Steps to Starting a Business
Brian O’Kane explains the steps involved in a start-up.
The steps involved in a start-up include:
o Assessing your own suitability and readiness.
o Finding an idea.
o Evaluating your idea.
o Looking for funding and assistance.
o Deciding on a legal structure.
o Registering for tax.
o Registering for any licences or permissions required.
o Finding premises.
o Setting up accounting systems.
o Preparing financial projections.
o Getting the necessary finance.
o Writing a Business Plan.
On your own suitability, think of your skills, experience, education, contacts, family situation, financial situation and health. Be realistic – if this is not the right time, wait.
Then find and evaluate your idea for a business. Often, this comes earlier and is what sets you thinking about starting a business – but some people decide first to start a business and then look for an idea. If you’re looking for an idea, some of the County & City Enterprise Boards (CEBs) (www.enterpriseboards.ie), the State network that supports businesses with less than 10 staff, run Idea Generation workshops that can be useful. In finding your idea, don’t dismiss buying an existing business (costs more but avoids the risks of the start-up stage) or buying into a franchise (much reduced risk, though less potential) (www.irishfranchiseassociation.com).
Evaluating your idea means market research, some of which can be done on the Internet or in libraries but which is best done among your potential customers, face-to-face. Most would-be entrepreneurs don’t understand the need for market research and are unwilling to put in the effort. But, unless you can answer the following five questions, with answers that show that you have a viable business, you need to do market research. What kind of market research and how much of it? As much as it takes to answer these five questions:
o Will anybody want to buy my product / service?
o Who are these people?
o Why will they buy? (and Why will they buy from me?)
o When will they buy? (and How often?)
o Where will they buy?
Unless you can answer these questions, you should not start at all.
At this stage, you should be actively looking for sources of funding and support – you won’t be ready to submit an application for a loan or grant yet, but you should be finding out who might give you one and on what conditions.
The County & City Enterprise Boards (www.enterpriseboards.ie) should be your first port-of-call. There are 35 CEBs across Ireland. They provide grants, training, mentoring and advice. If you are in a rural location, and your business idea will contribute to rural development, talk also to your local LEADER+ organisation (www.irishleadernetwork.org). If you are planning to develop a high-tech, knowledge-based business with significant export and employment potential (€1m+ in sales, 75% export, 10+ staff – all within 3 years), talk to Enterprise Ireland (www.enterprise-ireland.com). Start finding out what the different banks offer – talk to your own bank, where you have your personal bank account, and at least one other. First Step (www.firststep.ie) offers micro-finance, very small loans, to people who might have difficulty otherwise in accessing bank finance.
Lots of people get hassled by the formalities involved in setting up a business – don’t, it’s only paperwork; if that’s not your skill, pay someone else to do it for you. You can set up as a sole trader or as a partnership, simply by registering for tax with the Revenue Commissioners (www.revenue.ie). To set up a limited liability company (highly recommended, since it protects you from losses in the business – unless you give a personal guarantee, for example, to a bank), you need to register with the Companies Registration Office (www.cro.ie) and pay a fee, as well as registering for tax. A limited liability company must have two directors, one of whom can also act as company secretary, and usually has two shareholders (although one shareholder is possible). After registration, each year, a limited liability company must submit returns on its activities to the Companies Registration Office.
When registering for tax, you will need to register for taxes on:
o Your profits – Corporation Tax (limited liability company) or Income Tax (sole trader or partnership).
o Your sales – Value Added Tax (mandatory for sales of goods above €75,000 a year or of services above €37,500 a year).
o Salaries paid – PAYE / PRSI.
As a first step towards understanding your responsibilities in relation to tax, download the Starting in Business booklet from the Revenue Commissioners’ website (www.revenue.ie).