Let’s not beat about the bush.  The Chancellor’s Autumn Statement was pretty gloomy and, try as he might, he gave only cold comfort for just about every section of society.

So it was with some surprise, we learned that the number of UK start-up businesses actually increased during 2011.

According to widely reported data provided by business analysts Creditsafe, more than 470,000 new businesses will have been launched by the end of the year an increase of 17 per cent on last year, when 400,570 were launched.

The report also showed that there has been a net increase of 386,000 registered limited companies in the first three quarters of 2011 once insolvencies had been taken off.

Does this demonstrate a truly indomitable entrepreneurial spirit or a no-alternative shot at earning a living after redundancy?  An act of desperation or a life-changing opportunity?

Either way, there are important steps to be taken before embarking into the unknown, and taking professional advice heads the lists.  Start by asking, is there a market for your goods and services?  Have you calculated all the overheads you must meet such as wages, rent, insurances, utilities and stock?  Have you undertaken a competitor analysis?  Have you opted for the best business structure to suit your plans – sole trde, partnership, limited company?

Crucially, does your idea for a new business require funding and where are you going to get it from?  Despite popular belief, the banks will lend to new businesses if the figures stack up and are accompanied by a viable business plan and a thoughtful marketing strategy.

Too many people are blaming the banks for not lending which has led to fewer people asking for credit. The banks will lend to appropriate applicants but clearly there is a greater chance of getting credit where the watchword is growth rather than bail-out.

Established businesses may be unwilling to borrow right now despite the Chancellor making it easier to do so.  The vulnerability of the Eurozone and how its destiny will affect us all remains unknown so it’s difficult to plan.

You can take this as an argument against starting up a business in these difficult trading times while others, including 470,00 in 2011, may argue that you’ll never know unless you give it a try. 

In fact quite a few businesses that started in a recession have done pretty well for themselves – such as Microsoft, Fedex and Burger King – so there’s a chance for everyone.

For further information:

Paul Giessler, Partner at Francis Clark LLP.
Telephone:  01722 337661
 

Francis Clark has offices in Exeter, Plymouth, Salisbury, Taunton, Tavistock, Torquay and Truro. Francis Clark is the winner of the ‘Auditor of the Year - Mid Tier’ in the National Financial Directors’ Excellence Awards 2011, and LexisNexis Best General Tax Practice Award 2009. More information is available by logging on at our Online Information Centre