Guide/Tips on starting a small business

mxxx

I'm in the very fortunate position of having paid my mortgage but still being young enough to still be a long way from retirement (I turn 40 later this month). After some mental health issues during the pandemic I reduced to a 4 day working week and have been enjoying the extra flexibility and time, however I no longer find my day job fulfilling and want to give myself a bit more purpose in life.
I'm an IT engineer with 20+ years experience and have always enjoyed repairing, upgrading and tinkering with computers in my free time as well as doing electronics repairs, so would like to try and start a bit of a side job doing private work, diagnosing, repairing and upgrading computers as well as small electronics repairs (games consoles etc).

Being in the position i'm in i'd be looking to do this for the enjoyment rather than to get rich off it, but I do ideally want to bring in enough money to make it profitable, meaning i'd hopefully be able to choose who I want to work with (if you get what I mean).

If it proves to provide the satisfaction I need and starts taking off I can look at reducing my day time job further and maybe even give it up altogether.

I've always fancied doing this but never been in as good a position as I am now and worry that if I don't do something I'll regret it my later years.

What I'd really like is an idiots guide on how to go about starting the business from a legal perspective (tax, VAT,  business insurance etc) so that I'm doing things properly. Ideally I'd want to start from my shed and only look at business premises if it ever gets to the point where I'm getting enough regular business to warrant it.

DullGreyGuy

Before doing anything else... how are you going to find your customers? Too many have a "build it and they will come" mentality and fail because whilst they are a great ABC they weren't able to efficiently attracted the volume of customers they required for viability.

Secondly, how are you going to price? Too many think it'll take 1hr to do the job so I will charge £15/hr but fail to factor in the hours running the website, dealing with customer enquiries, frequent trips to couriers to collect/drop of parcels, rework if a customer says something doesn't work on return etc. Much of your time will be unbillable and has to be factored into your rate if you intend to do this for anything more than fun. 

Tax - register as self employed and to do self assesstment when you are going to generate more than £1,000 revenue in a financial year. Put aside an appropriate amount of your profits to cover the tax as you go based on your marginal rate on your employee work (remembering you may be pushed into the next band depending on your salary) 

VAT - only applies if you are to have over £90,000 of sales in a rolling year or if all your customers are VAT registered companies

Insurance - contact a broker to get quotes, plenty of inline options like Simply Business and PolicyBee

Mortgage/Lease/Rental/Home Insurance/ Planning permission - presumably you are going to have your customers equipment in your home whilst you service it? Could customers come to your home to drop off/collect items? If the answer to any of these are yes you need to consider the impact on the pre mentioned things as it can be breach of such agreements to hold stock, customer equipment, have business visitors etc. 

mxxx

@DullGreyGuy - Thanks for the comprehensive response, that's exactly the sort of thing I was looking for.
Initially I was just going to set up a Facebook page and start advertising locally through that as i'd like it to start gradually, don't want to overwhelm myself with work and initially at least I don't need to generate a specific amount of revenue.

On that basis it sounds like I can pretty much do just that and only need to worry about actually registering as self employed if I get enough custom to generate over £1,000. Obviously i'd like to be generating more than that, but I don't know if I'll actually get any business so it's nice to know I can test the waters first.

VAT - No plans to hit that threshold, although never say never eh!

Insurance and Home insurance are very good points i'd need to look into, thanks. Presumably there must be a way to resolve it what with so many people having side hustles these days, or is it a case that they're just ignoring it and hoping nothing bad happens...

I'd be grateful for any other suggestions or areas not mentioned above too. Thanks.

DullGreyGuy

mxxx said:
don't want to overwhelm myself with work 

Most have the opposite problem, they throw open their doors and just watch the tumble weed go by. 

mxxx said:

Insurance and Home insurance are very good points i'd need to look into, thanks. Presumably there must be a way to resolve it what with so many people having side hustles these days, or is it a case that they're just ignoring it and hoping nothing bad happens...

A lot of people are ignorant of the fact or think they can get away with it. Back in my claims days had a claim over £300,000 declined because it turned out the customer had been storing products for their business in their spare bedroom but had declared there were no business activities in the property. We wouldn't have offered insurance had they declared they were storing stock (hair care products).

Savvy_Sue

Excellent advice from DullGreyGuy as always, perhaps especially his last paragraph and cautionary tale, but there is one very first step which might put a stop to your plan before you start. 

Does your current employer require you to tell them if you are doing any other work? Do they say you cannot do so without their permission? 

In general, employers don't refuse permission if there's no conflict of interest, especially if you're part-time. However, if you don't ask, and they find out, and permission should have been granted, you may have a problem. 

If it does all seem to be panning out, then one other source of finding work might be through NextDoor, especially if you can at an early stage get recommendations from friends and family ... however another cautionary tale, do make sure that you have your own terms and conditions about what you'll do, and when and how you want to be paid. 

Finally, if you're going into people's homes, be aware of what's going on and don't outstay your welcome. I'm sure I don't need to say this, but I vividly remember someone 'just popping round' one evening, as a friend, to try and sort out some problem DH was having with his computer. Now, DH's desk is on the top landing, with everyone's bedrooms within earshot, and we had three teenagers at the time. Our techie friend enjoyed some very interesting conversations with the boys about all sorts of stuff you could find on t'internet, if you only knew where to look, and when they'd eventually gone to bed, I did too, even saying "I'm just off to bed now!" And yet, they continued. "I'm sure if we just try this it will all be sorted", and "hmm, that really should have worked", and so on. And yes, I know DH should have insisted he left (especially as he had a wife and small child at home!), but they were so close to sorting it, you know? 

martindow

Excellent advice above.  Regarding finding work and making yourself known, it can sometimes be easier for businesses that are local because computers need to be brought to you and you are not competing with businesses all over the country.  People I have found in recent years for repairs of computers and other things, I found via Next Door as already mentioned and also a local parish magazine that accepts adverts.  This is organised by local churches, but is mainly secular in nature covering local groups and news items.  According to the person I contacted, he gets a lot of contacts via this at very modest cost.

mxxx

Great tips all, thanks. @Savvy_Sue, you're absolutely right, my employer does require me to tell them if i'm doing any other work, so I'll need to have a conversation with my manager before I start. Good advice.

JennyDavis

Fastlane forum has a lot of great information and tips

PHK

One thing that hasn't been mentioned is the cost of regular training to keep your skills up to date.

Your business insurance will require this and clients will want assurance you know what you are doing. 

DullGreyGuy

PHK said:

One thing that hasn't been mentioned is the cost of regular training to keep your skills up to date.

Your business insurance will require this and clients will want assurance you know what you are doing. 

I've never had such clauses added to our business insurance. I could understand those who do work that require certification maybe would have to certify they are up to date with the latest regulation etc but doubt malware removal/ RAM upgrades etc fall into regulated work.

From a customer point of view? Maybe, but given the core things like MSCE have been retired and replaced with all things focused on Azure etc are they even going to be relevant for a home user? 

JennyDavis

Keep accurate records of income and expenses, and use accounting software for bookkeeping. Open a separate business bank account. Talk to extraco banks customer service about those. Guys helped me a lot when i started my own business.