Aspiring entrepreneurs are often attracted to the idea of bridging bedroom businesses to startups. Some of the world’s biggest companies started from spare rooms and little capital.
Luckily, for business starters in London, the startup hotspot of the EU and the UK, they have EIS and SEIS tax relief to help attract investors to their ventures. Funding, however, is only one of the many factors early stage startups need to think about.
Business Plan and Structure
The foundation of a successful startup is a well-researched business plan. A startup can have the most innovative idea on the planet, but flawed desk and field market research can bury the business before it starts.
Market research means collecting primary and secondary data through face-to-face interviews, industry reports, and archival information. Observing market consistency, consumer behaviour, focus grouping, and surveys will create the structure of the plan. Testing the market can also convince investors and the people behind the startup of their idea’s viability.
EIS and SEIS Tax Relief
Mentioned in the introductory text is the SEIS or Seed Enterprise Investment Scheme tax relief break. SEIS is unique to the UK and are available to businesses registered to the territory and gives rise to certain eligibility requirements. They are important to startups as they encourage investors to seed sprouting businesses.
Investors who put their money in SEIS-eligible businesses can recoup up to 50% of their investment in income tax relief, gain capital gains tax reductions, and other benefits. Startups can raise up to £150,000 under SEIS; any higher, and they must apply to the Enterprise Investment Scheme, which gives income relief of up to 30 percent.
Accounting and Legal
Starting a business means jumping through many financial and legal hoops. Accountants are needed by startups to keep their financial records in check for tax and legal requirements. Certified public accountants can also keep track of budgets and a company’s profitability, as well as provide insight on ways to obtain lower rates and filing proper fees.
Equally important is the expert advice and service that lawyers could provide. Lawyers will help startups understand the nuances of contracts, licensing and permits, business forms, taxes, and liabilities. With a good lawyer, startups can maintain compliance with all pertinent laws.
Oftentimes, startups regulate their own needs with regard to human resources. But the fact that most startups fail within five years and that HR is often forgotten from the start are not completely coincidental.
HR takes care of the minutiae that CEOs may not have the training for. Team harmony, hiring the right candidates with proper contracts, on boarding, expectation setting, and employee retention are crucial startup aspects that HR can take care of, allowing the CEO and other employees the time to do what they do best.
Advisors are often the key to success for startups. Trusted advisors dispense advice when startups need it, from their infancy to their path to profitability. At the same time, early stage companies need to delineate the advisor’s responsibilities, time commitment, compensation or advisor equity, confidentiality, and invention clause, as well as root out any conflict of interest.
Startups that pour this much thought and energy into the early stages of their companies will surely have an easier time making it to the next stage of their business.