How do you want to establish a business?Businesses can take a variety of forms, ranging from sole traders to public companies trading their shares on the stock market, or from a group of friends operating as a partnership to a formally established cooperative with rules and guidelines. When choosing the format of your business you may wish to consider: - the types of customers you want;
- whether you want people to invest in the business;
- the risks involved in providing your products or services;
- how many people are involved in the business.
back to top Sole tradersMost people who start in business do so as sole traders, working on their own, often from home. They alone receive the income and they alone are therefore liable for any losses or debts. Having no colleagues can be liberating, but may equally be isolating with no one to provide motivation or inspiration. back to top PartnershipsYou could set up in business with one or more colleague(s), relative(s), or friend(s). This form of business relationship is usually known as a partnership. All may be equal partner s or some may have a larger share of the business than others. Your income and liability are proportionate to your share in the business. back to top Limited companiesAs a limited company, the business is registered with Companies House. There are more regulations associated with running a business this way, but these are generally offset by tax advantages. Those directing the company have shares proportional to their involvement. back to top FranchisesFranchises provide a way for individuals to start their own businesses with the backing of an established brand and business process. Well known examples include Body Shop, Clarks Shoes, McDonalds restaurants and Prontaprint. These companies expand by getting other people to buy into their business, making an initial payment which secures equipment, raw materials, training and a well-known commercial name, and then running a branch of the business to make an individual profit. The British Franchise Association (BFA) provides information and advice on buying a franchise. back to top CooperativesA cooperative is a group of like-minded people with similar aims and business interests. Often community based, ‘co-ops’ are owned and run democratically and everyone has a say. Profits are returned to members and typically involve employee share schemes. Co-ops are frequently creative, practical or founded on ethical values. back to top Buying a businessTaking on an existing business may cut out some of the legwork involved in starting up on your own. But try to find an established firm with a solid customer base and a motivated workforce, rather than one with liabilities or a poor reputation. You can find a business to buy through the local press, estate agents, trade associations and websites dedicated to this sort of provision. back to top Medical and legal practitionersThe medical and legal professions have specific structures of employment. If you enter one of these careers, you will need to consider what sort of practice suits you best. For example, barristers work from chambers, medical general practitioners (GPs) and dentists may set up their own practice or go into partnership. Opticians may opt to take up a franchise. These are all alternatives to being salaried employees. back to top FreelancingFreelancers offer a skill or service to other businesses which employ them as needed for particular projects or for set lengths of time. They may be given office space or work from home, delivering work to (often tight) deadlines. Some freelancers actively market themselves. Others obtain work through agencies or by a direct approach from employers. back to top Social enterprises and charitiesThis is an expanding area and has evolved from a desire to help the disadvantaged, providing much needed resources or services and sometimes offering employment to those who would otherwise be unwaged. A well-known example is The Big Issue newspaper. The Charity Commission for England and Wales can provide advice and you will have to register with it to qualify for certain tax advantages. Certain trading activities are barred to organisations with charitable status. The UK Government has recently introduced a number of policies to support the growth of charities and social enterprises. Visit the Office of the Third Sector to find out more.
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