If you’ve come to this blog because you’re considering setting up as a freelance trainer but have yet to take the leap into self-employment, then this week’s blog is for you. I’m looking at ten training business start-up essentials that should help you start as you mean to go on.
Start-up essential #1: Prepare a business plan
As with any start-up business, it’s a good idea to prepare a Business Plan for your company, including items such as market research, financial assumptions, and your income and sales projections. Having a business plan will help you focus and act as a decision-making tool, as you can look at opportunities within the context of how they fit into your short-, medium- and long-term goals for the business.
Business plans are also helpful if you’re seeking funding or support from a third party, such as your bank.
Start-up essential #2: Fully research your market
As part of your Business Plan, you will need to carefully research your market by asking questions such as:
- Where will your clients come from?
- Who are they?
- What do they buy right now?
- Why do they buy?
- What will make them buy training from you?
Try looking at training companies that are a similar size to your proposed company and that serve the same geographic area (which could be global if you’re planning a web-based training business). Also, try to look for companies with a similar structure and that are relatively new.
It’s important to understand how you will adapt and fit into the marketplace. However, it’s also important that you develop a unique voice rather than become a pale imitation of a successful competitor.
Start-up essential #3: Decide on your legal structure
Many start-up businesses, especially individuals working on a freelance basis, operate as sole traders. However, there are benefits to operating as a Partnership or as a Limited Company. Talk to an accountant or solicitor to discuss which legal structure would be best for your business.
Start-up essential #4: Decide on a business name
Your business needs a name. I’ll be talking about this in more detail in a future blog but, for now, it’s important to remember that the name may be one of the first things a potential client learns about your business. Whether you decide to use your own name or pick a name that represents the business, make sure it’s easy to say and spell, has positive connotations, can grow with your business and is memorable.
Before you go any further, it’s worth checking whether anyone else is using the same business name and, if so, whether it is registered with Companies House and a registered trade mark. I recently found a handy list of business name FAQs on The Law Donut website that cover this in more detail.
Once you have decided on a business name, you need to register for tax and National Insurance with HM Revenue & Customs and register for VAT, if necessary (depending on your predicted annual turnover).
Start-up essential #5: Understand legislation that may affect your business
Before you start your business, spend some time looking at issues such as data protection, EU VAT, health and safety legislation, and insurance recommendations. As a freelance trainer, it’s a good idea to have Public Liability Insurance and Professional Indemnity Insurance.
Start-up essential #6: Decide how to manage your accounts
As a business owner, you are required to maintain handwritten or electronic financial records for your training business, and retain these records for at least six years. Do you want to handle your accounts yourself or will you need a bookkeeper and/or accountant? Perhaps you’d prefer to use accounting software such as Kashflow, Sage, Clearbooks or Xero? It’s worth shopping around and asking for recommendations from other small business owners. A good accountant can be worth their weight in gold.
Start-up essential #7: Set up a separate business account
If you decide to operate as a sole trader, you aren’t legally required to have a separate business bank account but it’s good practice. By having a separate account, you can keep your business and personal finances apart and your accounts will be easier to prepare at year end. Your business finances would also be more transparent in the event of an audit by HMRC.
I’d also recommend setting up a business savings account and putting away a percentage of each training fee you receive towards your future tax, National Insurance, VAT and/or accountant/solicitor’s bills.
Start-up essential #8: Know your numbers
Again, this is a planned topic for a future blog but it’s important that you know the numbers in your business:
- How much money do you need to earn each month?
- How are you going to earn this money?
- What do you plan on charging?
- How will you work out your fees?
- How many training sessions do you need to book in per month?
- What services do you plan on selling?
- When will be your busy and quiet times?
When you know how much you need to earn and how you plan to earn it, it’s easier to stay on top of your cash flow and beat the feast and famine rollercoaster.
Start-up essential #9: Have enough capital to see you through the first three months
Although the fear of no money coming in can be a great motivator and people have started up very successful training businesses without any reserves in the bank, a good rule of thumb is to have enough capital put by to cover three months’ worth of bills and living expenses when you first start out. This will give you a buffer as you work on your marketing and begin to attract new business.
Start-up essential #10: Know your value
Although you may be new to freelance training, the chances are that you’re already an experienced trainer with a great deal of knowledge to offer your clients. Take some time to think about your value:
- How can you help businesses?
- Where can you make the most difference?
- What results can your clients expect?
- What credentials do you have?
- What knowledge do you bring that others might not have?
- How is your training different or more engaging?
When you are confident about all the positive ways you can make a difference, it’s easier to aim for higher value clients and compete on the value you bring rather than what you charge.
If you’re about to start-up a freelance training business, why not say hello in the Comments section below? I’d love to hear where you are in your journey. If you’d like to find out more about my one-day workshops, there’s details and dates at: How to build a successful and profitable training business