Why You Shouldn't Start a Business "On the Go"
I have an idea. Let's start a business! Sounds exciting, right? Sometimes starting a business is perceived as a simple move, because what could possibly go wrong? You have a good idea! Motivation? You've got plenty! And off you go.
Unfortunately, it's far less simple than that. Each and every decision made at the beginning of the journey will have a direct impact on profitability, taxation, dealings with authorities, and even on the peace of mind and sense of security of its founders. Below is an organized list (before the first step) that will save you many costly mistakes, unnecessary delays, headaches and frustrations down the road.
Checking Personal and Business Fit
Take a breath and do some soul-searching:
1. Are you built for self-employment? For variable income? For responsibility over employees and other complications?
2. Is there real demand for your service or product, and do you have a clear advantage over competitors.
It's important to ask yourself these questions long before filling out registration forms, getting business numbers and so on. This is a cheap stage, no financial investment is needed – just honesty with yourself and an initial check
Choosing a Field of Activity and Correct Classification
Defining your field of activity is a critical action, as classification has a direct impact on VAT liability, licensing, insurance, and sometimes on future taxation. Imprecise wording can lead to a host of different troubles in dealings with tax authorities, which is why it's important – even critical – to define in advance what the business does and doesn't do, in the most accurate way possible.
Initial Revenue Estimation
Obviously, we're not asking for a perfect forecast, but a realistic estimate that requires answering the following questions:
· How many potential customers do you think there are?
· What is the average market price, or what are you planning to charge?
· What are the weak months, the strong months?
· How many competitors are there and do you have differentiation ideas against them?
Early revenue estimation allows you to understand whether the business can sustain itself – and whether financial backing is needed for the startup period.
Choosing a Type of Business Structure
Exempt dealer, licensed dealer or private company? Each of these frameworks has advantages and disadvantages. The choice depends on expected income level, risk level, nature of clients, and the need for legal separation. The right decision at this stage will prevent the need for changes (which can be complicated) later on.
Preparing Documents in Advance
Opening a business involves dealing with the Income Tax Authority, VAT, National Insurance, and banks. Preparing an ID document, account management confirmation, basic contracts, and organized pricing will save you valuable time and ease the process.
Common Mistakes Made by Beginner Entrepreneurs
Opening a business without professional guidance - Forgoing accounting or legal advice at the startup stage can lead to wrong choices that are difficult and expensive to fix later.
Delaying taxation and reporting matters - Lack of understanding or awareness of reporting and payment obligations to authorities creates a trail of debts, fines, and unpleasant surprises.
Mixing personal and business accounts - Using one account damages financial order and makes tracking, control, and correct reporting difficult.
Pricing too low (unrealistically) at the start - The desire to break through with a competitive price that breaks the market can result in prices that don't cover costs and harm profitability and branding.
Lack of initial financial planning - Opening a business without initial capital and/or a basic budget and revenue forecast makes decision-making difficult and increases the risk of failure.
Frequently Asked Questions
Is it mandatory to use an accountant when opening a business?
Not mandatory, but highly recommended. Professional guidance saves costly mistakes from the very first stage.
Can you open a business without income at the beginning?
Yes, but it's important to declare correctly to the authorities and understand the implications for insurance and taxation matters.
When should you consider setting up a private company?
When income is high, there is legal risk, or there is a need for complete separation between the business and its owners.
Summary: How to Save Time and Money from the Start
Opening a business is not an easy and simple move. Early planning, strategic thinking, and sound decision-making from the very beginning will make the difference between a business that survives and one that grows and develops.
Want to know if your idea can turn into a real and profitable business? Contact us and we'll build a complete and clear assessment for you that will give you a true picture before you start.