Are you wondering how to start a limited company? Before you make the big leap, there are a few things you need to know. One point, in particular, is not to quit your job too soon. Most budding entrepreneurs have time to continue working and begin starting a business at the same time.
Have I got what it takes?
Starting a business is tough, especially in the early years when you may have to make financial sacrifices. A business could eat into the amount of time you spend with your family to make the business a success. Be warned. You will need to be an all-rounder in the early days too. You may end up being salesperson, customer service, bookkeeper, social media marketer and more, all rolled into one. On the other hand, if you are starting off with a staff team, then you are the one they will turn to for answers and direction.
This means you’ll need to develop the right leadership qualities to manage your team and keep your new business on track. With or without staff, you might need to consider business or management training before starting your own business. It’s worth checking out your Local Enterprise Office – the Government’s national startup agency and Enterprise Ireland or New Frontiers – Ireland’s national programme supporting early-stage entrepreneurs.
Is my idea for starting a business a viable one?
Your business idea does not need to be unique, groundbreaking or new to your sector. Maybe you feel you can produce goods of better quality or cheaper price. Perhaps you can provide a certain service better than anyone else in the marketplace. Maybe you can reach new markets by extending online. But your business does need to be viable and capable of success. Sometimes people create a startup because it’s something they love doing and are passionate about it. The reality is that their startup idea does not necessarily make a great business.
In order to assess the viability of your idea, you need to know if it has the potential to make money. Do accurate costings to check. How much will your product cost to produce? Or how much will your service cost to deliver? Don’t forget to add your own time or labor into the equation. Figure out the costs involved in running your business – your overheads. Will you have enough money coming in each month to cover your costs? Proper costings will include cash flow projections. In other words, a prediction of what money you will have coming in and out. Check out this handy cash flow planner from AIB.
In terms of making the business a success, it pays to play to your strengths. Concentrate your time on the areas you work most effectively e.g. sales, customer service, management, marketing. Outsource where it saves you time and money e.g. HR, bookkeeping, using a Virtual Assistant.
Financial assistance for starting up a business
The next step on what you need to know before starting a business is to find out what financial assistance is available to support you. First stop should be your Local Enterprise Office. LEOs provide you with advice, information, and support in starting a business. This includes Start Your Own Business courses and a range of training, information and networking events. They also offer to mentor in a wide range of business areas.
Don’t overlook the importance of local networking. It can be a highly effective way of meeting potential new customers. Even if local entrepreneurs are not your target market, you can make valuable allies who will share their startup experiences with you and offer personal support.
There is also a range of local and national support networks, which can be massive support to small businesses, especially in the early years. These include local business support groups such as ProfitNet, informal coffee chat groups, and national network events. Online networks in your sector or field can also be useful. These include business or professional groups on Facebook and LinkedIn, Twitter chat sessions or profiles, like @Irishbiz and #Irishbizparty (Wednesday nights 9 pm), and other chat forums. Just Google to find the ones most relevant to you.
You may need financial assistance to get your business off the ground. You have a range of options here, depending on what kind of business you have. These include grants or loans from local or State agencies such as your Local Enterprise Office or Micro Finance Ireland, who offer startup loans of €5,000 – €25,000. It’s worth taking a look at programmes like New Frontiers, which is delivered at local level by Institutes of Technology and funded by Enterprise Ireland. Its’ remit is to speed up the development of sustainable new businesses that have strong employment and growth potential. Other options when starting a business include bank funding, but don’t forget to check out the growing number of crowdfunding options available, such as www.gofundme.com, www.kickstarter.com or www.indiegogo.com
It is important to note that startup grants and support are less likely to be given to sole traders over limited companies. Be sure to check out the pros and cons of setting up as a sole trader or a limited company if you are unsure about the business structure for you.
Finances for starting a business
Keeping the most important to last! Not everyone who starts a business is good at finance, and you don’t necessarily need to be. But you do need to have access to financial expertise and you do need to manage your business finances properly from the start. This is why it’s so vital to creating a great business plan before starting your business. A business plan gives you a map of where you want to go and what you need to do to get there. Your Local Enterprise Office can help you to create a plan, but in the meantime, check out their business plan template.
Do regular cash flow projections. Keeping a close eye on cash flow helps you make sure that enough money is constantly coming in to meet your overheads. Alternatively, it offers an early warning sign that you are not charging enough for your product or service. Perhaps your business costs or overheads are too high, or you need to generate more sales.
Get a separate bank account for the business- it is so much easier to monitor how the business is progressing when personal and business finances are separated. This summary on business accounts most suited for startups explains business bank accounts in more detail. Get advice on keeping your accounts properly, including correct invoicing. If you can’t keep on top of your financial records and accounts, then outsource this function. Are you ready to learn about the next steps in registering a new company in Ireland?