Home business tips for start-ups - Keeping overheads down

More than 50% of new businesses fail within the first five years, which means the lower your overheads during those crucial early days, the better. We have a great many small business clients and a good few start-ups on our books, and we're familiar with the unique territory they operate in. Here's some common sense advice about setting up business at home, keeping overheads super-low and giving your fledgling business the best chance of success.

A small business is still a 'proper' business

You probably don't have any plans to employ people at this stage, so working from home might be your best financial bet. You might not be 100% sure your start-up will thrive, in which case home-working is a sensible move. But just because you work from home, it doesn't make your business any less serious, any less worthy of your best efforts.

It's important to keep your overheads low, but it's also just as important to do things properly. That's why our first piece of advice for home-based businesses is this: draw up professional contracts, get yourself the right insurance and invest the right amount in marketing, in exactly the same way as you'd do when setting up business in separate premises.

Create a dedicated workspace

You could use the kitchen table to run your business. Or do it from the settee. But when the line between work and home blurs, it's all too easy to get distracted. There's a lot to be said for setting up a dedicated working space where you focus on business and nothing but business.

It might be your box room, or the cupboard under the stairs. It might even be a corner of a room, a place you can cordon off with screens. Just make sure it's a definite workspace with a single function. That's the best way to ensure you get into the working zone quickly and efficiently.

Small is beautiful – Keeping things simple

If you're in digital marketing, for example, all you might need to run your business is a laptop and a phone. These days there's rarely any real need for piles of printed stationery or paper files. In many cases you should be able to set up a totally paper-free office, which means you need a whole lot less space than a traditional business used to take up. Think first before you order any printed materials.

If you make and sell physical products, on the other hand, working wholly at home could be more of a challenge. You might need storage space, either at home in your garage or a garden shed, space donated by a friend or family member or, as a last resort, hired space.

Extending your home for business

Some entrepreneurs enjoy working from home so much that they extend their homes to account for business growth. You can extend in several ways and some come under permitted development, which means planning permission shouldn't be an issue. Garden rooms are great, where you build an indoor-outdoor room in your garden with proper insulation, lighting, power and heating. Some people add a conservatory to their home, others go for a summerhouse, and a few build a traditional brick and glass extension for the purpose.

Keeping up with the kids

A lot of our homer-working clients have children to care for. They fit running a business around school hours, something that's often a lot easier to do when you work from home than when you rent an office. Because you're at home, you can be much more flexible with your working hours and be where you need to be without having to travel between the office and home. Which also means you also save on public transport and driving costs, naturally making your business greener as well as cheaper to run.

Free business tech and tools

Just because you're starting a business, it doersn't mena you have to pay for expensive business tools. You could pay for software and business tools. Or you could find free alternatives, Open Source products created by altruistic people for business owners like you. Say you need basic accounting software. Type -free accounting software' into Google and see what pops up. Once your new business beds in and becomes a success, assuming it becomes necessary, you can think about buying more complicated software to meet your growing needs.

Use innovative new communications channels

Do you have a landline at home? If so, don't use it for business calls. You might want to avoid using your mobile for business, too, wherever possibloe. Use internet services like Skype or Google Voice instead, to radically reduce your phone bill, and bear in mind emails, tweets and texts are usually cheaper than phoning.

Do you really need a business bank account?

Some people run their home freelance business using an ordinary current account. A business account can be an expensive business, while using your current account – at least until the business begins to grow and thrive – is relatively cheap.

Limited company versus sole trader status

Do you really need to set up a Limited Company at the start? Not really. You can operate simply and cheaply as a sole trader, at least in the early days, then decide whether it's worth setting up a limited liability company once you know for sure your business isn't going to fail at the first hurdle.

Claiming household expenses against tax

Whether you're a freelancer or a limited company, you can claim back a proportion of the expense of heating and lighting your home against tax. This also helps keep your start-up overheads as low as they can go.

Setting up a simple website in the early stages

Keep your website small and simple in the early days. You can always add to your online presence as the business grows, keeping the costs down when it's important to save money and spending a little more once you're sure of success.

Letting your home insurers know

Even if you're simply using a laptop and phone to run a home business and never have customers visiting your premises, you still need to let your home buildings and contents insurer know that you're conducting business from home. If you don't tell them, they're entitled to reject any claims you make, even if the claim has nothing whatsoever to do with the fact that you run a business from home. It's more likely they'll apply an endorsement to your policy than charge you more.

To find out more about how Aben Bookkeeping can help your business call 01273 661913 or e-mail karen@abenbookkeeping.co.uk