About the author The Financial Times Guide to B T The Financial Times Guide to h Sara Williams is the Chief Executive of Aim-quoted BUSINESS U e BUSINESS TTThhheee FFFiiinnnaaannnccciiiaaalll TTTiiimmmeeesss GGGuuuiiidddeee tttooo Vitesse Media PLC, a growing online and print information F publisher, specializing in business, investment and S i n START UP tax. Its titles for entrepreneurs include: Business XL, smallbusiness.co.uk and growthbusiness.co.uk, and START UP IN an BBBUUUSSSIIINNNEEESSSSSS 2007 for investors Vitesse Media publishes The AIM Guide, c Gthreowwrtoh nCgopmricpea.ncyo Imnv. esTthoer, cgoromwptahncyo malpsoa nyp.rcood.uucke as nda 2007 E ia The Financial Times Guide to Business Start Up gives l range of events, including the Growth Company Awards, you the broadest range of content available, from fi nding The new name for the Lloyds TSB Small S T Quoted Company Awards, Investor AllStars Awards, Sara Williams premises and setting prices for products and services to Growth Cycle Seminars and Growth Company Investor. Business Guide – over 1 million copies sold! S im SSSTTTAAARRRTTT UUUUUUUUUUUPPPPPPPPPPP the lowdown on franchises and smart ways to fi nd new customers. It provides you with the ideas, solutions and e Sara is a former investment analyst and lecturer in s key references on a wide spectrum of topics, including: fi nance, and had a very successful career in fi nancial S G 222222000000000000777777 and business journalism before founding Vitesse Media “As comprehensive an introduction to setting up a business as anyone could need.” • Developing a business idea u in 1997. She contributed to many major newspapers The Daily Telegraph T i • Writing a winning business plan including the Financial Times and Sunday Times, and A d The new name for the Lloyds TSB Small • Raising the fi nances for start up and growth e was a weekly columnist for the Daily Express. She also “The Wisden of the small business world… threaded through with common sense • Finding premises wrote for Which? magazine and appeared regularly on R t Business Guide – over 1 million copies sold! TV and radio. practical advice.” o • How to sell and market your business successfully Daily Mail T • How to increase profi tability and achieve growth Sara is also the co-author of the The Financial Times • Dealing with the latest regulations, VAT, income tax Guide to Personal Tax. “A must for any small business owner.” and other charges U Federation of Small Businesses Additionally it gives a vital summary of everything you P need to know as an employer, from fi nding and keeping staff to saying goodbye if things don’t work out. THE ONLY ANNUALLY UPDATED GUIDE TO STARTING AND 2 RUNNING A BUSINESS 0 Register for your free email update on legal and tax 0 changes in the next Budget – see inside for details. 7 Whether you’re considering starting a business, or if you’ve already taken the plunge, this annually updated classic handbook is crammed with practical advice to ensure that you and your business get the best possible start on your route to success. S All fi nancial and legal information has been fully updated since the 2006 Budget, making sure a you have accurate facts at your fi ngertips, from employer obligations to tax and pensions. r a The book covers all elements of the start-up phase, with essential guidance and fully W up-to-date fi nancial information, covering every aspect of running and growing a business. i If you’re serious about starting a business, you need to have this book ll i a within easy reach. m s BUSINESS Visit our website at www.pearson-books.com ISBN 0-273-71082-6 Visit our website at www.pearson-books.com Front cover image: 9 780273 710820 An imprint of Pearson Education © Getty Images Sara Williams 0273710826_COVER.indd 1 10/10/06 11:01:02 FTBS_A01.QXD 15/10/06 6:58 pm Page i The Financial Times Guide to Business Start Up FTBS_A01.QXD 15/10/06 6:58 pm Page ii In an increasingly competitive world, we believe it’s quality of thinking that will give you the edge – an idea that opens new doors, a technique that solves a problem, or an insight that simply makes sense of it all. The more you know, the smarter and faster you can go. That’s why we work with the best minds in business and finance to bring cutting-edge thinking and best learning practice to a global market. Under a range of leading imprints, including Financial Times Prentice Hall, we create world-class print publications and electronic products bringing our readers knowledge, skills and understanding, which can be applied whether studying or at work. To find out more about Pearson Education publications, or tell us about the books you’d like to find, you can visit us at www.pearsoned.co.uk FTBS_A01.QXD 15/10/06 6:58 pm Page iii The Financial Times Guide to Business Start Up Sara Williams 20th edition FTBS_A01.QXD 15/10/06 6:58 pm Page iv PEARSON EDUCATION LIMITED Edinburgh Gate Harlow CM20 2JE Tel: +44 (0)1279 623623 Fax: +44 (0)1279 431059 Website: www.pearsoned.co.uk TheFinancial Times Guide to Business Start Upwas previously published as the Lloyds TSB Small Business Guide First published by Penguin Books 1987 Second edition 1988 Third edition 1989 Fourth edition 1990 Fifth edition 1991 Sixth edition 1992 Seventh edition 1993 Eighth edition 1994 Ninth edition 1995 Tenth edition 1996 Eleventh edition 1997 Twelfth edition 1998 Thirteenth edition 1999 Fourteenth edition 2000 Fifteenth edition published by Vitesse Media plc 2001 Sixteenth edition 2002 Seventeenth edition 2003 Eighteenth edition 2004 Nineteenth edition 2006 Twentieth edition published by Pearson Education in Great Britain 2007 © Sara Williams 1987, 2002 © Vitesse Media plc 2003, 2007 ISBN-13: 978-0-273-71082-0 ISBN-10: 0-273-71082-6 British Library Cataloguing in Publication Data Acatalogue record for this book can be obtained from the British Library Library of Congress Cataloging-in-Pub lication Data Williams, Sara. The finacial times guide to business start up / Sara Williams – 20th ed. p.cm Includes bibliographical references and index. ISNBN-1: 978-0-273-71082-0 (alk.paper) ISBN-10: (invalid) 0-273-71082-0 (alk. paper) 1. New business enterprises–Great Britain–Planning. I. Title. HD62.5.W492 2006 658.1’1–dc22 2006050773ß All rights reserved. no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers. 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 Typeset in 9pt Stone Serif by 70 Printed and bound in Great Britain by Bell &Bain Ltd, Glasgow The Publisher’s policy is to use paper manufactured from sustainable forests. FTBS_A01.QXD 15/10/06 6:58 pm Page v Contents Acknowledgements/ ix Update for the Financial TimesGuide to Business Start Up/ xi 1 You and your ideas / 1 2 Who will buy? / 13 3 A spot of coaching / 27 4 Your business identity / 38 5 Are you sure? / 53 6 The business plan / 64 7 Timing the jump / 71 8 Less than 100 per cent / 76 9 Off the peg / 82 10 Franchises / 104 11 Beating the pirates / 122 FTBS_A01.QXD 15/10/06 6:58 pm Page vi vi Contents 12 The right name / 130 13 Getting the message across / 139 14 Getting new customers / 152 15 Building customer relationships / 166 16 How to set a price / 174 17 Choosing your workplace / 186 18 Information technology – and other equipment / 198 19 Professional back-up / 206 20 Getting the right staff / 215 21 Your rights and duties as an employer / 233 22 Insurance / 267 23 Forecasting / 274 24 Raising the money / 294 25 Staying afloat / 309 26 Moving ahead / 327 27 Not waving but drowning / 340 28 Keeping the record straight / 346 FTBS_A01.QXD 15/10/06 6:58 pm Page vii Contents vii 29 Tax / 357 30 VAT / 388 31 Pensions and retirement / 402 *References/ 411 Index/ 423 *An asterisk after the name of an organization or source in the text indicates that contact details are given in the Reference section. FTBS_A01.QXD 15/10/06 6:58 pm Page ix Acknowledgements The number of people who have helped me produce this comprehensive guide continues to grow. My debt to those who commented and supplied information for the original edition remains enormous; they helped me to improve the quality and content of the advice it contains to help you to get new enterprises up and running, and keep them that way. For the current edition, the second published by Pearson as The Financial TimesGuide to Business Start Upbut the twentieth since it was first published as the Lloyds TSB Small Business Guide, the checking and updating was carried out with remarkable efficiency by Jonquil Lowe. I’d also like to thank all the team at Pearson Education for the work they have done in publishing the guide so successfully under its new title. If you have any comments on the guide, please e-mail sbg@growthcompany. co.uk Note I have taken every care and effort to check the information and advice in this guide. Nevertheless, with a book as comprehensive as this one the odd slip may occur. Unfortunately, I regret that I cannot be responsible for any loss that you may suffer as a result of any omission or inaccuracy. FTBS_A01.QXD 15/10/06 6:58 pm Page x