Self-Employment to Small Business: A Guide

So you’ve been working solo for a while, operating as a sole trader, and your business has found its footing. It’s time to start growing, and that means a partner or at least one employee.

This can seem like a simple step, but the transition is actually one of the biggest shifts in how you have to think about business that there is. As accountants for small businesses in Lancaster and Morecambe, here are some things to think about before you make the shift.

Business Plans Aren’t Optional

When your business is just you, there’s a degree to which you can have a rough idea where you’re going but otherwise play everything day-to-day. Many small businesses start out in that space – arguably, you have to, until you learn enough to be able to make long-term plans with any value.

If you transition from sole trader to partnership, you immediately benefit from having an agreed plan to help guide the company and resolve any differences in judgement. If you take on employees, you’re responsible now for their welfare as well as your own.

A business plan with goals and structure – that is, an understanding of how you intend to work towards those goals – is essential in either case. But there’s more value to a business plan than that; expansion often requires investment, and a solid business plan is a key part of securing funding.

And let’s not forget that the act of creating a business plan forces you to answer questions that may have been vague up until that point. This can help you to spot potential problems before they come up and start troubleshooting early.

Nor Are Soft Skills

The single biggest way to cause yourself problems when there’s someone else as part of your business is to tell them what to do rather than manage them.

Techniques for managing different personality types are far beyond the scope of this guide, and even identifying what personality you’re working with and deciding how best to motivate them can take time and skills. All the same, learning the best ways to reduce friction in clashes and to keep morale high pays huge dividends, and the same skills are also useful when talking to customers or potential customers.

You Brought Others in for a Reason

Your business will always be your baby. Even founders who sell a successful business on to someone else stay invested in its success and keep an eye out for news of it.

But part of growth is accepting that you can no longer do everything yourself. Whatever your new additions are doing has to maintain your standards, but micromanaging them doesn’t get work done faster or better, and it uses up time you need elsewhere. Learning to let go and trust others – especially if they have skills you don’t – is a whole new skillset, but you’ll benefit from it.

Keep Your Records Clean

Just as you’ll want a formal business plan early on, your financial records need to be that little bit more accurate and up to date.

This is especially true if you start to suspect you may need to pivot your business – the only way to confirm a decision like that is with up to date financials. Make sure you’re taking the time to do this, or if you can’t, make sure someone you can trust is. There’s a reason why we’re often called in at this point in a business’ growth.

If you want support in the accounts for your small business as it grows, get in touch. We’re always happy to help.