Before taking steps to set up the business we strongly recommend that you write a business plan, i.e., a summary of your aims and how you plan to achieve them. The business plan should include at the very least:
- A statement of your aims, in terms of (for example) turnover or market share and a timetable for their achievement.
- A summary of your market research results (covering, for example, products, suppliers, competition and market size).
- A sourcing, marketing, advertising and distribution plan.
- A summary of the resources that will be required (e.g., staff, know-how, stock, equipment, premises, etc.).
- A budget and a cash flow forecast, based on known and foreseeable costs, anticipated revenue and available or planned sources of finance.
Whether or not you plan to borrow money for the venture, we suggest that you write the plan as if it is to form the basis of an application for capital or loan funding. You may require help from your accountant to establish a budget and cash flow forecast.
Choice of business structure
If required, we can advise you on the main alternative business structures which you may adopt for your organisation, namely a partnership, a trust or a company. The most important distinguishing features of these alternatives are:
- The way your shares in the venture are defined.
- Control of operations and voting on decisions.
- Limitation of your liability to the public.
- Taxation considerations (particularly income tax and capital gains tax).
- Funding of the venture (having regard to taxation issues).
- Statutory record keeping requirements.
- Set up and running costs (including filing fees and taxation returns).
- Please let us know if you require further advice or information.
Matters to be settled before set-up
We attach a list (in summary form) of the major issues you should discuss and agree on when working out how to set up your business (whether you choose to set it up as a partnership, a trust or a company). Please note that whatever you agree can be expressed on the basis that it is subject to later alteration by agreement either generally or on a case by case basis.
There may be other points of detail that you will need to consider, but if you work through this list, it should give you a good foundation. Please bear in mind that not all the items will necessarily be relevant – it depends on how the overall structure develops.