How do you start a business? In a nutshell, just do it. But here are some things to think about before you start, which will make your chances of success greater.

Decide what you want to do

A business isn't just for Christmas. It may not be for life, but it will become your life. So before you start, create two lists: what you want from life and your business... and also what you don't want. Then try to build your business with this in mind. Otherwise you will be doomed to unhappiness and the business will end up being a millstone around your neck.

Next consider your skills, interests and experience. Be honest. Create two more lists: strengths and skills, and weaknesses and lack of skills. Do you have special skills from previous jobs, or maybe a hobby that could pay? Lack of a particular skill or experience is not a negative. Rather, you need to recognise the implications of your conclusion. For example, if you don't know how to do book-keeping, you might delegate/outsource that aspect to someone else, or you could learn how to do it yourself.

When you have your four lists, start to develop your ideas for what to do. Either come up with your own proposals after, say, identifying a gap in the market, or look into existing business opportunities, such as franchising.

Research your market

Most people start a business because they want to create something, so they create it... and then think how to sell it. Wise people do a little research first.

Consider what the market wants, and then how you can satisfy that want.

For this, you need some basic information. For example, what type of person is your customer likely to be? Where can they be found? How often do they buy and how much do they spend on related products? Who are your competitors? What are their strengths and weaknesses? How much do they charge? What is special about them? What is the state of the market in general - is it growing or declining or steady?

Good ways to gather local information include questionnaires, observation or interviews. Other sources of information include directories, articles, statistics, and company reports, which are often found in libraries.

Plan it

When you have identified a possible idea and know something of the market, prepare a plan for how it will work. Do it in outline first, then refine each section as you investigate more. This will help you clarify your objectives and your strategies for achieving them.

A simple way to start is to take a sheet of paper and divide it into four and outline your plan as follows:

Don't be put off if you don't know all the answers or details at the start - nobody does. Most banks also provide free booklets on planning. Ask a friend to give the results a sanity check.

Look at your plan carefully in terms of both you and your preferences, and as a business.

Plans are useful so that you know where you are going, but they are also useful for reassuring other people, such as spouses and family. They are essential if you wish to raise cash from a bank or investors. Later, they will help keep you on track as you get buried in the day-to-day confusion of running your business.

SWOT and PEST it

On a separate sheet of paper, write down the business's Strengths, Weaknesses, Opportunities, and Threats. What do these imply? Look too at the PEST- Political, Economical Social and Technological - factors. What do they imply? For example, under Political, if new regulations in your field are being proposed, how will that affect you? It may be, for example, that the new regulations are particularly onerous so people may decide to leave the field altogether, as happened recently in the insurance industry. This means you could get off to a quick start by buying someone else out. Or you could decide not to venture down that avenue in the first place.

Decide your USP

A USP is a Unique Selling Proposition. So what's yours? What makes your product or service better, faster, more cost-effective to use... than your competitors'? It might be as simple as next day delivery if they take 28 days to fulfil, or working in the evening when normal offices are closed.

Sort out money

What will your costs be, initial and ongoing? How much money must you make each week and month to cover your personal and business expenses? Use market research to help you set sales targets and work out what you should charge for your product or service.

Then create a cashflow forecast - not as hard as it might seem. How much money does your cash forecast suggest you will need? Can you afford to invest this? Can you borrow money from family, friends or the bank? How much are you prepared to risk as security?

Get the money sorted out before you start because it is harder to raise money later, when your savings have vanished. Asking for money sooner rather than later also implies that you have thought things through properly.

Find premises

Where will you operate from? Many people save money and start by working from home, unless they need retail or other premises. You do not need planning permission to work from home if:

• The character of your home is not materially changed;
• You use it for a purpose incidental to the enjoyment of the property as a dwelling;
• You do not inconvenience your neighbours.

If you work from home, you must tell your mortgage holder and check the terms of your lease. Council tenants aren't usually allowed to work from home. To work effectively you will need a dedicated area.

If you cannot work from home, think long and hard before leaping into long-term agreements or buying property.

Decide your business status

Will you trade as a sole trader, a partnership, a limited liability partnership or a limited company? An accountant can advise you. Generally it is better to keep things simple to start with, but it's essential to have a proper agreement prepared by a solicitor if you are in a partnership.

Registering under Acts

If you hold information on other people on a computer, you may need to inform the Information Commissioner. You may also have to register under other Acts, like the Health & Safety at Work Act, the Food & Drugs Act, or the Licensing Act. If in doubt, ask your local Business Link for advice.

Cover yourself

Do you need extra insurance? Even if you work from home, at the very least tell your domestic insurers your plans, or you could invalidate all your existing policies.

By law you will need employer's liability insurance if you employ anyone, even part-time.

You may also need cover for office contents, employer's liability, product and public liability, and professional indemnity.

Consider your image

First impressions count and your image is part of your marketing. It need not be expensive but should be professional and consistent. This includes your stationery, décor, signage, packaging and website. People won't take you seriously if you don't present yourself well. It's worth getting a designer to create an 'identity' and logo for you.

Technology

People must be able to contact you at any time, so if you don't want to use the services of an answering service, get a reliable answer machine.

A fax can be useful. E-mail is increasingly essential for many areas of business. Owning your own domain name and having e-mail accounts @ that domain name can help you look professional and lend credibility.

When buying computers, decide what you want it to do first, then buy something that fits the bill. This should stop you buying something far larger, and more expensive, than you need. Consider buying second-hand equipment - for example, Dell sells second-hand PCs.

Tell the taxman

Tell HM Revenue and Customs and the Contributions Agency that you're running a business, even if it is only part-time. If you do not inform them of your set up within three months, you can be fined £100.

You need to know your turnover, precisely. For instance, if you turnover more than a certain amount in any twelve-month period, you are obliged by law to register for VAT purposes within 30 days of crossing this threshold. Failure to comply can result in heavy penalties. After registration, you need to keep accurate records for the VAT man.

Once you have registered for VAT, you can reclaim VAT on business expenses, with some exceptions. However, you must charge VAT on taxable supplies.

Contact Customs & Excise if you have any dealings with imports or exports.

The tax helpline will guide you through the procedure. T: 08457 143 143.

Open a bank account

Discuss your idea with the bank managers in your area and go through your business plan. A good personal relationship is usually the best way to choose a bank since services are roughly similar.

It's a good idea to talk with your bank's business adviser because you want to develop a good working relationship, and also they may be able to offer you advice and services you didn't know about.

Get advice

Go to your local Business Link or national equivalent for advice, particularly for local information about, say, premises, sources of grants and so on. They are also excellent sources of advice and most will guide you through preparing a business plan.

For your local one call: 0845 600 9006 or visit the Business Link Web site.

Meanwhile, there is a vast pool of knowledge on this Web site, including useful contacts and articles, just waiting to be tapped.

This information is meant as a starting point only. Whilst all reasonable efforts have been made, the publisher makes no warranties that the information is accurate and up-to-date and will not be responsible for any errors or omissions in the information nor any consequences of any errors or omissions. Professional advice should be sought where appropriate.

© 2008 Published by Cobweb Information Ltd