For many self-employed, once they’ve been working solo for a while and they’ve started to taste success, the next logical step is to consider expanding beyond what they can do alone. What they may not expect is that the shift from sole trader to a bigger business is one of the biggest changes you can have – so here are the things we think you need to know, as small business accountants.
Business Plans are More than a ‘Nice-to-Have’
As a freelancer or sole trader, you’ll already be planning your time carefully, but probably on more of a day-to-day basis. The planning horizon on a small business is already much higher, so your priority should be to put a structured business plan together.
You want to do this early for three reasons. First, they’re a great way to identify and start troubleshooting potential problems with your expansion.
Secondly, writing a structured business plan gives you extra clarity and helps you to really focus your ideas for your next big step. A business plan template like the one the government offers will assist you in highlighting the big questions and giving you the shape of things to come.
Lastly, and possibly most importantly, a business plan is a key item for securing funding from many lenders.
Soft Skills are Not Optional
Again, anybody who’s been in business for themselves for more than a handful of weeks should understand the importance of soft skills. Your ability to win business, turning leads into customers, and your ability to create return custom, are both essential as a sole trader.
But once you have too much work to be done by you alone, you’ll need someone working for you, and that means managing them.
You’ll soon find that different people respond best to different techniques, and learning how you get the best from different temperaments will be a huge benefit. There’s no substitute for experience here, but there are management blogs and video courses which can help you get started and give you some things to watch for.
When You Can’t Do Everything, Give Others Room
You’re obviously proud of what you’ve accomplished and what you can do, and if your business is successful, it probably has a lot to do with the standards you’ve set yourself. And that commitment to quality obviously needs to be maintained.
However, you’ll quickly learn that micromanaging your staff and hovering over their shoulder doesn’t actually free up your time. Learn to trust your team as quickly as you can, and delegate where you can – you’ll still have plenty to do yourself, and it’s good practice for if your business reaches the point where you couldn’t possibly put your stamp on everything!
Pay Close Attention to Paperwork
At ICS Accounting we don’t recommend letting paperwork slide as a sole trader, simply because there’s time to circle back later and get it done – but we understand why it happens. Once you’re in charge of a wider business, this practice needs to stop. Make sure your contracts are well-drafted and check them carefully before agreeing.
You’ll also want to keep your accounts up to date and clear. This doesn’t just save time when you need to submit your tax returns and other reports – it also gives you the information you need to make decisions beyond the day-to-day, and you can’t grow your company without that bigger picture.
Choose and Understand Your Business Structure
The difference between sole trader, limited company, and partnership isn’t just the name you give your business; it has real implications for tax and legal liability.
Which option is best for you will depend on your situation and your plan – but make sure you understand the differences, make the choice, and register with HMRC. If you’re not sure what to do or how to go about registration, get in touch – we’d be happy to help.
Funding is Key to Small Business Infrastructure
Part of expanding is infrastructure. This might be as simple (and therefore easy to overlook) as software licences, cloud storage space, and a set of rules for how to name files so everyone can find what they’re looking for, but it might include new company vehicles, the rental of new official premises, and much more.
There are many potential sources of funding for small businesses including bank loans and government grants. Each come with their own strings attached, so the choice isn’t always an easy one. Make sure you don’t overlook any of the options on the table and take the time to understand each one fully before you commit.
Don’t Be Afraid to Ask for Help
Very few parents raise their children without reaching out to others for support, and a small business can be just as much of a new challenge. Sometimes talking to people who’ve dealt with similar issues is essential, and sometimes you need professional help.
As a sole trader, how much time were you already spending on your company accounts? Adding extra staff and expanding will only increase the time demands. On the other hand, ICS Accounting can take care of it, using our experience with many other businesses in similar situations to ensure we don’t misstep.
Bringing us in doesn’t just free up your time – it means you can be confident your business records will be up to date and fully compliant, taking one source of stress out of the equation entirely.
We’re always available if you want no-obligation advice from a dedicated, experienced account manager who will come to know your goals just as well as you do. Contact us today to get the process started.
