ALLOWING FOR ACCOUNTING AND CASH FLOW

Do you have basic book-keeping/accounting skills? If not, consider attending an evening class. Even if you are going to use an accountant, you still need to know the rudiments so as to be able to exercise financial control over your business and manage the cash flow efficiently. An online alternative you might want to consider is Dave Marshall’s website www.coursepal.com. Dave is a management accountant by profession and offers comprehensive free instruction for beginners. You can either participate in his tutorial online or download the e-book version to study offline at your own convenience.

ALLOWING FOR TAXATION

Not a subject we need delve into in detail this early in your potential adventure, but it would be prudent to make some allowance for it.

You should be thinking in terms of:

• 1.Income tax;
• 2.National Insurance contributions (NIC);
• 3.Value Added Tax (VAT).

Preparing your accounts

Should your business turnover (total sales) before expenses fall below £15,000 for a full year of trading, you will not be required to provide detailed accounts. Instead, a simple three-line summary will suffice. For example:

COMPUTER AND COMMUNICATION SKILLS

If you are currently short on either or both of these vital skills you will need to get up to speed as quickly as possible to make the most of your enterprise. Further on in this section you will find online and offline avenues of valuable instruction. Choose one and apply yourself before you launch your business – even if you are just doing it for pleasure.

LEARNING HOW TO MARKET THE ENTERPRISE

There is no mystique about marketing. It is all down to commonsense and practical application. Ignore the hype and concentrate on the essentials.

• 1.Costing.
• 2.Price setting.
• 3.Buying.
• 4.Merchandising.
• 5.Selling.

and only if you really need them ...

• 6.Advertising.
• 7.Public relations.
• 8.Exhibitions.

Once again you will find ample practical instruction online or offline as featured below.

ACQUIRING COMMERCIAL SKILLS ONLINE

Back to online learning: go to this ultra-professional non-profit website www.myownbusiness.org where you can access completely free of charge an MBA-calibre online course on how to go about setting up a business in retirement. It comes complete with 12 wide-ranging lessons and 33 powerful sound bites (in a variety of digital formats) from successful entrepreneurs, plus interactive feedback for each session. You get all of this without having to invest a penny. It covers in depth all of the elements we’ve just touched on and even if you are not on the internet at home you can still access this comprehensive course for free at your local library. As it does not require online participation you may download/print out the entire programme to study at home in your own time.

ADDING TO YOUR SKILLS OFFLINE

Online learning is extremely useful for getting up to speed on theory, but if you are really serious about pursuing this retirement option I suggest you put yourself down for one of the many business start-up programmes sponsored by the Department for Work and Pensions. Don’t be put off by the maximum age cut off point. If you are sufficiently persuasive you will gain admittance. I did, and I did so because no matter how much you think you know about commerce, you can never learn enough, let alone too much.

Here is an example of a typical syllabus:

• New business planning.
• Markets and market selection.
• Product identification.
• Marketing.
• Computer training.
• Support systems for start-ups.
• Financial planning.
• Public sector funding.
• Private sector funding.
• Sourcing proven ideas.
• Legal aspects.

It may cost you a little to participate but it will be money well spent if your heart is set on starting a business in retirement whether for fun or profit.

CRUCIAL QUESTIONS TO ASK YOUR PROFESSIONAL ADVISERS

Armed with all of this intelligence you will be more than able to field questions from your professional advisers – but here are some crucial questions you might want to ask them ...

Your solicitor

• 1.What are my legal obligations if I opt for sole trader status?
• 2.Explain to me the significance of individual and collective responsibility for debts incurred in a partnership arrangement?
• 3.How much will it cost me to set up a limited company?
• 4.Will I need more than one director?
• 5.Must I produce an annual return even though my turnover is small?

Your accountant

• 1.Which accounting books should I keep?
• 2.Are there different accounting procedures according to business status: sole trader, partnership, limited company?
• 3.What records should I maintain for taxation purposes?
• 4.How much do I have to be turning over before I register for VAT?
• 5.How much will you charge me for the annual audit (for a limited company)?

Your bank manager

• 1.Can you provide me with an overdraft facility?
• 2.If not, what are your best terms for a small business loan?
• 3.What are your charges for administering a small business current account?
• 4.If I get lucky and want to place money on deposit, what’s the best rate of interest you can offer me?
• 5.How often do you need to see management accounts: monthly, quarterly, half-yearly?

Your public sector funding contact

• 1.Would I qualify for small business grant?
• 2.Could you offer me a ‘soft’ loan facility?
• 3.Tell me about employment grants and how they operate.
• 4.What are your terms for office/small factory rental accommodation?
• 5.Could I obtain a training grant?
• 6.What else can you offer me?

CAUTIONARY NOTE

If you think I’m deliberately putting obstacles in your way to dissuade you from starting up in an offline business then you will be wrong. I operate one myself in retirement and derive tremendous satisfaction from it. What this chapter has set out to accomplish is to caution you that the commitment factor in offline trading is considerably higher than that relating to online enterprise.

Let me put that another way.

You can close down an online business at no cost with just a click of your mouse button but winding up an offline business that isn’t fulfilling your ambitions is both difficult and expensive.

Bear in mind too that going offline for your profitable retirement pursuit means you will be foregoing the opportunity to create streams of residual income – the subject matter of much of the remainder of this book.