Business plan is important but not less important is the ability to realistically correct it. Company in the UK can succeed but it is necessary to keep in mind the ongoing analysis of financial flows and the effectiveness of the actions taken. Sometimes it is necessary to implement quick changes and sometimes get support from a specialist.
High tax-free allowance, low National Insurance Contributions, minimum bureaucracy, absorptive market – these and other advantages of running a business in the UK each year encourage many taxpayers to start their own business here. People who live in the UK often have good, fresh ideas for their activities which can quickly bring a fruitful success. But to achieve this success, business in the UK should be well planned.
Company in the UK – the plan is needed
Enthusiasm is a very necessary feeling for establishing your own business. However, it is not possible get the business going and maintain it without good planning, analysis, cost calculation and possible verification of assumptions. Many entrepreneurs starting a business in the UK are making a fundamental mistake in this regard – the lack of a business plan can cost many young companies a lot, so it is essential to prepare it in advance.
Business plan not only for a businessman
Creating an effective business plan requires a realistic approach to your business. This written document can not be a collection of free notes of a future entrepreneur – it should be borne in mind that if you apply for a grant, credit or external investment, the business plan will be viewed by banks, offices and other entities. It is therefore necessary to stick to the generally accepted scheme of such a document.
Business in the UK in figures
A good business plan should include elements such as executive summary i.e. generally saying a summary of the project, description and realistic assessment of business opportunities, marketing strategy and sales strategy, management and staff information as well as an outline of the company’s capabilities in terms of production, trade or services – depending on the type of activity. The last but probably the most important part of the business plan is financial analysis – in this place all the previous parts should be presented with the use of specific numbers. Financial projections should reach up to 5 years ahead, but the most detailed analysis should be about the first 12 months.
When the plans have to be corrected
Doing business in the UK often requires predicting unpredictable things. A very common situation faced by beginner entrepreneurs is the underestimation of costs. If a company’s finances begin to slip out of control, it does not mean that the business plan is bad and you do not have to keep it – but you need to correct it. Such an adjustment should be made whenever the circumstances or plans of the entrepreneur will change or when they have already missed the reality.
“Do it yourself” is not always the best option
Another mistake made by beginner entrepreneurs is to assume that they can do everything by themselves. Even if the owner of the company knows the basics of accounting, it will take time for her / him to make the accounts, which she / he could could otherwise spend on developing a marketing strategy or even meeting with clients. For People operating in the UK the better solution is to use services of an accounting office – specialists from such companies have experience in tax optimisation, know the current regulations and are always up to date with changes in the law, which often misses the attention of the busy entrepreneur.
Cash flow under control
Another situation which beginner entrepreneurs often do not take into consideration is the occurrence of cash flow problems. Contracting parties delay the payments, financial commitments grow and accumulate – eventually a situation occurs when a company does not have the financial sources to pay salaries for employees or purchase of goods. In order to avoid such a situation a cash flow is needed.
Supervision of money
Cash flow is a source of transparent information about the profitability and liquidity of a business in the UK. Cash flow analysis is based on operational, investment and financial activity. Effective management of a cash flow will allow to maintain adequate financial reserves, increase revenues by transferring surplus of funds into the bank accounts with better interest rates, reduce costs of interest on loans, or even get the discounts by making cash payments.
Fair questions, honest answers
For the UK company in order to maintain its financial liquidity and stay on the market, it is necessary to conduct ongoing analysis – reliable and fair. Regularly responding to seemingly trivial questions will allow the entrepreneur to make the necessary changes on time. Among such questions, it is worth mentioning whether the invoices issued are clear and legible to the recipient, whether a company has implemented procedures in case of arrears in the payments from contracting parties, whether the orders are executed in a timely and conscientious manner, whether the negotiations are conducted effectively or whether the company outsources the work which it does not have to do personally.
Focus on profit
The success of the company in the UK often depends on whether the entrepreneur is sober and realisticly looking at her / his business – plans, analyses, is not afraid to correct the plan and confront with e.g. profits less than expected. However, the success is possible. Sometimes it is worthwhile to use specialist support and sometimes with help of specific questions and negative answers to them, and in the next step of effective implementation, direct the business in the UK to a good track leading to measurable success.