With our guide: The Ten Commandments of Business, you will gain an understanding of the critical tasks to consider and prepare for when starting a business. The first three commandments are featured below.

1. Choose the correct structure for your business

From a Sole Trader to Limited Company, Limited Liability Partnership or Third Sector Enterprise, the structure you choose is important for so many reasons. As a sole trader, you are individually self employed and are personally responsible for all business debts. You also declare earnings annually via self assessment and therefore pay tax due on profits at the end of the financial year. A limited company is entirely different in its structure. You are considered as an employee of the company and pay tax monthly on a payroll system. In addition, your personal assets receive protection if the business was to fail with outstanding debt. There is no cost to register as a sole trader whereas registration and ongoing costs exist when setting up a limited company. Remember you can change the structure at any time (although it is usually easier to do so at the end of the tax or accounting year to simplify the taxation process). There are other issues to consider when choosing the correct structure such as credibility and division of ownership.

2. Find out who your target markets are

Consider your ideal customer. Where do they live, go out and work and what does your product/service need to offer them? Consider different segments of your market – you may have several targets, each of which may have different needs and requirements. For instance, a soft play centre for children has two main target markets. Firstly, the parent, whose needs include safety, hygiene, cost and ease of access. The second target market, the children, have very differing needs based around entertainment and fun. So you need to consider each target and ensure every need is fulfilled. Also, think outside the box – is there a potential group that you haven’t tapped into? There may be an opportunity just waiting to be exploited within a target market that you haven’t considered.

3. Calculate whether your business idea is financially viable

work out the viability of the business. If your monthly expenses are £2000 and you charge £20 per hour, it is easy to calculate that you will need to work 100 hours in the month in order to cover those costs and breakeven. Obviously, if your calculation deduces that you need to work 27 hours per day, the business model is not viable. In this case, review your forecasted overheads - can they be reduced? Or can your sales price be increased? A cashflow forecast is a work in progress and is often changed several times before you achieve the a viable forecast. Using the model, you can then see what you need to achieve and set goals and objectives.

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