The business lifecycle: Start-ups
What are some of the key challenges facing entrepreneurs when starting their businesses?
It is vital that the company has the right business and tax structure at inception. At this stage, the company is unlikely to have any tangible value, which makes it easier to structure the company in an efficient way.
Firm milestones and objectives need to be set to monitor the performance of the business. A cogent and well thought through business plan will allow such focus.
Compliance is an area often overlooked and getting it wrong can be an expensive mistake both commercially and financially. It is far better to have a good handle on all the accounting and legal requirements from the start, so that the business is on a firm footing.
Appointing the right professional advisers is also vital to ensure you are kept compliant, and equally importantly, you receive the right professional advice to support you and enable your business to grow.
Financing is of course key, and there are some favourable investor tax regimes such as Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) which should be considered when planning to raise finance, particularly during the start-up and early expansion phases.
Choosing the correct systems early on
Operationally, it is expensive and time consuming to migrate systems once established. Choosing the correct accounting and operational IT package is of critical importance and one should consider the likely needs of the business tomorrow as it grows in size, and possibly complexity, and balance this in the future against cost.
Managing the workforce
Finally, staffing and employee matters will challenge the entrepreneur from day one. Initially, there will be the running of payroll, auto enrolment pensions, employee contracts, and benefits reporting.
Common risks faced at inception by start-up businesses include incorrectly remunerating workers by treating them as self-employed, and not having systems in place to deal with poor employee performance. Selecting an external specialist payroll and HR service provider is often a wise option.
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