There are many reasons why a person might consider the business start-up route.
It could be a carefully planned process which has gone on for some time, it could be forced as a result of losing ones job or it could just be that you feel that starting a business is the right thing to do at this particular time on your life.
Irrespective of the road which has led to you exploring working for yourself, it is probably that at best, there are a few concerns which you have or a worst, you might find the whole prospect quite a terrifying experience.
The prospect of exchanging the security and certainty of employment with the uncertainty of an increasing aggressive and hostile business world is a conclusion which required strong consideration.
Most business start-ups fail in their first year of activity. This will provide very little comfort, even to the most confidence of individuals.
You have to take a long hard look at yourself and ask whether you can be one of the few who make it to the second year and beyond.
Starting a business and surviving to tell the story involves having more than just a good idea and a few contact. Many owners of business startups have a become chameleons and most of the successful ones will constantly redefine the word multi tasking.
Employment has its benefits
At work there may be someone to make you tea, someone who types your letters and other who are able to take the boring and mundane tasks away from you.
After having started a business, you might find that you and only you is available to do these duties. How do you feel about that?
Another strong benefit of being in employment is that collaboration and idea sharing can lead to better and faster ways to complete and solve many business problems. Even though you might be better than your colleagues, their very presence might have inspired you in the past.
Consider the alternative as a business start-up. On your own and solving each and every little problem by your lonesome. Could you do it?
Having painting a pretty gloomy picture of starting your own business, you might ask if our aim is to talk you out of the whole idea and keep you where you belong.
Our aim is simple. To help you to get it right!
Wednesday, 2 December 2009
Types of UK Companies
UK companies are a common form of business entity in the UK for carrying out some trade of other venture.
The main types of company are: private and public limited and unlimited companies. Those which fall in to the private category can be further divided in types which are limited by guarantee and those by shares.
All of the above types of business entity are incorporated by Companies House.
The latter type, private companies limited by shares are by far the most common form of registered entity in the UK.
Private Companies Limited by Shares
This type of business is a traditional trading entity. It is owned by shareholders and is run by at least one director.
Whilst the specific activities which this type of company will be engaged in will vary, businesses adopting this structure are usually engaged in some form of profit seeking enterprise.
Private Companies Limited by Guarantee
Private companies limited by guarantee are not for profit organisations such as charities and societies.
They have members rather than shareholders and would not be permitted to distribute excess income to them. Any surpluses would be retained for future activities and given back to the original source if no such projects were available.
The object clauses of a company limited by guarantee are usually far more specific than those of a business limited by shares.
In many cases, such entities are set up with a particular purpose in mind and thus stating these objectives might ensure that the actual activities do not deviate from this stated reason.
Public Limited Companies PLCs
Public limited companies are usually larger business entities engaged in some trading activity with the view of making a profit.
A company seeking a listing on the London Stock Exchange must be a PLC before admission can be granted.
Minimum Share Capital Requirements
A public limited company have minimum share capital requirement which must be met before Companies House will incorporate the company.
The rules are that there must be at least £50,000 worth of shares issued on incorporation with at least £12,500 paid up.
Because of the necessity to deposit this sum of money with the company up on registration, the number of this type of entity which are formed in the UK are fewer than for private companies which do not require any initial deposits.
Unlimited Companies
Unlimited companies are those which are incorporated without limited liability. This type of business entity is extremely rare in the UK.
One situation where an unlimited company might be appropriate is where individuals essentially require a partnership business, but wish to avoid the time and expenses involved in drafting a detailed agreement.
The share distribution (and the rights which each confers) available through a company might be preferable.
The main types of company are: private and public limited and unlimited companies. Those which fall in to the private category can be further divided in types which are limited by guarantee and those by shares.
All of the above types of business entity are incorporated by Companies House.
The latter type, private companies limited by shares are by far the most common form of registered entity in the UK.
Private Companies Limited by Shares
This type of business is a traditional trading entity. It is owned by shareholders and is run by at least one director.
Whilst the specific activities which this type of company will be engaged in will vary, businesses adopting this structure are usually engaged in some form of profit seeking enterprise.
Private Companies Limited by Guarantee
Private companies limited by guarantee are not for profit organisations such as charities and societies.
They have members rather than shareholders and would not be permitted to distribute excess income to them. Any surpluses would be retained for future activities and given back to the original source if no such projects were available.
The object clauses of a company limited by guarantee are usually far more specific than those of a business limited by shares.
In many cases, such entities are set up with a particular purpose in mind and thus stating these objectives might ensure that the actual activities do not deviate from this stated reason.
Public Limited Companies PLCs
Public limited companies are usually larger business entities engaged in some trading activity with the view of making a profit.
A company seeking a listing on the London Stock Exchange must be a PLC before admission can be granted.
Minimum Share Capital Requirements
A public limited company have minimum share capital requirement which must be met before Companies House will incorporate the company.
The rules are that there must be at least £50,000 worth of shares issued on incorporation with at least £12,500 paid up.
Because of the necessity to deposit this sum of money with the company up on registration, the number of this type of entity which are formed in the UK are fewer than for private companies which do not require any initial deposits.
Unlimited Companies
Unlimited companies are those which are incorporated without limited liability. This type of business entity is extremely rare in the UK.
One situation where an unlimited company might be appropriate is where individuals essentially require a partnership business, but wish to avoid the time and expenses involved in drafting a detailed agreement.
The share distribution (and the rights which each confers) available through a company might be preferable.
Different Business Types
One of the preliminary decisions faced when starting your own business is under what guise you should trade. There are various choices of business entity which are available and selecting the right structure is an important consideration.
Two of the more popular trading vehicles in the UK are a sole trader and a private limited company. There are others including two types of partnerships and PLCs which might be appropriate in certain circumstances.
Some factors which may influence the decision of the different business types are as follows:
The Type of Business Activity
Generally, a simple commercial activity may require a straightforward and uncomplicated type of business entity to further the ambitions of the owner.
Typically, small window cleaning businesses which are owned and run by one person may start-up as sole traders.
In situations where there are two or more people involved in the business start-up, they might select a partnership or private limited company. This would enable them to distribute the ownership of the entity according to their wishes.
Ability and Preference on Administrative Tasks
Some kinds of business structure require greater level of administration effort than others. Public limited companies, especially those which are listed on the stock exchange, require more detailed systems for reporting and maintenance than a sole trader might.
The business owners would therefore have to gauge the benefits of the potential enhancement of their standing against the increased administrative costs and other burdens which would be placed up on them when trading as a PLC.
The Importance of Limited Liability
The owner’s views on the importance of limited liability may place a significant part in their decision of how to trade.
Limited liability exists in both private and public companies and in LLPs but is not present in sole trader or traditional partnerships.
A risk assessment of the business and the industry in general might provide sufficient analysis to determine whether such protection would be useful.
Custom within the Industry
Although less significant in today’s world of commerce, certain industries have traditionally been associated with a specific type of business structure.
In addition, larger entities have generally been Limited companies, either private or public, whilst smaller commercial ventures have been known to trade largely as sole traders.
Personal Preference
The choice of which format to use to start the business will depend to a large extent, on the personal preferences of the entrepreneurs who will engaged in it.
Whichever kind of entity is chosen, it is they who must be comfortable with the decision that is made.
Two of the more popular trading vehicles in the UK are a sole trader and a private limited company. There are others including two types of partnerships and PLCs which might be appropriate in certain circumstances.
Some factors which may influence the decision of the different business types are as follows:
The Type of Business Activity
Generally, a simple commercial activity may require a straightforward and uncomplicated type of business entity to further the ambitions of the owner.
Typically, small window cleaning businesses which are owned and run by one person may start-up as sole traders.
In situations where there are two or more people involved in the business start-up, they might select a partnership or private limited company. This would enable them to distribute the ownership of the entity according to their wishes.
Ability and Preference on Administrative Tasks
Some kinds of business structure require greater level of administration effort than others. Public limited companies, especially those which are listed on the stock exchange, require more detailed systems for reporting and maintenance than a sole trader might.
The business owners would therefore have to gauge the benefits of the potential enhancement of their standing against the increased administrative costs and other burdens which would be placed up on them when trading as a PLC.
The Importance of Limited Liability
The owner’s views on the importance of limited liability may place a significant part in their decision of how to trade.
Limited liability exists in both private and public companies and in LLPs but is not present in sole trader or traditional partnerships.
A risk assessment of the business and the industry in general might provide sufficient analysis to determine whether such protection would be useful.
Custom within the Industry
Although less significant in today’s world of commerce, certain industries have traditionally been associated with a specific type of business structure.
In addition, larger entities have generally been Limited companies, either private or public, whilst smaller commercial ventures have been known to trade largely as sole traders.
Personal Preference
The choice of which format to use to start the business will depend to a large extent, on the personal preferences of the entrepreneurs who will engaged in it.
Whichever kind of entity is chosen, it is they who must be comfortable with the decision that is made.
Promoting Your Business
Promoting your business is an essential activity which you will have to undertake in order to gain customers and make an overall profit.
There are many forms of marketing which can be employed as promotion techniques. Some of these are:
Business Recognition
Business recognition involves establishing a brand name and then working to have it thought as synonymous with the particular products or services which you offer.
The can take a great deal of expense, effort and time before the results and known and any gains realised.
Brand recognition is an area where the analysis and benefits of such a feature are inherently subjective. Even where there is a clear case to suggest that it exists (for example Coke Cola), placing a value on exactly what is earned from it is extremely difficult.
Having your brand recognised can become a strong competitive advantage in cases where customers are purchasing the relevant items for the first time and seek some reassurance of quality and delivery.
Having an Online Presence
Whether or not you choose to sell via an in-house website, having an online presence can be a valuable yet inexpensive means of promoting your business.
In most industries, many of your potential customers might use the internet to carry out primary research or even to make the purchase itself.
A business website is also often viewed as a means of establishing the credibility of a organisation. If customers are considering buying for a particular company, they might well view their website to gain further information about the business.
If the company does not have a website or has one which is judged to be poor, that might have a negative effect in the eyes of potential customers.
Advertising a Business
Advertising a business is a tried and tested form of promotion. The main questions which to be answered is where to advertise and how much.
Money required to promote the business will complete with the other areas of expenditure including design, production and research. Each item of proposed adverting will require justification for the costs involved and why the money should not be spent on other areas of the operation.
Other Forms of Promotion
There are many other forms of business promotion including producing literature for distribution, attending trade shows and writing articles for inclusion in relevant publications.
The methods which are employed by a particular business will depend on available resources, the type of industry which it operates in and the most appropriate means which are judged to be the best way to reach potential clients.
There are many forms of marketing which can be employed as promotion techniques. Some of these are:
Business Recognition
Business recognition involves establishing a brand name and then working to have it thought as synonymous with the particular products or services which you offer.
The can take a great deal of expense, effort and time before the results and known and any gains realised.
Brand recognition is an area where the analysis and benefits of such a feature are inherently subjective. Even where there is a clear case to suggest that it exists (for example Coke Cola), placing a value on exactly what is earned from it is extremely difficult.
Having your brand recognised can become a strong competitive advantage in cases where customers are purchasing the relevant items for the first time and seek some reassurance of quality and delivery.
Having an Online Presence
Whether or not you choose to sell via an in-house website, having an online presence can be a valuable yet inexpensive means of promoting your business.
In most industries, many of your potential customers might use the internet to carry out primary research or even to make the purchase itself.
A business website is also often viewed as a means of establishing the credibility of a organisation. If customers are considering buying for a particular company, they might well view their website to gain further information about the business.
If the company does not have a website or has one which is judged to be poor, that might have a negative effect in the eyes of potential customers.
Advertising a Business
Advertising a business is a tried and tested form of promotion. The main questions which to be answered is where to advertise and how much.
Money required to promote the business will complete with the other areas of expenditure including design, production and research. Each item of proposed adverting will require justification for the costs involved and why the money should not be spent on other areas of the operation.
Other Forms of Promotion
There are many other forms of business promotion including producing literature for distribution, attending trade shows and writing articles for inclusion in relevant publications.
The methods which are employed by a particular business will depend on available resources, the type of industry which it operates in and the most appropriate means which are judged to be the best way to reach potential clients.
Business Premises Contingencies
The level of complexity required for contingency planning for business premises will largely depend on what is housed at the organisation’s location.
Generally speaking office based functions are far easier to deal with than factory production facilities and those requiring large and expensive plant and machinery.
Planning for Office Based Functions
Broadly speaking the advances in technology has meant that a large range of administrative office functions do not actually have to be carried out from within the confines of a traditional office.
In the event of an emergency it is possible for a busy office complete with large photocopiers, printers and conveniently placed coffee machines to be transformed in to a satellite structure with each employee working from home.
Computers, telephones, internet access and instant messenger services which currently may form a large part of daily lives can also be used to provide a real-time communication structure in the event that the staff are required to work from home.
In this scenario, there may be no substantial effect on a business’ operations if the office premises were suddenly to become unavailable.
As part of the contingency planning process it would obviously be useful to ensure that the key staff have these facilities at their home.
Factory Based Businesses
For businesses which used large or expensive equipment as an important part of their daily operations, the solution might not be an attractive in terms of cost and required resources.
At one end of the scale there might be a fully equipped mirror factory located in another part of the country which could be used should the first line premises become unavailable.
This is a very expensive back-up cushion to maintain and although it might be the idyllic choice, it would effectively double the operating budget for the business. This might result in it not being around long enough to ever experience an emergency sufficient to warrant their use.
A good insurance policy might suffice whereby the business is compensated for loss of earning and is provided with adequate funds to source both premises and the necessary production facilities on a premium basis.
Making Plans
The exact nature of what a business puts in place to cater for the sudden loss of its premises would depend on how the managers view their importance.
The essence of all contingency planning is to how a idea of what you would do and not leave to many elements left to do should the unexpected happen.
Working on the assumption that the worst case happens might encourage some simple yet time consuming actions such as having a list of nearby business parks to be taken now.
This is opposed to working against a backdrop that the managers will have time to start their research from scratch at a time when the whole dynamics of the business just changed overnight.
Generally speaking office based functions are far easier to deal with than factory production facilities and those requiring large and expensive plant and machinery.
Planning for Office Based Functions
Broadly speaking the advances in technology has meant that a large range of administrative office functions do not actually have to be carried out from within the confines of a traditional office.
In the event of an emergency it is possible for a busy office complete with large photocopiers, printers and conveniently placed coffee machines to be transformed in to a satellite structure with each employee working from home.
Computers, telephones, internet access and instant messenger services which currently may form a large part of daily lives can also be used to provide a real-time communication structure in the event that the staff are required to work from home.
In this scenario, there may be no substantial effect on a business’ operations if the office premises were suddenly to become unavailable.
As part of the contingency planning process it would obviously be useful to ensure that the key staff have these facilities at their home.
Factory Based Businesses
For businesses which used large or expensive equipment as an important part of their daily operations, the solution might not be an attractive in terms of cost and required resources.
At one end of the scale there might be a fully equipped mirror factory located in another part of the country which could be used should the first line premises become unavailable.
This is a very expensive back-up cushion to maintain and although it might be the idyllic choice, it would effectively double the operating budget for the business. This might result in it not being around long enough to ever experience an emergency sufficient to warrant their use.
A good insurance policy might suffice whereby the business is compensated for loss of earning and is provided with adequate funds to source both premises and the necessary production facilities on a premium basis.
Making Plans
The exact nature of what a business puts in place to cater for the sudden loss of its premises would depend on how the managers view their importance.
The essence of all contingency planning is to how a idea of what you would do and not leave to many elements left to do should the unexpected happen.
Working on the assumption that the worst case happens might encourage some simple yet time consuming actions such as having a list of nearby business parks to be taken now.
This is opposed to working against a backdrop that the managers will have time to start their research from scratch at a time when the whole dynamics of the business just changed overnight.
Business Continuity - Planning for the Unexpected
Planning for the unforeseen is a crucial part of ensuring a business’ longevity and that expected events do not unduly hinder its ability to conduct its affairs.
Unfortunately many businesses, particularly those which are small place little, if any emphasis on business continuity. Instead they might chose to invest their resources in areas where other more immediate and pressing issues exist.
Whilst this practice may be reasonable given the demands typically placed on small businesses, the omission of a feasible continuity plan can threaten the very fabric of what is being built up.
Why have a Business Continuity Plan?
The reasons for having a business continuity plan are primarily to enable the organisation to adapt its operations in the event of an emergency.
Whilst it is not possible to predict every convincible emergency scenario and what would be the appropriate course of action in each, it is possible to consider some common events such as fire and flood and make some preparation for them.
The preservation of human life and protection of important business assets can serve as a starting point for contingency planning.
Developing an Emergency Plan
The development of an emergency plan might centre on “what if” statements. “What if there was a fire on the third floor towards the back of the office?”
If the answer paints a grim picture then important and urgent action is required in order to improve the situation.
“What is the building was destroyed over the weekend?” might propel a business in to considering alternative premises which staff could use and where backup copies of important data are currently being stored.
Truth about Business Contingency
Despite the apparent reluctance for small businesses to engage in any form of contingency planning because they do not have adequate resources for tackling a seemingly large administrative task, most of the steps needed are in fact quite simple.
The complexity and length of any business contingency plan can vary substantially from a physical document some several hundred pages in length to a few simple ideas shared verbally between co workers.
The essence is both that something is better than nothing and any plan need only fit the business is seeks to serve.
Unfortunately many businesses, particularly those which are small place little, if any emphasis on business continuity. Instead they might chose to invest their resources in areas where other more immediate and pressing issues exist.
Whilst this practice may be reasonable given the demands typically placed on small businesses, the omission of a feasible continuity plan can threaten the very fabric of what is being built up.
Why have a Business Continuity Plan?
The reasons for having a business continuity plan are primarily to enable the organisation to adapt its operations in the event of an emergency.
Whilst it is not possible to predict every convincible emergency scenario and what would be the appropriate course of action in each, it is possible to consider some common events such as fire and flood and make some preparation for them.
The preservation of human life and protection of important business assets can serve as a starting point for contingency planning.
Developing an Emergency Plan
The development of an emergency plan might centre on “what if” statements. “What if there was a fire on the third floor towards the back of the office?”
If the answer paints a grim picture then important and urgent action is required in order to improve the situation.
“What is the building was destroyed over the weekend?” might propel a business in to considering alternative premises which staff could use and where backup copies of important data are currently being stored.
Truth about Business Contingency
Despite the apparent reluctance for small businesses to engage in any form of contingency planning because they do not have adequate resources for tackling a seemingly large administrative task, most of the steps needed are in fact quite simple.
The complexity and length of any business contingency plan can vary substantially from a physical document some several hundred pages in length to a few simple ideas shared verbally between co workers.
The essence is both that something is better than nothing and any plan need only fit the business is seeks to serve.
Business Centre
Welcome to Business Centre from Omega Accountancy
As part of the resources which we offer visitors to our website, we have designed this portal to provide general business material and information.
The list and number of topics covered here will continually increase and be updated over time.
Business Centre is a guide to starting up and running a successful enterprise, whether as an individual or as part of a team. Whatever the industry or field of activity you are, or will be engaged in, we have compiled a list of resources which we hope you will find useful.
Areas currently forming part of the portal include business start-up information, marketing, finance and information technology issues as they affect entrepreneurs.
To help in finding information on specific aspects of business, we have created an original and unique menu structure to display each subject area and the topics within them.
All Business Centre resources are reachable through our main site search by simply entering a few relevant keywords.
We welcome feedback and comments on the Business Centre concept or any material contained within it. We would especially like to hear suggestions about further information we might provide to enhance the standing of the portal as a comprehensive and valued resource.
Alternatively, if you already have an established enterprise, you may want to add your profile to our my business start-up pages.
As part of the resources which we offer visitors to our website, we have designed this portal to provide general business material and information.
The list and number of topics covered here will continually increase and be updated over time.
Business Centre is a guide to starting up and running a successful enterprise, whether as an individual or as part of a team. Whatever the industry or field of activity you are, or will be engaged in, we have compiled a list of resources which we hope you will find useful.
Areas currently forming part of the portal include business start-up information, marketing, finance and information technology issues as they affect entrepreneurs.
To help in finding information on specific aspects of business, we have created an original and unique menu structure to display each subject area and the topics within them.
All Business Centre resources are reachable through our main site search by simply entering a few relevant keywords.
We welcome feedback and comments on the Business Centre concept or any material contained within it. We would especially like to hear suggestions about further information we might provide to enhance the standing of the portal as a comprehensive and valued resource.
Alternatively, if you already have an established enterprise, you may want to add your profile to our my business start-up pages.
Subscribe to:
Posts (Atom)
Posts
