Next Step (2).... Back to Step 1
Preparing for Business
While in step 1 we looked at the type of business and viability in this step we want to look at what we need to do in order to prepare to run a business, for example we need to identify our skill shortages and how we are going to overcome them, we are going to need look at the business structure if we need a company or decide to be a sole trader and how to go about deciding on a business name. Step 3 following this goes into producing The Business Plan, Marketing Plan and some of the other planning in some detail.
List of preparation activities
In step 1 we detailed our skills and experience while considering the business areas that we are looking at entering. We now need to produce a further list of skills or areas of knowledge and perhaps experiments and other experience that we wish to acquire before actually starting to market a service to others.
This could include photographic skills training, it might involve business courses, perhaps visiting and looking at the way others run their businesses. No single person can become an expert in every aspect, or read all the legislation and other information that relates to business. We therefore have to decide which items are essential and will have an impact on what we are doing, the sales we are likely to make, and making sure that at least the majority of clients are happy with the results that they get. Only if we are doing something completely outside the normal do we need to check out in depth legal limits, in most cases if a large number of people are involved in a business, running it in a certain way then it is unlikely that there will be some legal restriction to undertaking it. If on the other hand you have spotted a GAP in the market or found a different way to achieve an objective then you do need to make sure that by doing this that you are not going to run into legal problems.
The easiest part in many ways is acquiring the photographic skills but in running a business you need to be able to produce successful results on every assignment. A person who wins club competitions by selecting a small number from a large number of photographs is less likely to meet the needs of clients than the beginner who has undertaken one to one training, has complete control of the camera, editing and can go out and get good results every day.
On Your Own or with a Partner
Running a business on your own can be a lonely process, but you get to make all the decisions. If you work as a part of a partnership you only require a subset of skills in that other partners can fill in these areas, but you may then find you are not in control and getting the business to react rapidly to opportunities may be more difficult.
You may find that a husband/wife/life partner may be able to either work with you or carry on their own employment but assist you fulfilling some of the roles that a business partner would do. Deciding to work full time with the people that you live with can have advantages in that you have shared interests and both understand the needs of the business, but it can also in some cases present conflicts that spill over from their personal life to the business or from the business to personal life. It can be a successful arrangement but ideally each person needs to have defined areas of responsibility. If you are involving someone then it is essential that they fully understand what is involved, and share your dream with you rather than just going along with what you want to do. In some cases it may be easier when a partner continues to work bringing in additional income at least for the first stage while the business is becoming established.
Next we need to consider the business structure and name.
You will need to decide the business structure you are going to use so this next we are going to take a brief look at each of the business structures available to you and allow you to decide which is the best type for your business.
In the UK there are a number of different types of business structures available including:
A type of business enterprise or proprietorship which is owned and controlled by one person who is fully liable for the businesses debts and fulfilment of contracts with his/her personal wealth unless incorporated. They can however employ other people. They are usually self employed and considered as such from a tax point of view. This is the easiest and less costly way of starting a new business, however it may not be the most tax efficient depending on expected income of the business.
A partnership will have at least 2 or more partners; all partners participate in the management of the business and share in the profits of the partnership. Each partner is an agent for the other when making contracts on behalf of the business, all partners are liable for the debts of the business except for Limited Liability Partnerships. Click here for explanation of the three types of partnership in greater detail.
A limited company is a legal entity in it's own right, like a new person, providing that you keep within the rules then this entity has it's own assets, profit, debts, liabilities etc. As a Director of the company you have managing control, and as a shareholder can share in that part of the profits that the Directors decide to give to shareholders. There are a number of types of companies including those run not for profit and those far larger ones that are public companies with share prices quoted on the stock exchange. In most cases a photography business will be a private limited company. You can click here for an explanation of the different types of companies and what is involved in forming one.
Many of you will from these explanations know which format would be best for you, you can of course start as a sole trader and incorporate later if you wish. If this is completely outside your experience and you are looking at a substantial business then it may be worth talking to an accountant about which format would be most tax efficient for you.
Naming Your Business
One other aspect of setting up your business is the Business name. There are some restrictions in relation to names used, and we don't want to have a number which is confusing with others in the same marketplace. It may be an advantage to have a business name starting with a letter near the beginning of the alphabet if we expect telephone or other directories to play a major part in bringing business as most people will only call a few businesses and naturally start at the beginning of the list. We have another page, Naming Your Business which will give you some pointers and what to watch out for and where to look when researching if itís possible to use the name you have chosen.
So now having sorted out the skills we need to acquire, decided if we are working alone or with others and decided on the name and the structure your new business is going to take, the next stage will be the detailed planning that will include your Business Plan and Marketing Plan.
Proceed to Next Step (3)
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