What is business infrastructure?
It is important to research and establish your infrastructure for startup so that the daily activities of your business run smoothly.
A well organised and well structured company will be able to deliver its products and services in a timely fashion, and ensure that existing and new customers are happy and the company is profitable.
In this blog post we’ll cover the specifics of choosing your infrastructure for startup, including:
- Communication – how to create a business email
- Equipment – what equipment do I need?
- Logistics – how to manage logistics
- Premises – how to choose the right workspace
- The financial infrastructure of startup business
Communication – how to create a business email
Most businesses will have several ways customers, suppliers or partners can get in touch with them. If you need access to telephones, emails/internet, then you need to start organising this as soon as you know the space where you will be working from. Sometimes, these things can take a frustrating amount of time to organise/install, and you need to allow plenty of time for this. The last thing you want to happen is technology teething problems impacting your customers.
It’s good practice to set up company emails that clearly represent your company like: firstname.secondname@companyname.com.
It’s also a good idea to have a generic info@companyname.com or hello@companyname.com email address for people to contact you so that multiple staff members have access and can action.
You can often set up your emails through your website hosting company which we’ll get to in more detail later on in the website chapter. However, a standard option is using a large provider like Google’s GSuite or Microsoft’s Office 365. These providers have fairly low monthly costs in exchange for solid, reliable infrastructure and up-to-date security.
What equipment do I need?
What equipment do you need for your business? This also falls under the infrastructure for startup. By equipment, I mean anything that you use to create your products or services. If you are an accountant, you’ll need a computer, an internet connection and access to accounting software. If you’re starting a gym, you’ll need gym equipment, lockers, mats, music systems, televisions, wireless routers…
For some businesses like gyms or coffee vans, the cost of equipment is a huge part of their infrastructure for startup costs. Find out the financing options for the equipment you need as soon as you can – you’ll need to look at the long term costs of this in order to decide on whether it’s a good idea to lease or purchase your equipment outright. A surprising variety of equipment is available for lease, and for businesses, without much available funding, this can be a low-cost way of getting started.
How to manage logistics
Logistics is the art of managing supply and transportation. Effective logistics, delivery and operational planning are all about producing, storing and delivering your products to your end-user. Managing this efficiently will save you both time and money – well worth the thought and research!
Transportation of goods can be one of the most challenging aspects of running a company – it can be expensive and may need a lot of paperwork, particularly if the product is being shipped outside your country. It’s also surprising the number of carriers with restrictions over the types of goods they will deliver.
Understanding this part of the business and having someone responsible for it can make a big difference to efficiency.
As well as considering how you will deliver your products, consider your suppliers. Where are they, how can they deliver to you, and what are the costs in doing so? The answers to these questions may impact not only your logistics planning but where you locate your business.
With so many aspects involved, having a logistics planning document alongside your business plan is important for if you are starting a company that sells physical goods.
Premises – how to choose the right workspace
When looking at the infrastructure for startup, choosing the right type of premises, and its location are both important decisions to make. The happy confluence of a low price, good location and room for future expansion can be hard to come by. Moving premises is costly – in terms of both time and money. Finding the right place could take a while – but rest assured when you do, you can then focus on building the perfect atmosphere and environment for your business.
If you rent or buy your premises or part of the premises, you may well have to pay business rates on top of rent. These are charged on most non-domestic properties. Small companies can apply for a discount on business rates, while some might not pay any rates at all! Some councils will charge mobile businesses business rates if they have a fixed pitch. The rates will be worked out on the land cost rather than the mobile unit.
What do your premises contain? If you didn’t think about it in the equipment section above, now’s the time. There can be hidden costs to setting up your office for example, such as furniture, computers, printers, cables, telephones, signage for the building, security/alarms, hardware and software, software licences (multiple licences can be expensive), stationery, tea and coffee. In most cases, these costs will increase as more people join your business. Tea and coffee for a workforce of 50 is substantially different to 5.
Location is a tricky one to get right – if you are relying on passing trade, it is often a balancing act between footfall (passing trade) and expense (business rates tend to be higher in more popular areas).
There could also be some legal requirements that you will need to comply with – depending on the actual location of your premises:
- If you have altered the property in any way, this will need to be signed off by Building Control at the local council.
- Does the property have the right permissions to be used for your type of business?
- Are there any restrictions over noise/pollution levels/disposal of waste that you need to be aware of?
The financial infrastructure of your startup business
Sorting out the ways your business deals with all things “money” is an important part of having a well-functioning business. Getting wise to these practices and systems now will save you time, money and frustration in the long run – so let’s dive in.
Bank accounts
Limited companies are required to have a business bank account, as legally the business is a separate entity to you. Accordingly, sole traders are not required to have a business bank account. However, there are often good reasons for setting one up:
- Your bank may require you to do so (if their terms and conditions state that personal accounts are not to be used for business);
- It can be easier to keep personal and business transactions separate, particularly when submitting returns to HMRC
- It looks more professional if you have a separate business bank account
A business bank account offers all the same facilities as a personal count, but also means that the business can borrow money, get a company credit card and take card payments from customers. Depending on the type of account, there will be a small monthly charge.
Payment Methods
You also need to establish the best ways for your customers to pay you, and for you to pay your suppliers.
You have the following options available to you:
- Via debit or credit cards from your bank
- BACS payments from your bank account to your supplier’s bank account
- PayPal accounts
- Cash
- Cheque
- Online payments via payment gateways
Card payments – On-Site
To take physical card payments from customers you’ll need a card machine (a PDQ terminal). Talk to your bank or payment service provider about setting up a merchant account for card payments. This means that the money is in a separate, ring-fenced account until the payment has been authorised. The bank or payment service provider will also set up a payment gateway for you.
There are lots of different card machine options available to you, including:
- Smartphone card machines
- Wireless machines
- Virtual terminals
Each one will have its own setup and monthly costs and will depend on whether you rent or buy it. Costs vary from £15 to £30 per month depending on the option you choose.
You’ll also have to pay a transaction fee for each card payment you take. The amount depends on the number of transactions you make and whether you pay a percentage of each transaction or a flat fee. You may also incur some minimum usage charges with some providers if your number of transactions is low.
Card Payments or Bank Transfers Online
There are several different ways of working or selling products and services online. eBay and Amazon are well-known platforms for starting out selling online, but depending on the kind of work you’re doing, Etsy, Patreon, Freelancer or Fiverr may be more appropriate.
If you want to take online payments through your website, the safest and easiest way is to use a payment gateway. They mean you can get instant payment, add credibility, and improved security over just taking direct debit payments.
There are many providers out there including:
- SagePay
- WorldPay
- 2Checkout
- Stripe
- Paypal
Integrating your website with a payment gateway will need expertise, and if you’re not confident then it’s best to seek professional help.
How to keep track of your finances
Doing the books/accounts is crucial for any business. And, unfortunately, this is where most stereotypes of accountancy being boring come from.
A lot of the hard labour that this reputation owes itself to can now be done through software, which accountants are experts in. Accountants and bookkeepers still possess invaluable skills, and it’s worth seeking their aid (particularly when it comes to tax returns or business advice) to ensure the business’ finances are handled correctly.
There are many tools out there that can automate invoices, track payments and link it all to your business bank account. Some of these are easier to master than others but could save you some time if you don’t want to have someone on your team fully responsible for the financial side of the business.
You might want to look at online providers such as Xero, Quickbooks or Freeagent but you may need an accountant or finance professional to help you set this up for your company.
Invoicing
When you sell something to a customer you should provide an invoice, and also keep a copy of this invoice for your records. This could be digital, or on paper, but many digital invoicing systems exist that can make this easier for you.
An invoice should include:
- Your company name, address (registered and trading) and contact information
- The company identification number
- The company name and address of the customer you’re invoicing
- A clear description of what you’re charging for
- The date the goods or service were provided (supply date)
- The date of the invoice
- The amount(s) being charged
- VAT number if registered for VAT
- VAT amount of applicable
- The total amount owed
If you and your customers are VAT registered you must provide a VAT invoice, which must include additional VAT information.
How to avoid cash flow problems
Many of these costs are predictable and so are so easy to plan, you just need to think about them ahead of time.
For each topic we’ve covered today, you should make a list of all costs associated with setting up your business. You should then research how much these costs are and how often they need to be paid. A lot of them will have an annual or monthly fee. Once you have a better understanding of these costs, note down, for each month, what costs need paying, and how much it is.
Unexpected expenses can cause cash flow problems so it’s crucial to think about these costs ahead of time to avoid these pitfalls.
Conclusion
In this article we covered:
- Communication – how to create a business email
- Equipment – what equipment do I need?
- Logistics – how to manage logistics
- Premises – how to choose the right workspace
- The financial infrastructure of your startup business
Again, there’s a lot to think about here and most of it will apply to your business in some shape or form. So take it slowly and make sure you cover all the bases before you move on.
Speaking of moving on, in the next article we’re going to be looking at protecting your business from laws, regulations & others copying your ideas!
