
Marketing plan summary and introduction
External and internal analysis for your
marketing plan
Marketing is a key part of business success.

You need to decide which customers to
target. You need to work out how you will
reach and win new customers. You need to
make sure that you keep existing customers
happy. And you need to keep reviewing and
improving everything you do to stay ahead
of the competition.
Marketing strategy for your marketing plan

Implementation of your marketing plan

navigating to:
Home > Sales and
marketing > Marketing > Write a marketing
plan
A good marketing plan starts by looking at

your overall strategy, and the business
environment you operate in. It builds on your
own strengths and weaknesses to work out
what your marketing strategy should be. It
sets out clear objectives and explains how
you will achieve them. Perhaps most
importantly it looks at how you can ensure
that your plan becomes reality.
This guide outlines the key areas to look at
and to include in an effective marketing
plan.
Marketing plan summary and

introduction
Your marketing plan should start with an
executive summary. The summary gives a
quick overview of the main points of the
plan.
Although the executive summary appears at
the beginning of the plan, you should write it
last. Writing the summary is a good
opportunity to check that your plan makes
sense and that you haven't missed any
important points.
Business strategy
It's a good idea to introduce the main body
27
of the plan with a reminder of your overall

business strategy, including:
what your business is about (your
business mission)
your key business objectives
your broad strategy for achieving
those objectives
This helps to ensure that your marketing
plan, your marketing strategy and your
overall business strategy all work together.
For example, suppose your business
strategy is based on providing premium
quality products and service. Your marketing
strategy and plan will need to take this into
account, targeting customers who
appreciate quality, promoting your product in
ways that help build the right image and so
on.
External and internal analysis for

your marketing plan
Understanding the environment your
business operates in is a key part of
planning. A PEST analysis helps you to
identify the main opportunities and threats in
your market:
Political and legal changes such as
new regulations
Economic factors such as interest
rates, exchange rates and consumer
confidence
Social factors such as changing
attitudes and lifestyles, and the
ageing population
Technological factors such as new
materials and growing use of the
Internet
You also need to understand your own
internal strengths and weaknesses. For

example, the main strengths of a new
business might be an original product and
enthusiastic employees. The main
weaknesses might be the lack of an existing
customer base and limited financial
resources.
A SWOT analysis combines the external
and internal analysis to summarise your
Strengths, Weaknesses, Opportunities and
Threats. You need to look for opportunities
that play to your strengths. You also need to
decide what to do about threats to your
business and how you can overcome
important weaknesses.
For example, your SWOT analysis might
help you identify the most promising
customers to target. You might decide to
look at ways of using the Internet to reach
customers. And you might start to
investigate ways of raising additional
investment to overcome your financial
weakness.
You can find out more about strategic
analysis in our guide on how to review
your business performance.

Your marketing objectives should be based
on understanding your strengths and
weaknesses, and the business environment
you operate in. They should also be linked
to your overall business strategy.
For example, suppose your business
objectives include increasing sales by 10
per cent over the next year. Your marketing
objectives might include targeting a
promising new market segment to help
28
achieve this growth.

For more information on how to identify the
best opportunities, see the page in this
guide on external and internal analysis
for your marketing plan.
Objectives should always be SMART:
Specific. For example, you might set
an objective of getting ten new
customers.
Measurable. Whatever your
objective is, you need to be able to
check whether you have reached it
or not.
Achievable. While you should set
targets that stretch you, there is no
point in being too ambitious.
Realistic. You must have the
resources you need to achieve the
objective. The key resources are
usually people and money.
Time-bound. You should set a
deadline for achieving the objective.
For example, you might aim to get
ten new customers within the next 12
months.
Marketing strategy for your

marketing plan
Your marketing plan is how you put your
marketing strategy into practice. It's worth
highlighting the main points of your strategy
in the plan.
If you understand the market well, you can
probably break it down into different
segments - groups or similar customers. For
example, you can break the business
market down into businesses of the same
size and in the same sector.
For each segment, you need to look at what

customers want, what you can offer and
what the competition is like. You want to
identify segments where you have a
competitive advantage. At the same time,
you should assess whether you can expect
high enough sales to make the segment
worthwhile.
Often, the most promising segments are
those where you have existing customers. If
you are targeting new customers, you need
to be sure that you will be able to reach
them.
Once you have decided what your target
market is, you also need to decide how you
will position yourself in it. For example, you
might offer a high quality product (at a
premium price) or a flexible local service.
Some businesses try to build a strong brand
and image to help them stand out. Whatever
your strategy, you want to differentiate
yourself from the competition.
See our guide on how to create your
marketing strategy.

Once you have decided what your
marketing objectives are, and your strategy
for meeting them, you need to plan how you
will make the strategy a reality.
Many businesses find it helpful to think in
terms of the 4 Ps:
Product. What your product offers
that your customers value, and how
you should change your product to
meet customer needs.
Pricing. For example, you might aim
29

simply to match the competition, or
charge a premium price for a quality
product and service. You might have
to choose either to make relatively
few high margin sales, or sell more
but with lower unit profits.
Place. How and where you sell. This
may include using different
distribution channels. For example,
you might sell over the Internet
or sell through retailers.
Promotion. How you reach your
customers and potential customers.
For example, you might use
advertising, PR, direct mail and
personal selling.
If you sell a service, you can extend this to 7
Ps:
easy to get bogged down dealing with

day-to-day priorities.
It should also assess what resources you
need. For example, you might need to think
about what brochures you need. You might
also need to look at how much time it takes
to sell to customers and whether you have
enough salespeople.
The cost of everything in the plan needs to
be included in a budget. If your finances are
limited, your plan will need to take that into
account. You may also want to link your
marketing budget to your sales forecast.
See our guide on how to forecast and plan
your sales.
Control
People. For example, you need to

ensure that your employees have the
right training.
Processes. The right processes will
ensure that you offer a consistent
service that suits your customers.
Physical evidence. The appearance
of your people and premises can
affect how customers see your
service. Even the quality of
paperwork, such as invoices, makes
a difference.
Implementation of your marketing

plan
Your marketing plan must do more than just
say what you want to happen. It must
include how you will make sure that it
happens.
The plan should include a schedule of key
tasks. This sets out what will be done, and
by when. Without a schedule, it's all too
As well as setting out the schedule, the plan

needs to say how it will be controlled. You
need an individual who takes responsibility
for pushing things along. A good schedule
and budget should make it easy to monitor
progress. When things fall behind schedule,
or costs overrun, you need to be ready to do
something about it.
From time to time, you need to stand back
and ask whether the plan is working. What
can you learn from your mistakes? How can
you use what you know to make a better
plan for the future?

A good marketing plan:
sets clear, realistic and measurable
targets - for example, increasing
sales by 10 per cent
includes deadlines for meeting
30

targets
provides a budget for each marketing
activity
specifies who is responsible for each
activity
Poorly thought-out objectives will cause
problems. For example, you might set a
target for the number of new enquiries. But if
none of these enquiries turn into sales, you
will have increased costs without any
benefits.
Link to your strategy
Assess the business environment to identify
the opportunities and threats that you face.
Look for where you can capitalise on your
strengths or need to overcome a weakness.
Every part of your business must work
together. For example, if you have limited
cashflow you may want to pursue large
orders from customers that demand
extended credit.
Training Directory | Create your

marketing strategy | Forecast and plan
your sales | Advertising: the basics | PR:
the basics | Direct marketing: the basics |
Understand your competitors | Market
research and market reports | Review
your business performance | Reach your
customers effectively | Price your
product or service |

useful
Use the marketing planning tool on the
Chartered Institute of Marketing website
Download a guide about conducting a
SWOT analysis from the Chartered
Institute of Marketing website (PDF)
Remember to focus on your long-term

strategy. Reducing customer service might
boost short-term profits, but next year you
might not have any customers left.
Make it happen
A plan will not happen by itself. You need to
make someone responsible for monitoring
progress and chasing up overdue activities.
Reviewing progress will also help you learn
from your mistakes so that you can improve
your plans for the future.
Related guides on
businesslink.gov.uk
Book a course on Marketing through our
31
Introduction
Introduction
Here's how I decided I was ready to start up
my business
Helplines

navigating to:
up? > Are you ready to start up?
Starting a new business is both exciting and

rewarding. But it is also full of challenges,
and the level of commitment that you will
need should not be underestimated.
The success of your business will partly
depend on your attitude and skills. This
means being honest about a range of issues
- your knowledge, your financial status and
the personal qualities that you can bring to
your new business.
Commitment, drive, perseverance and
support from family and friends will go a
long way towards transforming your
business idea into reality and will be
especially important during the early days.
This guide will help you decide whether you
have what it takes to set up a new business.
It also provides a look at the day-to-day
reality of starting a business and outlines the
skills and qualities that you will need.

Setting up your own business requires your
full commitment. A valuable way of finding
out about the day-to-day realities is to talk to
people who have already experienced them.
However, there are some matters which
anybody hoping to start up should be aware
of.
Personal sacrifice
The physical and emotional demands of
starting up in business should not be
underestimated. Starting a business is a
life-changing event and will require hard
32
work and long hours, especially in the early

stages.
Pressure on close relationships
You will need the support of your family and
friends. They should be aware from the
outset of the effect starting up a business
will have on your life and it is crucial that
they are right behind you. Their emotional
backing may also need to be complemented
by a practical "hands on" approach.
Discussing these issues before they arise
will help.
successful business people.

A typical entrepreneur will have a lot of the
following key qualities:
Self-confidence - a self-belief and passion
about your product or service - your
enthusiasm should win people over to your
ideas.
Self-determination - a belief that the
outcome of events are down to your own
actions, rather than based on external
factors or other people's actions.
Isolation
Being your own boss can be a satisfying
experience. However, shouldering all the
responsibility for the success of the
business can prove lonely. Unless you
develop a network of contacts, there will be
no one there to bounce ideas off.
Financial insecurity
Being a self-starter - the ability to take the

initiative, work independently and to develop
your ideas.
Judgement - the ability to be open-minded
when listening to other people's advice,
whilst bearing in mind your objectives for the
business.
There can be times of financial uncertainty,

and this may have a knock-on effect for both
you and your family. For example, you may
have to forgo holidays and other treats.
Commitment - the willingness to make

personal sacrifices through long hours and
loss of leisure time.
Loss of company perks
Perseverance - the ability to continue

despite setbacks, financial insecurity and
exposure to risk.
Setting up your own business means that

you will no longer be able to take advantage
of the usual benefits associated with a
permanent job. This includes the loss of
"safety net" benefits such as pension rights,
sick pay, paid holiday and other company
perks.
Initiative - the ability to be resourceful and

proactive, rather than adopting a passive
"wait and see" approach.

Research has shown that there are certain
qualities commonly found amongst
As a business owner you will need core

skills to execute your ideas and to ensure
that your new business survives in the long
term.
33
You should start by assessing your own

skills and knowledge. This will help you
decide whether you need to set aside some
time to learn new skills yourself, or whether
you need to draw on outside help by
delegating, recruiting or outsourcing.
Key business skill areas
Financial management - This includes
having a good grasp of cashflow planning,
credit-management and maintaining good
relationships with your bank and accountant.
cashflow management: the basics.
Product development - The ability to make
long-term plans for product development
and identify the people, materials and
processes required to achieve them. In
order to make such plans you will need to
know your competition and your customers'
needs. See our guides on how to
understand your competitors and know
your customers' needs.
People management - This includes
managing recruitment, resolving disputes,
motivating staff and managing training.
Good people management will help
employees to work together as a
well-functioning team. See our guide on
skills and training for directors and
owners.
Business planning - The ability to assess
the strengths and weaknesses of your
business and plan accordingly. See our
guides on how to prepare a business plan
and budgeting and business planning.
Marketing skills - Having the skills to
manage different aspects of your business
must also be complemented by a sound
marketing approach. This covers setting up

and overseeing sales and marketing
operations, analysing markets, identifying
selling points for your product and following
these through to market. See our guides on
how to write a marketing plan and
market research and market reports.
Customer/supplier relationship
management - The ability to identify
suppliers and positively manage your
relationship with them. See our guides on
how to manage your suppliers and the
supplier selection process.
You can get advice on any of these issues
at your local Business Link. Find your
Contacts Directory.

However excited you may be about your
product or service, and however convinced
you are of its value, you need to research
your target market and your competitors
carefully.
A common misconception is that
entrepreneurs who fail simply lacked
sufficient funding or did not put in place the
right team. However, in many cases they fail
because they have not spent enough time
on researching the business idea and its
viability in the market.
There are certain criteria you can use to
establish this:
Does your product or service satisfy
or create a market need?
Can you identify potential
customers?
Will it outlive any passing trends or
34
capitalise on the trend before it dies

away?
Is it unique, distinct or superior to
those offered by competitors?
What competition will it face - locally,
nationally and globally?
Is the product safe?
Does it comply with relevant
regulations and legislation?
Can you sell the product or service at
a price that will give you sufficient
profit?
Market research can play an important role

in answering many of these questions, and
increasing your chances of success.
How much research you do will depend on
the time and funds you have available. You
could:
informally canvass the opinion of
friends
talk to industry contacts and
colleagues
survey the public about whether they
would use a product
ask customers of competing products
what improvements they would like
to see
set up focus groups to test your
product or service
monitor what your competitors are
doing
look at what has and hasn't worked
in your industry or market niche
study wider economic and
demographic data
The more information you have, the better
placed you will be to make your business
idea a success.
how to write a marketing plan.

You can also read about market research
techniques at the British Market
Research Association website.

Securing the right financing for your new
business is crucial, as there is no guarantee
that your business will make money for you
straight away.
You should aim to have sufficient reserves
to last you for several months without an
income from your business. For tips on how
to keep afloat during the early months of
your new business, see our guide: how do
I survive until my business is off the
ground?
You need to be honest about your start-up
capital reserves. If there is not enough
money to see you through until your
business begins to make money, then you
are not ready to start up. Being realistic at
this stage is likely to save a lot of pain. If you
decide to launch your new business without
enough funding behind it, keeping it afloat
will prove extremely difficult.
There are many different sources of
potential start-up funding, including bank
loans, overdrafts and private loans. Use our
interactive tool to investigate the best
finance methods for your business.
For expert help, contact an accountant,
small business adviser or your bank
manager. For more information, see our
guides on how to choose and manage an
accountant and choose and manage a
business adviser.
35

Starting up a business requires a
considerable investment of time, funds and
energy. Before you begin, you need to
honestly assess whether you really have
what it takes and how well you think you
might handle the risks involved.
decide whether you have what it takes to

make your dream of starting a business into
a reality.
Here's how I decided I was ready

to start up my business
Paul Kruzycki
You may want to consider the following

questions:
Are you prepared for the personal
demands of setting up a new
business?
How well do you handle uncertainty?
Do you have a positive attitude?
Are you prepared to take chances
and gamble on your ideas?
Do you have any of the key qualities
of a typical entrepreneur?
Do you have an absolute
determination to succeed?
Can you bounce back from
setbacks?
Are you able to delegate?
Do you have core business skills?
Are you prepared to spend time
carrying out in-depth market
research?
Do you have sufficient funds to set
up a new business?
Are you willing to draw on expert
help when you need it?
Very few entrepreneurs can claim to be
strong in all of the areas required. The key is
to make the most of your assets and take
action to address any gaps. This could
include learning new skills yourself or
drawing on outside help by delegating,
recruiting or outsourcing.
Ales By Mail Ltd
Paul's top tips

"Really understand what you are
giving up by leaving a job such as
paid holiday, company car and so
on."
"Find information wherever you can,
especially on the Internet."
"Be organised and methodical in
your paperwork."
Paul Kruzycki discovered an entrepreneurial

streak while running a not-for-profit charity
convention and he decided to set up his own
venture. When he did, a cautious approach
to the launch of his real-ale mail-order
company, Ales By Mail, proved important in
giving the business a sound start.
What I did
Research the business proposition fully
"I continued working full time as a building
surveyor while I developed my business
plan, built contacts and got my idea to a
stage where I felt I could get it off the
ground. I wanted to prove fully to myself that
the business could work.
Ultimately, you are the only person who can

36
"I also knew that if I wanted to get finance to

help me start up I would need to answer
some tough questions such as who are your
customers, where will you advertise and so
on.
"I spent a lot of time talking to people in the
industry and finding information on websites
- seeing how other people were doing
things, at what level and how differently."
What I'd do differently

Think about the impact of routine
paperwork
"Before starting up I'd find out more about
the organisational aspects of running a
business. I underestimated the amount of
time needed to deal with tax matters, chase
up clients and do all the other bits of
paperwork. "
Take the opportunity to work part-time to

provide a financial buffer
"My research showed that Ales by Mail
couldn't pay me a salary at first so I decided
I needed to save at least six months' living
expenses. Then an opportunity to work as a
property consultant came up.
"I now do that two days a week and spend
two days on Ales by Mail. On the fifth and
sixth days I work on whatever needs doing
most urgently.
"I'm building the business on a tight budget
and am going for slow growth. My
consultancy work allows me to take this
approach."
Consider domestic circumstances
"I spent 18 months preparing to start the
business. There were things that needed to
be resolved before I gave up my job. For
example, I needed to wait until my house
had been refurbished so that I could work
from home.
"I've had a lot of support from my wife.
Knowing I can go to my family after a bad
day and receive that support helps me
remember that the decision I made was the
right one."
Helplines
0845 600 9 006
Chartered Institute of Marketing General
Enquiry Line
01628 427 500
Related guides on
businesslink.gov.uk
Contacts Directory | Reasons for going
into business | How do I survive until my
business is off the ground? | Starting a
business when you are young | Research
and develop your business ideas | Find
and book a Business skills course
through our Training Directory |
Cashflow management: the basics |
Know your customers' needs | Skills and
training for directors and owners |
Prepare a business plan | Write a
marketing plan | Manage your suppliers |
37

Market research and market reports | Use
our interactive tool to investigate the
best finance methods for your business |
Budgeting and business planning |
Choose and manage an accountant |
Choose and manage a business adviser |
Understand your competitors | Here's
how my first IT system helped me set up
my business | Here's how I chose the
name for my business | Here's how the
tax authorities helped me start my
business |

useful
Read about market research techniques
at the British Market Research
Association website
38
Common mistakes when starting up - and how to avoid them
Introduction
Introduction
Poor or inadequate market research
Launching a small business can be risky

and success is not always guaranteed.
Businesses are most vulnerable to failure
during the early years of trading, with 20 per
cent of new businesses folding within their
first year and 50 per cent within their first
three years.
Taking your eye off the competition

Poor supplier and customer controls
These figures should not scare you off, but

should prepare you for some of the
challenges entrepreneurs face when starting
a business. With hard work and an
awareness of the issues, a new business
can be a great success.
Helplines
This guide looks at the most common

mistakes new business owners make and,
more importantly, how you can avoid them.
It also shows you how to improve the
chances of your business idea succeeding.

navigating to:
Poor or inadequate market

research

up? > Common mistakes when starting up and how to avoid them
Research and planning are vital to ensure

that your business idea is viable.
A common misconception is that

entrepreneurs who fail simply lacked
sufficient funding or did not put in place the
right team. However, in many cases they fail
because they have not spent enough time
researching their business idea and its
viability in the market.
Lack of in-depth market research
Lack of proper market research is one of the
key problems for new businesses. It's easy
to get carried away with a business idea and
39
set up a business without testing its viability.

Accurate market data will help prevent
over-optimistic forecasts about market
share. For more information, see the page in
this guide on setting sights too high and
our guide on market research and market
reports.
Keeping your business ideas to yourself
Failing to share your business ideas with
people you trust means that you will miss
out on objective feedback.
Brainstorm with other colleagues to give you
valuable perspective. Note down any good
ideas you get from brainstorming and use
them when developing your business.
to research and develop your business
ideas.
Not knowing your clients or marketplace
If you do not complete adequate research,
you are in danger of selling to the wrong
people or of not understanding the
marketplace that your potential
clients operate in. To avoid this, consider
the following options:
Use information, such as free
government data or your own
network of contacts to build up a
picture of the market place.
Carry out field research to explore
customers' profiles to discover
buying trends.
Swap ideas with people in the same
sector, in training courses or
seminars.

know your customers' needs.
Take advantage of free advice available
from your local Business Link. Find your
Contacts Directory.
Becoming a member of a Chamber of
Commerce will give you access to services
such as training, networking and savings on
overheads. Find Chambers of Commerce
in your area at the Chamber Online
website.

Financial planning is extremely important for
most new businesses. A lack of capital, lack
of a contingency plan and reluctance to
seek professional advice can all bring major
problems.
Lack of capital
Having sufficient capital is essential for the
survival and prosperity of your business,
and is a primary indicator of your business'
health.
It is important to create a high-quality
business plan to attract and secure the
right type and amount of funding that you
need to make your business successful. A
business plan can:
be used as a tool to structure the
financial side of your business and
can be updated and changed as your
business grows
keep your expectations for what can
be delivered grounded
40

to prepare a business plan.
Lack of a contingency plan
Without a contingency plan you can leave
yourself exposed to the unexpected.
Situations beyond your control that may
impact on your business and cashflow
include interest rate rises, transport strikes
and political instability. While your business
can survive periods where there are no
sales or profits, it cannot survive without
cash. Building up cash reserves will ensure
that you can trade effectively and develop
your business.
cashflow management: the basics and
how do I survive until my business is off
the ground?
A reluctance to seek professional advice
It is important to make realistic forecasts

about your business' potential. During the
start-up phase, it can be easy to make
over-optimistic forecasts, however there can
be serious consequences for your business
if your projections are not realistic.
Over-optimistic forecasts about market
size
Inaccurate forecasting of market size is a
common mistake when starting up.
Cash levels can be quickly depleted if you
recruit too many people or spend too much
on business premises as a result of poor
forecasting.
Inaccurate forecasting is often linked to poor
market research, so it is essential to get
your research right. For more information,
see our guides on market research and
market reports and cashflow
management: the basics.
Failing to seek professional advice will make

any financial troubles worse. Few new
business owners can claim expertise in all
areas of their business. Using an accountant
or financial adviser can help you ensure you
borrow and manage money cost-effectively.
Focusing on sales volume or size not

profit

how to choose and manage an
accountant and choose and manage a
business adviser.
Overtrading can occur during the rapid

expansion of a new business when it takes
on more orders than can be supported by its
working capital or net current assets. This
can have serious repercussions.
You can also find a local independent

financial adviser from the Association of
Independent Financial Advisers website.
A common mistake for new businesses is to

focus too much on growing the sales volume
or size rather than profit.

how to forecast and plan your sales and
avoid the problems of overtrading.
Diversifying too soon

41
There may be a temptation for you to tap

into a new market or geographical area, but
keeping a clear focus on your core business
is crucial. Diversifying too quickly can
actually increase your business risks during
the vulnerable start-up stage.
Poor planning
Poor planning will increase your chances of
making business mistakes and will reduce
the probability of achieving your goals.
Drawing up a high-quality and realistic
business plan is essential. A business plan
will help to secure external funding,
pre-empt problems and measure how well
your business is doing.
Writing a marketing plan will also ensure
that you take into account your target
customers, your marketing objectives and
that you set goals to address these.
how to prepare a business plan and
write a marketing plan.
Taking your eye off the

competition
During the busy start-up phase it can be
easy to forget to set aside enough time to
monitor the competition. However, it's
essential that you are ready to respond to
competitors in your market place and to new
developments.
Failing to actively monitor the
competition
Failing to monitor your rivals will stop you
from seeing what competition or threats to
your business there are in your market

place.
Competition is not just another business that
might take money away from you. It can be
another product or service that's being
developed which you ought to be selling or
looking to license before somebody else
takes it up.
You can get clues to the existence of
competitors from:
advertising
press reports
exhibitions and trade fairs
questionnaires
searching on the web for similar
products or services
approaches reported by your
customers
flyers and marketing literature that
have been sent to you - this is quite
common if you're on a bought-in
marketing list
planning applications and building
work in progress
to understand your competitors.
Failing to act on competitors' information
Failing to use information gathered about
your competitors will weaken your position
in the market.
Feed any useful information into your
marketing plan. Your marketing plan and
research will help you to set realistic targets
and deadlines, and allocate appropriate
resources. You can then decide to focus on
building relationships with your existing
clients or attract new customers. Your
42
marketing can then be turned into sales by

deciding on your sales methods.

to write a marketing plan.
Poor supplier and customer

controls
Failing to choose suppliers carefully and set
up satisfactory credit arrangements are
common mistakes for new businesses.
Choose carefully as your business'
profitability and reputation could be at stake.
Setting up poor supplier contracts
Finding a reliable and competitively priced
supplier can be vital to the success of your
business. This is because you rely on your
suppliers to provide you with the goods and
services your business needs to operate.
And getting the best deals can have a
significant effect on your business' profits.
When selecting your suppliers, price is an
obvious concern. However, other factors
such as value for money, quality, reliability
and service must also be taken into
consideration.
Establish exactly what you are looking for in
a supplier. A good way of finding out
whether a supplier can deliver what you
need is to carry out a credit check to
reassure you that they aren't in danger of
folding. Once you have identified your
chosen supplier, you can then discuss terms
and conditions and draw up a formal
contract.
how to manage your suppliers and

negotiate the right deal with suppliers,
and our guide on the supplier selection
process.
Setting up poor credit arrangements
If you are dealing with a potential new
customer, it can be tempting to offer credit
without carrying out checks. But this can
leave your business vulnerable to cash flow
problems if the customer delays payment or
does not pay at all. You may find that you
cannot pay your suppliers or bank on time.
In turn, they may withdraw their supplies or
funds, putting your business at risk.
To avoid potential problems with customer
payments, you may want to:
carry out credit checks on new and
existing customers
check bank references, trade
references and online credit-ratings,
from a credit-reference agency
motivate customers to make early
payments by offering discounts
investigate legally enforceable ways
of encouraging prompt payment
See our guide on getting paid on time.

Poor stock control and over-investment in
fixed assets can mean your capital is tied up
unnecessarily.
Poor stock control
Efficient stock control (inventory) will mean
you have the right amount of stock in the
right place at the right time. It ensures that
capital is not tied up unnecessarily, and
43
protects production when there are

problems with the supply chain.
Poor stock control can tie up capital
unnecessarily. You need to put systems in
place to keep close track of stock levels and
values. Taking control will allow you to free
up cash, while also having the right amount
of stock on hand.
There are a number of ways you can
approach stock control. You can:
re-order when stock reaches a
minimum level
carry out regular reviews of stock
use just in time (JIT) delivery to
avoid excessive stock build up
See our guide on stock control and
inventory.
Over-investing in fixed assets
In the early years of your new business, you
need to limit drawing on your cash reserves
unnecessarily. Over-investment in fixed
assets, such as office furniture or computer
equipment can be a problem. Acquiring
fixed assets outright gives you ownership
straightaway, but you have to pay for the full
cost upfront, which drains cash.
The alternatives to ownership:
Leasing assets - at least while your
business finds its feet. This allows
you to spread payments in regular
instalments over a fixed period, thus
freeing up more cash. You may be
able to upgrade equipment without
having to buy more up-to-date
models.
Hire purchase - you own the asset
at the end of the payment process.

This is not the case with leasing.
See our guide on how to decide whether
to lease or buy.

Employing people is an investment in your
business that you should consider carefully employing unwisely can seriously
undermine the success of your business.
Employing unwisely
A large part of your new business' success
will be determined by the quality of the
people you recruit. Taking on people will
always mean some form of investment for
your business. But it's equally important to
remember that taking this investment
seriously can make it more valuable.
Ensuring that you hire high calibre people
with the right mix of skills is not an easy
process but one that will pay dividends.
How you go about employing new people
will depend on your business needs, eg
whether the work is constant, how long it will
last and the number of hours available.
You need to explore all the options available
to you. These include:
recruiting permanent staff on a full or
part-time basis
fixed-term contract employee
temporary staff
freelancers
consultants
contractors
44
Employing relatives may appear an easy

solution to staffing issues, but they may not
have the right mix of skills that you need. If
problems occur, because of the nature of
your relationship, it can be difficult to bring
their period of employment to a close.
taking on staff - the options.
Failing to delegate
Being your own boss may be a key
motivator to setting up your own business.
However, there is a danger of failing to
delegate. Not delegating can result from a
fear of losing control or a lack of faith in
other peoples abilities.
Delegating the right task to the right person
is important for both you and your business.
It will prevent you from taking on too much
yourself and minimise the high levels of
stress that can accompany this.
A good way to tackle delegation is to identify
a few key tasks of your own that are very
valuable to the business and handover the
rest to your team. For more information, see
our guide on skills and training for
directors and owners.
Helplines

Contacts Directory | Market research and
market reports | Research and develop
your business ideas | Know your
customers' needs | Prepare a business
plan | Cashflow management: the basics
| How do I survive until my business is
off the ground? | Choose and manage a
business adviser | Choose and manage
an accountant | Forecast and plan your
sales | Avoid the problems of overtrading
| Write a marketing plan | Understand
your competitors | The supplier selection
process | Manage your suppliers |
Negotiate the right deal with suppliers |
Getting paid on time | Stock control and
inventory | Decide whether to lease or
buy | Taking on staff - the options | Skills
and training for directors and owners |

useful
Find Chambers of Commerce in your
area at the Chamber Online website
Find a local independent financial
adviser from the Association of
Independent Financial Advisers website
Download guidance on cashflow and
overtrading from the CIMA website (PDF)

0845 600 9 006
Related guides on
businesslink.gov.uk
Download a short guide to

understanding competitors from the
Chartered Institute of Marketing website
(PDF)
Download information on supplier
relationship management from the CIPS
website (PDF)
45
Find details of credit checking agencies

on the Better Payment Practice
Campaign website
Read about how to get paid on time on
the Better Payment Practice Campaign
website
Find guidance on recruitment and
induction at the Acas website
46
Choose and manage a business adviser
Introduction
Introduction
What a business adviser could do for you
Find an adviser
Set a timescale
Ten things you need to know about your
prospective business adviser
Helplines

navigating to:
Home > Grow your business > Dealing with
suppliers and advisors > Choose and
manage a business adviser
Starting and running your own business isn't

easy. You may need specialist advice, such
as help with legal issues or managing your
finances. Equally, you might want to talk
over your ideas and problems with someone
who understands the challenges you face.
The right adviser will help you focus on the
most important issues and can suggest
ways of overcoming obstacles. Advisers are
often particularly useful for new businesses
and businesses facing a new challenge
such as changes in their marketplace.
Of course, the adviser can't and won't run
your business for you. It's still up to you to
take the decisions.
This guide will help you decide whether you
need an adviser, choose the right one and
effectively manage the relationship.
What a business adviser could do

for you
Using an adviser could help you plug a
variety of gaps in skills or knowledge often far more cost effectively than buying it
in through other means.
It may be too expensive or difficult to
develop your own expertise in certain
areas. For example, few businesses
can afford to employ a qualified
lawyer.
You can use advisers for one-off
projects. For example, you could get
a technology consultant to set up a
new computer system for you.
You can use advisers on a longer
47

term basis to bring fresh ideas to
your business.
The easiest way to decide what advice you
need is to identify the gaps in your skills
and knowledge. Many early-stage
businesses often find it difficult to prepare a
business plan. Young businesses
sometimes face new challenges, such as
exporting for the first time.
Consider the best way to overcome your
weakness in that area. The main options
are:
recruiting a new employee with the
right expertise
investing in training for yourself or
other employees
finding a suitable adviser
The costs
Some advice services are free or
subsidised. For example, Business Links
and Enterprise Agencies offer free start-up
advice.
Most advisers charge a daily rate, typically
from 200 a day upwards. Some advisers,
such as top lawyers, charge as much as
200 an hour or more.
As with all business decisions, the key is
value for money. A day or two of the right
advice could be worth thousands of pounds
in reduced costs or increased sales.
Find an adviser
Business Link and other advisers can offer
general advice and guidance on specific
issues you may have.
Your local Business Link, which is partly

government-funded, may have an adviser
with experience in your industry. It may also
have specialist advisers dealing with areas
such as exporting, information technology
(IT) and design. Initial advice is provided
free of charge while other services are
charged at affordable rates. Find your
Contacts Directory.
For new businesses, Enterprise Agencies
can offer free business counselling both
before and after you start trading. For
example, they can help you prepare your
business plan and approach sources of
finance. Find your local Enterprise
Agency at the National Federation of
Enterprise Agencies website.
You may be able to get recommendations
of useful sources of advice from friends and
business contacts.
Your bank manager may be able to put you
in touch with useful contacts.
Your accountant will probably know a
number of suitable advisers in your area.
Your local Chamber of Commerce and
your trade association may offer advisory
services or have lists of recommended
advisers.
Professional bodies, such as the Law
Society, can provide names of their
members.
You may also find it helpful to have a
mentor. The mentor's main role is to talk
over your ideas and problems. They may
also offer their own ideas and suggestions.
48

Sole traders who work alone often find a
mentor particularly helpful.
Look for an adviser who suits your
circumstances. Ideally, the adviser will:
have experience of businesses of

your size
understand your industry
have experience of any particular
issues you want to deal with
hold any necessary qualifications
be a member of any appropriate
professional body or trade
association

The first step is to work out what you need.
Use this to create a brief saying exactly
what you want the adviser to do for you.
Include background information on your
business - how long you have been trading,
who your key people are, who your
customers are and so on. Give an indication
of your budget and any deadlines for
achieving specific goals.
The next stage is to search for an adviser. If
someone seems suitable, send a copy of
the brief and arrange a meeting. An initial
meeting is usually free of charge.
Check the adviser
Talk through the brief to ensure the adviser
understands what you want. Then find out
about the adviser.
Check what experience they have of

working with similar businesses. Ask
for references.
If necessary, ask for confirmation of

membership of any professional
body or trade association.
Ask what they think of your brief and
whether they have any suggestions.
Ask how much of their time they think
you will need, spread out over how
long.
Ask whether they will
personally advise you. If not, ask to
meet the individual who will.
Ask how much they charge and what
their payment terms are.
Confirm the details
Once you are satisfied, prepare a written
agreement.
Agree what their role will be, and
what they can expect from you.
Work out how you will manage the
relationship.
Agree how long the relationship will
last and on what basis you can
terminate it.
Confirm that they will protect any
confidential information.
Make sure that any intellectual
property that is created is assigned
to you.
Confirm the charges and payment
arrangements.

From the start, you need to know what you
can expect from the adviser. Think about
the following questions:
How often will you meet, for how
long?
Will you be able to call the adviser in
a crisis?
What areas will the adviser cover?
49

What will you need to do yourself?
What results can you expect?
For example, if an adviser is helping you
prepare a business plan, you might agree to
meet once a week. The adviser may help
you identify the key areas you need to cover
and work through your financial forecasts
with you. But you might be disappointed if
you expect the adviser to do your market
research for you.
Be clear also about how much effort you
are prepared to put into the relationship. To
make the most of your meetings, make sure
you have all the key facts and figures ready.
Otherwise, you will waste valuable
time hunting for information. You'll also need
to follow through on the adviser's
suggestions if they are to have any impact.
Whenever possible, agree specific targets
and interim milestones and deadlines.
These will help you agree how long you will
need the adviser and check that you are
making the right progress.
Be honest and communicate. Let the
adviser know if you are unhappy with the
way things are going. Check whether the
adviser feels that you haven't lived up to
your side of the deal.
An experienced adviser should be able to

tell you how long this is expected to take. By
agreeing interim milestones - such as a date
for completing your market research - you
will be able to check that you are on track.
Continuing advice
Many businesses use an adviser for
continuing advice. The adviser's work may
include identifying your weaknesses before
advising you how to deal with them. It's
more difficult to set targets in this kind of
relationship - but not impossible.
One possibility is to benchmark your
business. You compare your business with
others to see where you are
underperforming. These weaknesses then
become your priorities. Once you have
overcome them you may no longer need
advice. See our guide on benchmarking.
Changing needs
More often than not, you will face new
challenges. Reviewing your business again
will show where you now need to
concentrate your efforts.
You may want to continue using an adviser
who already understands your business. Or
you may need a new adviser, with different
skills and areas of expertise.
Set a timescale
You may use an adviser for a specific
one-off project. For example, you might
want help launching a new business.
If so, you should be able to agree targets
and deadlines. For example, your goals
might be to create a business plan and raise
finance for the business.
Always carefully check the terms of any

contract you have with an adviser if you
need to make changes to the relationship. If
an adviser helps you to achieve a milestone
more quickly than expected, for example,
you may still have to pay for the service until
the end of any agreement.

50
Keep an eye out for any danger signs that

suggest something is going wrong.
Is the adviser trying to bind you into
an inflexible agreement?
Is the adviser reluctant to agree
specific targets and deadlines?
Are you getting off-the-peg advice,
or does it reflect your individual
circumstances?
Is the adviser focusing on your
priorities?
Does the adviser come up with ideas
you hadn't thought of?
Does the adviser let you know if you
are making a mistake?
Does the advice you get lead to
action?
Does the advice you get have
unexpected consequences?
Are you keeping to schedule, or do
deadlines keep getting put back?
Are you making progress, or do you
always seem to need even more
advice?
Do the same problems keep
recuring, or has the advice helped
you make a permanent
improvement?
Are costs higher than you expected?
Is the adviser unreliable, failing to
return calls or turning up late to
meetings?
Does the adviser look
unenthusiastic?
Do you look forward to meetings
with the adviser or are they just a
chore?
If you have concerns about the
effectiveness of the relationship with your
adviser, look again at what you and your
business want to achieve.
It may be that you've made progress and
the adviser's role has diminished as a result.

In that case work out if there are other
issues the adviser could help you to address
- or agree a new definition for the role.
If you're unhappy with the adviser, you
should be able to end the relationship. But
carefully check any agreements you've
made before you do so.

The adviser you use, and how often you
meet, may change from time to time.
You may find that you have achieved your
goals. For example, suppose you are using
an adviser to help you launch your business.
You might work with the adviser on a weekly
basis, preparing your business plan and
arranging finance.
A change in focus
Once the business is launched, your needs
will change. You might decide to have
monthly meetings to review progress. You
may also feel that you need a different
adviser to help with a new area, such as
marketing. On the other hand you may
decide that you no longer want to work with
an adviser at all.
A failure to perform
Sometimes, you may want to terminate the
relationship because it has been a
disappointment. For example, suppose
you are using an adviser to help you set up
a computer system. Your first agreed
milestone might be to have the cabling
installed by a certain date. If you fail to meet
this target, you might decide that it isn't
worth investing more time and money
working with the adviser.
51
Even without specific targets, you may feel

that the relationship isn't working the way
you want. There are plenty of danger signs
that tell you when things may be going
wrong. See the page in this guide is the
relationship working?
you will be able to get urgent help in

a crisis.
9. How much the adviser charges and
what the payment terms are.
10. Whether you have to pay any
expenses, and if so how much.
Check the original agreement
Helplines
Make sure that your agreement allows you

to terminate the relationship if this happens.
Make the agreement as flexible as possible.
You dont want to be forced to continue
using an adviser if it isnt working for you.
Ten things you need to know

about your prospective business
adviser
1. How much experience the adviser
has working with similar businesses.
Experience of businesses your size,
in the same industry, can be a big
advantage.
2. How satisfied other clients are. A
good adviser should be able to
provide references.
3. What the adviser's areas of
expertise are. You might want a
good all rounder or a specialist.
4. Whether the adviser has any relevant
qualifications. For example,
membership of the Institute of
Business Advisers or accreditation
as a Technology Means Business
adviser.
5. Whether you will be dealing with the
same individual all the time.
6. Whether the adviser can recommend
colleagues or other contacts if your
needs change.
7. What the adviser's personality is
like, and whether it suits you.
8. How busy the adviser is. Whether
0845 600 9 006
Related guides on
businesslink.gov.uk
Book a course on Building Effective
Relationships through our Training
Directory | Create a personalised list of
start-up resources for your business |
Choose and manage a solicitor | Choose
and manage an accountant | Find your
Contacts Directory | Choose and manage
a consultant | Benchmarking |

useful
Search for your local Enterprise Agency
on the National Federation of Enterprise
Agencies' website
Search for your local Chamber of
Commerce on the Chamber Online
website
Find out about coaching and mentoring
at the Coaching & Mentoring Network
website
52
Find trade associations at the Trade

Association Forum website
Search for a solicitor through the Law
Society's Solicitors Online website
Read about the Business Volunteer
Mentors scheme from the National
website
Find out about benchmarking at the
Benchmark Index website
Find an adviser on the Institute of
Business Advisers website
Search for an accredited adviser on the
Technology Means Business website
53
Introduction
Introduction
Accountants can offer your business a

range of services from basic bookkeeping to
specialist business advice. They can save
you time and help to make your business
more profitable.
How to choose the right accountant

Checklist: ten things to ask your prospective
accountant
Here's how I used an accountant to help me
in my business
Helplines
It is up to you how much you rely on an

accountant. You may employ one simply to
prepare financial statements for your
end-of-year tax return. But you may also
choose to use many of the other services
accountants offer, such as start-up business
advice.
This guide will help you understand what
your business accounting needs are and
how an accountant can help you with them.
It will explain how to find an accountant that
is right for your business and it offers advice
on how to get the most from one.

navigating to:
Home > Finance and grants > Expert
financial advice > Choose and manage an
accountant
If you run any business, you're legally

required to:
Keep certain records, for example
PAYE records if you have employees
and VAT records if you're VAT
registered. This will involve regular
bookkeeping work.
Submit an annual tax return to HM
Revenue & Customs. This will
involve the preparation of financial
statements.
If you're a limited company you also have to
file accounts with the Registrar of
Companies. For more information, see our
guide on how to file accounts at
Companies House.
54
In addition to basic accounting functions,

many accountants offer added-value
services. These can include:
auditing
start-up business advice
management-systems advice
You could decide to do all this work yourself
- but many businesses prefer to turn to an
accountant for at least some of it. Weigh up
time, cost and know-how factors and ask
yourself:
What does my business have the
skills to do in-house?
What would be more efficiently and
effectively outsourced to an
accountant?
What must, by law, be done by a
qualified person? If your business
turns over more than 5.6 million, it
is subject to an annual audit. This
has to be carried out by a registered
auditor, such as a qualified
accountant.

If you look under A in any business directory
you'll find lists and lists of accountants.
However, anybody can call themselves an
accountant and there can be better ways to
find contact details than taking pot-luck with
a directory.
The following professional associations can

help you find a qualified accountant:
Select a chartered accountant
from the Institute of Chartered
Accountants in England and
Wales website.
Read advice on choosing an
accountant at the Association of
Chartered Certified Accountants
website.
Find a practising accountant at the
Chartered Institute of Management
Accountants website.
Find an accountant in Scotland at
the Institute of Chartered
Accountants of Scotland website.
Read advice on selecting a
chartered accountant in Ireland at
the Institute of Chartered
Accountants in Ireland website.
Recommendations
Many businesses find accountants through
personal recommendation. Although what is
right for one business isn't necessarily right
for yours - it can be helpful to ask for
recommendations from your:
friends, family, business associates
and contacts
bank or lawyer
professional or trade associations this can be a particularly useful route
if you're looking for an accountant
that specialises in your industry
Professional associations
Qualified accountants usually have the
words "chartered" or "certified" attached to
their title. They also usually belong to one of
accountancy's professional associations.
Bear in mind it's best to start looking for an

accountant well before you need to use one.
If possible, don't leave such an important
decision to the last minute.
Once you have found some names and
55
considered their reputations and

qualifications, you should draw up a shortlist
of about six accountants you'd like to
contact.
How to choose the right

accountant
It's very important to select an accountant
who's right for your business. To minimise
the chances of making a wrong choice you
should speak directly to everyone on your
shortlist. You should discuss their
experience and services and outline your
business needs. Ideally the relationship you
have with your accountant will
be long-term, so these are important
considerations.
Telephone your shortlist
Ask each accountant about their practices:
Experience - do they have clients in
your sector? Can they deal with your
business' unique needs?
Charges - what do these cover, how
are they scaled and do they offer
all-in fees?
Personnel - who will look after your
business most of the time - a partner
or someone more junior? How many
partners are there? Sometimes
smaller practices suit smaller
businesses.
Efficiency - what response times do
they work to?
Added value - what additional
services can they offer?
Choose about three to visit. Check whether
you will be charged for this meeting.
Meet your prospective accountant

When you visit a practice, you should
discuss:
How the practice can help you
develop your business.
Whether it will be able to offer you
advice.
What services you will be charged for
and how and when you will pay for
them.
The level of access you will be given
to the data held about your business.
This is important as you might need
data to update your business plan or
for a tender document. You will also
want easy access if you ever decide
to change accountants.
Take your business plan and other useful
information about your business to the
meeting. A good accountant should want to
know as much about you as you do about
them.
A good accountant should also be happy to
pass on names of clients for you to take up
references.
Once you've found an accountant, let them
know that you've selected them and they will
issue a letter of engagement. This letter
will be the contract between you and your
accountant and should detail:
your responsibilities
the accountant's responsibilities
their fees and how they will be
charged
Checklist: ten things to ask your

prospective accountant
56
1. Are you qualified?

2. How many partners does your
practice have?
3. Are you experienced in dealing with
businesses of similar size and at a
similar stage of growth as mine?
4. Do you understand my business
sector and its unique needs?
5. Who will look after my business on a
day-to-day basis?
6. What are your practice's estimated
response times?
7. Will your practice be proactive - for
example, contact me to remind me
when I need to submit accounts or
give me updates on changes in tax
law?
8. Do you offer any additional services
- for example, inheritance planning or
information-systems advice?
9. Does your practice have any
specialisms - for example, in
start-ups or stock-market listing?
10. How do you charge and what exactly
do the charges include? Can a fixed
fee for the first 12 months be
arranged?

The terms of the relationship with your
accountant are set out in the letter of
engagement issued to you. In addition your
accountant can help you to manage and
develop your business.
evidenced by certain types of behaviour on

the part of your accountant. These include
them:
being difficult to contact
failing to provide you with
information
issuing unexpected fee hikes
Equally, you could yourself put the
relationship at risk if you fail to:
keep agreed records or deadlines
inform your accountant of changes
to your business
Reviewing the relationship
As you may already have discovered, the
needs of any business do not stand still. A
good accountant should adapt with you however, every three to five years, it can
make good business sense to ask:
Is my business still getting value for
money?
Does my accountant still suit the
needs of my business?
If the answer to these questions is no, then
it could be time to find another accountant
who is better suited to your current
requirements.
Making a complaint
To get the best out of your accountant you

should arrange to have regular contact with
them. You should also always allow
yourself plenty of time to discuss tax
implications before the preparation of
year-end accounts.
If for any reason you suspect your

accountant of misconduct you can make a
complaint to the professional body they are
accredited with. However, the organisations
will not help you get compensation for any
funds lost as a result of the misconduct - to
do this you will need to seek legal advice.
Any problems in the relationship could be

57

There are a number of reasons why you
might want to switch accountants. You may
be unhappy with the service offered, your
business could be in need of new specialist
skills or the relationship may just not be
working.
If you do choose to change your accountant,
it's worth managing the process carefully.
Bear in mind that you need to terminate the
agreement with your existing accountant
before you sign any agreement with a new
one.
Before you do anything else check the
terms and conditions that you've agreed
with your accountant. You may find there
is a notice period you must honour.
The next thing to check is that you have
access to all the data relating to your
business. You should aim to have these
transferred to your new accountant prior to
the handover.
Accountants should be cooperative if you
wish to place your business elsewhere. But
always clearly set out a timetable for the
transfer and make agreed payments to the
accountant on time.
If you don't, the accountant has the right to
withhold your figures and other data they
have on record about your business until
payment under the agreed terms and
conditions has been made (with the
exception of limited company accounts that
must be filed with Companies House).
Here's how I used an accountant

to help me in my business
Jenny Fitzpatrick
The Fine Food Store Ltd
Jenny's top tips:

"Decide which accountancy services
are appropriate for your business
before you start."
"Choose qualified accountants with a
good reputation and satisfy yourself
that they understand your business."
"Develop a good working relationship
based on trust, but keep hold of the
reins."
Jenny Fitzpatrick set up her specialist food
retailing business and coffee shop, The Fine
Food Store, in Stamford, Lincolnshire
straight from leaving higher education. From
the start, she maximised the use of
accountancy services as part of the
business model.
What I did
Plan accounting needs
"My business plan always included putting
sound systems in place as the foundation
for growth. That included managing the
books. Although I had a business
management science degree and knew the
basics of accounting, I also knew that it
wasn't my strength. My business is open six
days a week and I wanted to devote the
time not spent in the shop to product
development and marketing.
"Remembering advice from a senior
lecturer, I decided to look for a bookkeeper
and an auditor. It's good business practice
to have your books audited separately, and I
58
wanted to start as I meant to go on."

Choose reputable practitioners
"When I was looking for an auditor, I got
several recommendations from business
associates. I got the auditors to look over
my business plan, before I'd taken it to the
bank, which was as a useful 'trial' of their
services. In the end I chose a reputable
local firm with experience of dealing with
small companies. I was impressed by the
way they had read the business plan in
detail and understood what I was trying to
achieve.
"My bookkeeper was also recommended to
me and I signed her up from day one to
handle invoicing, management accounts,
VAT returns, PAYE for my five employees
and National Insurance contributions.
"My bookkeeper and auditor are both
established local businesses themselves. It
was important to me to work with people
who knew the local market in which I was
operating."
know exactly where the business stands,

but she does the work of entering up and
checking all the figures. She also presents
the figures on interactive spreadsheets to an
agreed format, so that I have instant access
to the financial information I need. There's
no way I would have the time to go into the
kind of detail she provides.
"The relationship with my auditors is also
very productive. They respond quickly to
queries and I use them as ad hoc advisers
on things like taxation and VAT. The fact
that my advisers have an excellent
reputation is very useful in dealing with VAT
officials. I've found they're less likely to
make life difficult if they know your advisers
are trustworthy."
Helplines
0845 600 9 006
Companies House Contact Centre
Build and manage the relationship
0870 333 3636
"Trust is the key to any business

relationship, doubly so with accountancy
services because you're handing over all the
financial details of your business. I have a
high level of trust in both my advisers, based
on their reputation and my experience of
working with them to date.
Related guides on
businesslink.gov.uk
"From the beginning I knew I wanted

monthly management accounts, rather than
just quarterly, so that I could keep close tabs
on capital expenditure and cashflow. My
bookkeeper works closely with me to
produce the accounts, but I'm still in control.
I analyse the cashflow on a daily basis so I

resources for your business | Financial
and management accounts: the basics |
Beginner's guide to tax and accounts |
Decide what to outsource | Prepare a
business plan | Choose and manage a
solicitor | Here's how I reduced supplier
costs | Here's how I decided I was ready
to start up my business | Here's how I
established an effective record-keeping
59

system |

useful
Read advice on choosing an accountant
at the Association of Chartered Certified
Accountants website
Select a chartered accountant from the
Institute of Chartered Accountants in
England and Wales website
Select a chartered accountant from the
Association of Chartered Certified
Accountants website
Find a practising accountant at the
Chartered Institute of Management
Accountants website
Find an accountant at the Association of
Chartered Certified Accountants website
Read a guide to professional ethics on
the Institute of Chartered Accountants in
England and Wales website
Read about making a complaint on the
Association of Chartered Certified
Accountants website
60
Introduction
Introduction
Find a solicitor
Choose a solicitor
Manage the relationship with your solicitor
Ten things you should ask your prospective
solicitor
Helplines

navigating to:
Home > Starting up > Choosing advisers
and services > Choose and manage a
solicitor
You can save your business a lot of time

and money if you approach legal issues in
the right way from the start. It is far easier to
sort out any legal issues at the outset
instead of later, when they can be more
problematic and costly to solve.
There are a number of common legal
errors made by businesses. For example,
some don't take proper advice when signing
a lease for their business premises and find
themselves vulnerable to unexpected rent
increases or hidden charges. Others make
critical errors when setting up the legal
structure of the business. And some going
into partnership don't allow for the
consequences if the relationship breaks
down.
Choosing the right solicitor is an important
part of the process. This guide outlines
when a solicitor can help, how to find the
best solicitor for your needs and how to
manage the relationship.

There are nine key areas where you may
find it useful to take professional legal
advice.
Company structure - whether to
trade as self-employed, a partnership
or a limited company, and to make
sure the proper legal agreements are
drawn up. See our guide on how to
choose the right legal structure for
your business.
Business premises - negotiating
and making sure you understand the
61

terms of your lease. See our guide
on buying business premises.
Dealing with regulations - many
new regulations are specific to
particular sectors. You need to be
aware if they apply to you. Get a
personalised list of regulations
from our Regulation checklist.
Contract terms and service levels you should be sure of your legal
responsibilities to customers and
suppliers. See our guide on basic
contract terminology.
Protecting your business ideas and
confirming ownership - making sure
any intellectual property rights to
your product or service are protected
and that you're not infringing the
rights of other businesses. See our
guide on how to secure your
intellectual property.
Finance - the legal implications of
raising finance - for example on your
home - and agreeing terms with
the lender. See our guide on how to
get the right finance for your
business needs.
Debt control - protecting you against
bad debts and advice on debt
collecting. See our guide on how to
recover debt through court.
Franchising - anyone going into
franchising needs to check all the
small print with a specialist
lawyer. See our guide on how to
buy a franchise.
There are a number of ways you can find

the right solicitor for your business.
The Law Society, the professional body for
solicitors, offers the Lawyers For Your
Business scheme which can put you in
touch with solicitors in your area or with a
particular specialisation who will give you a
free initial consultation. Read about the
Lawyers For Your Business scheme on
the Law Society website.
Your local Business Link will have details of
local solicitors. Find your local Business
Link through our Contacts Directory.
It's a good idea to ask other businesses of
a similar size to yours or other businesses in
your sector if they can recommend a
particular solicitor or firm.
If you belong to a trade or a professional
association it may be able to put you in
touch with solicitors who are used to dealing
with issues in your sector.
Choose a solicitor
Most legal firms cover the majority of issues
that your business might need advice about.
But if your needs are more complicated the
Law Society can help you find a specialist in
the areas you need.
Find a lawyer with a particular
specialisation under the Lawyers For
Your Business scheme on the Law
Society website.
Employment law matters.
Find a solicitor
All solicitors must hold a practising

certificate issued by the Law Society unless they are only employed by your
business. It's a good idea to make sure your
62

potential solicitor has a certificate as it
guarantees the solicitor is qualified and has
insurance to protect you if anything goes
wrong.
It's a good idea to ask for quotes from a
number of solicitors - just as you would from
any other service supplier. Once you've
gathered a shortlist of potential solicitors, it's
well worth meeting them face-to-face to
make sure they will be suitable for you.
the relationship more cost-effective for you.

They may be able to give you advice on
employment law, for instance, or advise on
the insurance you may need to protect your
business in the event of a claim against you.
As with any business relationship, it is
important that you monitor the effectiveness
in terms of cost and efficiency of using a
particular solicitor.
You should regularly check whether:
Most solicitors offer an initial interview free

of charge. But make sure you're meeting the
person who will actually be carrying out the
work for you.
Solicitors usually charge on an hourly rate,
but it is possible to agree a fixed spending
limit so that you don't go over budget. Once
you have worked with a particular solicitor
and are happy with the service they have
provided, it's often wise to develop a
long-term relationship with them. If they
understand the needs of your business, they
will be more effective.
You can find a solicitor on the Law
Society website.
Manage the relationship with your

solicitor
Many businesses maintain a relationship
with a solicitor they have used from the
outset. But it's important to monitor that
relationship to ensure you are getting the
right level of advice for the money you are
paying.
It's a good idea to check the range of
services that a solicitor offers - there may
be other areas they can advise on to make
the advice you have been given has

been useful or successful for you
you believe the solicitor has acted in
your best interests
the solicitor's rates are in line with
their competition
there are other legal issues that it
may be more time and cost-effective
for your solicitor to handle, rather
than you handling them yourself
in-house
Ten things you should ask your

prospective solicitor
Do they understand the nature of
your business? If not, it's often
helpful to provide them with a written
summary.
Is the solicitor happy to take you on
as a client? And comfortable with the
work you want them to do?
Are they qualified to act for you? Do
they have a practising certificate
issued by the Law Society?
What hourly rate will they charge?
Do they think what you are looking to
achieve is realistic? If so, will they
outline the steps they think you need
to take to achieve it?
Will they explain things in clear plain
63
language and not confuse you with

legal jargon?
Will they provide you with real
practical solutions and not just a
legal commentary on your case?
Will they agree methods and
frequency of keeping in contact,
using face-to-face meetings, phone,
letters or email?
Can they provide you with a
client-care letter that sets out their
terms of business and complaints
procedure?
Can they outline what other services
the firm may be able to provide as
your business develops?

If you are unhappy with the service your
solicitor has provided, it's best to follow
some set procedures.
First, you should write directly to the person
who handles complaints in your solicitor's
business. This person should have been
named in the client-care letter that the
solicitor provided when they started working
for you. Outline exactly what the problem is
and ask them to confirm who will deal with it
and how quickly they will do so.
You can call the Consumer Complaints

Service Helpline on Tel 0845 608 6565 or
find details on how to take the complaint
further on the Law Society website. The
progress of the complaint depends on
whether it involves court action that has
already taken place or is forthcoming.
Even if a complaint has not been resolved,
you may need to pay at least part of your
solicitor's bill. Check with the Consumer
Complaints Service helpline for more
detailed advice.
If the Consumer Complaints Service cannot
resolve the complaint to your satisfaction,
you may be able to complain to the Office of
the Legal Services Ombudsman about the
Consumer Complaints Service.
The Office of the Legal Services
Ombudsman is unlikely to examine your
original complaint - it usually only looks at
how it has been handled by the Consumer
Complaints Service.
Helplines
0845 600 9 006
If your complaint is about your solicitor's

bill you should do this quickly as time limits
apply if you need to take the complaint to
the next level.
If you cannot reach agreement through your
solicitor's internal complaints procedure, you
can take your complaint to the Law Society's
Consumer Complaints Service. This is an
independent body that will try to arbitrate
between you and your solicitor. It can also
award compensation if appropriate.
Related guides on
businesslink.gov.uk
resources for your business | Get a
personalised list of regulations from our
Regulation checklist | Choose the right
legal structure for your business |
Buying business premises | Basic
contract terminology | Secure your
64

intellectual property | Recover debt
through court | Buy a franchise |

useful
Find a solicitor on the Law Society
website
Read about the Lawyers for your
Business scheme on the Law Society
website
Find details of solicitors in your area on
the Yell.com website
Download the Client's Charter from the
Law Society website (PDF)
Read about the Consumer Complaints
Service on the Law Society website
Find contact details for the Office of
Legal Services Ombudsman on the
OLSO website
65

Before Starting A Business Start Up Checklist

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Before Starting A Business Start Up Checklist

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Before starting a business - Start-up

Reasons for going into business

A good business idea

A tried and tested business model

A specific business opportunity

Taking control and changing your lifestyle

Going into business full time

Going into business part time

Related guides on businesslink.gov.uk

Related web sites you might find useful

Research and develop your business

Finding and developing your idea

Is there a market for my idea?

Plan the development of your idea

Finance the development of your idea

Sharing your ideas with others

Test the market

Related guides on businesslink.gov.uk

Related web sites you might find useful

Prepare a business plan

Created by Business Link 04 August 2005 15:21