If you are just embarking upon your Creative Home Business Journey and are considering starting a Baby Casting Business, Pet Keepsake Business or Silver Jewelry Business, you may be wondering how to start a Business from scratch.
When first considering pursuing your passions and turning your love of craft into a profitable business, it is easy to get caught up in the initial excitement of learning the different craft techniques without giving much thought to the actual steps you will need to take to start a Creative Home Business, let alone the legal things you need to know before starting a Business.
There are many things to consider when starting a new Business. To help you, I have produced a list of things needed to start a business and my top tips on how to start a business from scratch. This is relevant for any Business, whether that be a Baby Life Casting Business, a Pet Keepsake Business, a Silver Jewelry Business, or any other type of Craft Business.
Here are a few things to consider:
- Enroll in the Appropriate Traning - Far too many people decide upon the idea of starting a Baby Life Casting Business or Silver Keepsake Jewellery Business without embarking upon the appropriate Life Casting Courses or Silver Clay Jewellery Training. If this is your strategy you are likely to experience many issues and roadblocks along the way. So, always invest in the appropriate training with a well-established Industry professional.
- Find a good Accountant - Don't be afraid to interview them and question them to assess their experience and suitability. Do they work for a similar-sized business? What makes them better than another Accountant? How long does it take them to produce Annual Accounts? How do they want you to record your sales and expenditures? Will they charge you monthly or annually? You can find a local accountant at www.local-accountants-uk.co.uk
- Determine if you need to be VAT registered. Your accountant will be able to advise you. However, if you are operating a business from home, as a sole trader, it is probably unlikely that you will reach the VAT threshold in the early days, but refer to your Business Plan and always take the advice of an accountant.
- Decide upon your Business Structure and legal Status - Will you be a Sole Trader? Form a Partnership agreement? Or register a Limited Company? There are advantages and disadvantages to each, as I explain in my recent article; How to choose a Legal Status for your Creative Home Business.
- Prepare a Business Plan & Financial Budget - You will need to work out fixed costs and variable costs over 12 months. Fixed costs are rent, heating, insurance, salaries, loans, etc. Variable costs are products, supplies, services, and marketing. If you have not yet prepared a Business Plan and need help in knowing how to write a Business Plan please check out my Masterclass on Business Planning.
- Know your Break Even Figures - your Break Even Figure is the point at which your sales and revenues cover your expenses. Your break-even point should be your minimum target to reach.
- Keep Control of your Cash Flow - Cash Flow is the net change in your Business's cash position from one period to the next. If you bring in more cash than you send out, you have a positive cash flow. If you have more cash outflow than inflow, you have negative cash flow. Cash flow is important because it is a key indicator of your business's financial health. Remember the saying: "Revenue is vanity, margin is sanity BUT Cash is King!"
- Choose a Good Bank - make comparisons, check out services and packages on offer, choose a recognized name, and find out if you are allocated an Account Manager.
- Check if you are eligible for a Business Grant - You may be able to get some help in the form of a grant. For example, you might be eligible for an Enterprise Allowance Grant to help you with moving from Benefits to starting your own Business. You may be eligible if you are over 18 and either; you or your partner get Universal Credit, Jobseeker's Allowance, or Employment and Support Allowance, or you get Income Support and you are a lone Parent, Sick or Disabled. Alternatively, if you are aged between 18 and 30, you may be eligible for a grant from the Princes Trust. In addition, The Queen Elizabeth Scholarship is awarded to people who want to improve their craft skills and can be used to fund further study, training, and practical experience.
- Further information on Grants - is available from the government's Business Finance Support Online Tool. (Selecting the 'grants' tick box to find Grants that you me be eligible for. The Local Enterprise Partnerships (LEP) Network has been set up to provide business funding, suppport and guidance in their local areas. They have 38 regional growth hubs in England who may be able to help you to find local Grants that you may be eligible for. If you are located in Scotland, you can apply for a Business Grant from Scottish Enteprise. If you are based in Northern Ireland, Enterprise Ireland, lists several ways that you can get finacial help for your small business is already up and running. If your small business is located in Wales, you can search the Welsh government's Funding Locator to find and apply for various grants in your area. Grant aid varies considerably around the UK and some assistance may be available in your area to help you start your Keepsake Business. In particular, often there
are grants available to women or lone mothers starting out in Business; therefore it is worth contacting the above Agencies to see what help may be available.
- New Business Tax Relief - New Businesses can benefit from a variety of tax allowances and relief that may result in a lower tax bill. They include tax allowances for investment in equipment and premises, tax relief and credits for spending on research and development, and stamp duty relief in disadvantaged areas. These tax advantages need to be applied for via www.gov.uk/capital-allowances. This can be complicated for a new business start-up, so I recommend that you seek help and advice from an Accountant.
- Develop your Brand Strategy - A well-planned and considered Branding Strategy is vital to the success of your business, so don't fall into the accidental branding trap. Branding is about far more than designing a pretty logo. A strong brand identity will enable you to raise brand awareness and build trust, attract your ideal customers, differentiate yourself from the competition, prevent you having to compete on price and will help you to attract more customers who are willing to pay more.
- Create your Keepake Website - A well-designed and developed e-commerce Website is vital to the success of your Creative Business because; It reflects the quality of your business and brand. If it's professional your customers will think that you are professional and vice versa. It brings in more sales and helps customers to find you when conducting localized searches. It helps to bring in extra local business. It helps to generate wider national and global business. It can generate media interest. If you need help with designing and developing your Website, check out our 'Done for your Branding & Website Start-up Package.'
- Health and Safety - Health and safety law is enforced by inspectors from the Health and Safety Executive or by inspectors from your local authority. If you operate from a business's premesis, Inspectors have the right to enter any workplace without giving notice, though notice may be given where the inspector thinks it is appropriate. On a normal inspection visit an inspector would expect to look at the workplace, the work activities, your management of health and safety, and to check that you are complying with health and safety law. The inspector may offer guidance or advice to help you. He/she may also talk to employees and their representatives, take photographs and samples, serve improvement notices and take action if there is a risk to health and safety that needs to be dealt with immediately. Visit www.hse.gov.uk for downloadable documents and resources.
- Employee Rights - ACAS is an extremely helpful organization to help with employee rights. ACAS aims to improve organizations and working life through better employment relations. They provide up-to-date information, independent advice,
high quality training and work with employers and employees to solve problems and improve performance.
- Payroll - If you plan to employ staff and require a payroll system, we recommend www.thepayrollsite.co.uk. The system produces pay slips, tax summaries and online annual returns, linked to the Inland Revenue website, for as little as £6.50 per month. They offer step-by-step instructions and are really helpful with their advice.
- Consumer Rights Act - If you sell products or services to consumers from a base in the European Community, then you are obliged to comply with this act. For further information visit: www.gov.uk
- Online and Distance Selling Regulations - If you intend to sell your products by phone, mail order, or online, you will need to comply with Online and Distance Sellng Regulations.
- Home or Business Insurance - Most standard Home Insurance Policies are unlikely to include kilns in their cover due to restrictions imposed by underwriters. If you find a standard policy, it is likely that surcharges and/or exclusions will be imposed.
Failure to advise your insurance company that you are operating a Kiln from your home or business could result in a canceled or invalid insurance policy. This means that any damage caused by the Kiln will not be covered. It also means that the kiln itself will not be covered should it become damaged from other causes. In my experience, most insurance policies automatically exclude the ability to fire a kiln overnight or when a building is closed or unoccupied. I recommend that you contact a Specialist Insurance Broker, who understands The Craft and Keepsake Market and who should be able to help you find a suitable policy. I provide further details on insurance, including a list of insurance brokers in my article on Craft Business Insurance Requirements.
- Public Liability Insurance - As well as adequate insurance for your business premises or home, you will also need to take out Public Liability Insurance, especially, since you will be working with members of the public and in particular, babies and young children.
- Employers Liability - This is a legal requirement if you employ anyone, even on a casual basis. Please also remember to inform your Insurance Company of any work that you do away from your Business Premises. For example, Demonstrations, Exhibitions, Craft-Fairs and Home Appointments etc. This is because few insurers automatically provide this cover, so you must be clear on your requirements when you speak to them. Any Business that employs staff is at risk of possible legal action for damages by an employee who can prove to have suffered injury or illness while carrying out their workplace duties. It is a legal requirement for all companies with employees to hold Employer’s Liability (EL) Insurance.
- Data protection - If you store data about individuals; employees, customers, the public, then European Businesses are required to comply with the Data Protection Act and GDPR.
- Financial Planning and Accounts - Financial Planning is important to help you determine and meet your short and long term goals. This involves creating a budgeting process to keep yur busines andit's finances on track. Although there are several other elements that you will need to incorporate into your Financial Planning.
- Playing Music in Public - Under UK copyright law licenses are required if music is to be played in public. PPL PRS issue licenses to the owner of premises who wish to play music.
- PPL PRS Music License - PPL PRS is a music industry organization collecting and distributing airplay and public performance royalties in the UK on behalf of over 3,500 record companies and 40,000 performers.
Whether your business is a small independent retail outlet using a CD player, or a large department store using specialist in-store radio, you will need a PPL PRS Music License.
- Planning Applications – Make sure you have gained Planning Approval for any changes you wish to make in order to run your Business from home. If you are uncertain if you will need planning permission go to www.planningportal.co.uk or www.gov.uk/run-business-from-home
- Business Rates - You do not usually have to pay business rates for small home-based businesses if you: use a small part of your home for your business, for example your bedroom as an office. But you may have to pay business rates, as well as council tax, if your property is part business and part domestic, for example, if you live above your shop, you employ other people who work at your property, or you’ve made changes to your home to accommodate your business. You can check if you are eligible to pay business rates at: www.gov.uk/introduction-to-business-rates
- Small Business Rates Relief – Some business properties are eligible for discounts from the local council on their business rates. This is called Business Rate Relief. There are different types of Business Rate Relief, including; small business relief, rural rate relief, enterprize zone relief, retail discount. Go to: www.gov.uk/apply-for-business-rate-relief for more information and contact your local council to find out if you are eligible.
- VAT - You do not need to register for VAT unless you have or expect to have a turnover in excess of the VAT threshold (£85,000 as of August 2020). However, you can choose to voluntarily register for VAT if you have a lower turnover below the VAT threshold. If you do decide to register for VAT, it is worth noting, that you can apply for up to three years on any VAT expended on capital equipment.
- Customer Service Disclaimers - Think about your processes for disatisfied customers. What will your Returns or Customer Satisfaction Policy be? Will you offer a free replacement, credit or refunds?
- Working Captial - Working Capital represents the lifeblood of any healthy business. Many promising businesses, have over the years, found themselves insolvent, despite significant assets and healthy profitability. The problem here, is usually a lack of operating capital, without which, no business can survive. Make sure that you have sufficient working capital, not only to cover your initial start-up costs, but also to cover the additional costs, necessary to support the day-to-day operation of your business.
This starts out with solid Business and Financial Planning and securing the services of a good Accountant to help you plan and stay on track.
I hope that this article has been helpful to you in understanding the legal things to know and the steps to start a creative home business. If you need advice and guidance on starting and developing your Craft Business, I'd love to help. I have over 20 years of experience running my own successful Creative Home Business and offer a market-leading series of Craft Courses, including Life Casting Courses and Silver Clay Jewelry Courses, along with a growing collection of Business and Marketing courses, designed to help you with each stage of starting, launching and growing your Creative Home Business.
If you need any help with writing a Business Plan, developing your Brand Strategy, or designing your Website, I have a range of services to help you with that too!
If you are right at the beginning of your journey of considering starting a Baby Hand Casting Business or Fingerprint Jewellery Business, please register for my FREE Mini Course on "How to Start a Creative Home Business."
