Congratulations, and welcome to lesson one which is slightly unusual because I want to talk to you about your mindset; you see having the right attitude and approach to starting your own business matters. A lot.

It’s been your dream for some time and now you’ve done something about it. It’s the start of a journey and your dream now is to be successful.

That’s why we’ve constructed our own DREAM™ sequence for you to follow: you see the experience we’ve gained from helping lots of our members start and run successful businesses is that to be successful you must develop a mindset – an attitude if you like – and follow a process even when it feels uncomfortable to do so. We may ask you to ‘step outside your comfort zone’ and ‘face your fear and do it anyway’. There is a good reason for this – it works!

Here is the DREAM sequence:

D is for desire: the journey to becoming a business owner is hard…don’t let anyone tell you otherwise. It’s why we are here to help you. But you must want it – really want it. Some people will say you need to be passionate and love what you do. That it’s what gets you out of bed in the morning looking forward to every day. That you are doing something worthwhile, helping others and fulfilling your purpose. None of those statements are an exaggeration. Your desire to become the best you can possibly be and a successful business owner must be the most important thing to you after family.

R is for roadmap: you wouldn’t set out on a journey to somewhere new without knowing the destination and having a map to get you there. Starting on your business journey is just the same. You need a detailed plan. I’m not talking about a written business plan that gathers dust as soon as it’s written but a working document setting out the steps you need to take, the resources you need and the help you’ll call on. You’ll find it’s a lot like building a house and just like a house you need to build your business in the right order (groundworks before roof) and not miss any stages. The single biggest reason we find our members struggle (before we get them back on track) is because they miss a step in the process that they don’t think is important or they don’t feel like completing. Don’t fall into that trap.

E is for environment: whatever your reason for starting your own business you’ll need support from your family and friends. Lots of our members do it to have a more fulfilling lifestyle and more family time, so make sure your family understand the pressures you face and are there to support you. There will be setbacks. Don’t go it alone. And find a comfortable, quiet place to work from where you have all the resources you need.

A is for aptitude: you already have all the skills you need to be a bookkeeper; sure they may be some learning that you still want to do to be able to offer more services but you have the basics. The skills you don’t have yet may be around running a business, getting and keeping the clients you want (and not the ones you don’t), marketing your services, networking, and compliance with all the rules and regulations of the bookkeeping profession. Don’t worry. We have you covered. In this programme is everything, and we mean everything, you need to know to launch and run a successful bookkeeping business. And as you grow in confidence and gain more clients you can add more services to your portfolio.

M is for mindset: which is where we started. A lot of us grew up with limiting beliefs around money, wealth, success, whether we are worthy and worst of all a scarcity – rather than abundance – mentality. Lose those limiting beliefs. Believe that anything is possible if you put your mind to it. Change only happens outside your comfort zone. Be the person you want to be. Develop yourself as well as your business. Create a vision, and values, for your business based on your purpose. Become unstoppable. It takes guts and self-confidence, which is why our boost programme in Module 4 is so important – don’t skip it and if you’d like a confidence boost right now you can start this module straightaway (it’s stand alone and self-contained) and refer back to it as you progress through the rest of the programme.

Action:

Take some time, find a quiet place and write down (in your journal if you have one, which we strongly encourage you do) each of the steps in the dream sequence and your beliefs about each step. Refer back to this regularly. Take action if you are finding any of the steps difficult.

Recommended reading:

Start with Why – Simon Sinek

Built to Last – Jim Collins and Jerry Porras

Unstoppable People – Adrian Gilpin

Abundance Unleashed - Christian Mickelson

Your mindset is the number one thing that will create success or failure in your business.

A business owner is an entrepreneur and an entrepreneur’s number one downfall is themselves. The ability to have success comes down to seeing how an entrepreneur sees the world or a set of challenges. A challenge and an opportunity are the same; they’re just seen differently. Anxiety and excitement are the same emotion.

And entrepreneurship is all about managing risk, overcoming obstacles, managing energy, and managing emotions. Difficult things are going to happen (and we can include handling success well as something that is often emotionally difficult). How are you going to handle these things as they come?

If there’s a single thing an entrepreneur must have in order to achieve success, both in the short and long term, it’s the ability to have a mindset that is growth-oriented and for that person not to hang on to an old set of beliefs and stories and for the person to allow for new information to change what they believe is law.

One thing is for certain with entrepreneurship and your mindset: your beliefs will change quickly and your mind will evolve quickly. That is, if you want to grow your business. What served you once, won’t now.

Thanks to the internet, everyone has equal access to the information they need to succeed. The biggest obstacle is almost always that the entrepreneur gets in his or her own way. It is always your thoughts, beliefs, and mindsets that keep you stuck playing a smaller game.

In this paper, we will go over how to strengthen your mindset so that you can powerfully handle any obstacle and show you how to graciously accept (and then build upon) your well-deserved success without falling into complacency or self-sabotage.

Your mindset will create your outcome

The truth is this: your mindset will create your outcome. It will decide what you do, how you think, and you can typically see the success or failure of a business based directly upon the mindset of the owner. Think about it this way: the mindset, values, and beliefs that you have today have brought you to where you are. They’ve been formulated from your friends, parents, books, and those who you follow and surround yourself with. Most entrepreneurs who succeed are those who are open to change, and they see their beliefs as theory, not law. Inside of business, those who see what they believe as laws typically fail.

So there are two mindset shifts you must understand:

1. Failure is simply a data point that tells us what went wrong. It tells us what didn’t go how we expected. It’s easy to identify.
2. Success is scarier because most of the time, we’re not 100 percent certain how we achieved it, and we aren’t fully confident that we can keep creating these results.

Often, not only do we not understand HOW what we did made us successful, but we don’t know how to handle it. Our minds are conditioned for failure much better than for success. Our DNA has been developed over the years to protect us from all the elements outside of our comfort zone. That means the discomfort of success can seem like failure, if not worse.

Most of us can imagine huge failure. It’s how our brain protects us. We can predict what the worst will look and feel like. Yet when presented with success, especially for the first time, it allows us to access our imagination, creativity, and (for better or worse) our ego and pride in ways we’ve never imagined. It’s the number one reason that entrepreneurs who find early success lose it all. They don’t know how to react to their newfound freedom. Their egos get inflated, and they start to believe they’re invincible. As a result, they start making emotionally bad choices. Now you are forewarned you won’t make this mistake.

Most of the accountants and bookkeepers I work with need mentorship or coaching to work on their mindset. Because it’s their mindset that stops them. Most of us know exactly what we need to do, but we’re just afraid of that next level because of limiting beliefs. If we solve this and build a process for your mindset which will unleash the ability for you to actually implement what’s in this programme. You will find your purpose so that your business becomes a machine that delivers value to your clients.

How do I find my purpose?

You may have no idea what your purpose is right now. (And if you believe that you currently do know your purpose, well, there is always more that can be revealed to you about it.) I believe our purpose is revealed to us over the course of our lives through what is called emergence. Similar to how the entire blueprint of a perfect oak tree is contained within a single acorn, the highest expression of your self exists within you (and always has). But if the mighty oak is going to grow from the acorn, it requires the right conditions to emerge. It needs to be planted in fertile soil, get plenty of water and sunlight, and not fall prey to natural disasters or to human or animal intervention of its growth.

If you are going to emerge into knowing and living your purpose, you need the right conditions too. The first thing you need to know about these right conditions is that it is impossible to truly know yourself when you’re constantly stressing over the day-to-day concerns. You need to be able to take some longer-term perspective to see more of the full picture, and that is extremely difficult when these kinds of questions are always buzzing somewhere in the back of your mind:

• How am I going to pay these bills?
• Is there enough money coming in this month?
• Am I charging enough?
• Why am I working so hard for this?

It requires a real commitment of time and energy to connect deeply with yourself, and so long as you’re worrying about where the next client is going to come from, you will never be able to fully unleash your purpose into the world. The constant nagging of questions like the ones above make it hard to reach the levels of peace and freedom needed to figure out what your next best steps are.

How do I achieve ‘freedom’?

I define “freedom” as being when you are able to look at your life and can confidently say, “I am able to do what I want, when I want, with who I want to do it with. And I am able to do so simply because I want to.” Having access to all the people, places, things, and experiences you most desire, without any of the emotional hang-ups around your worth or worries of whether you deserve the things you want or having the nagging feeling that you’re an imposter.

Having a real business that creates value and generates profit can provide you with true freedom and abundance if you have the right mindset and lay the right foundations.

As I’ll demonstrate when we get to marketing and selling your services, there are several powerful reasons to focus on serving a smaller number of clients on a deeper, more intimate level as opposed to selling at lower value points to a larger number of clients.

The truth is, when you are providing huge value to your clients there is a path to not just higher profits but, more importantly, a business that provides you with true freedom that likely involves serving fewer clients but on a deeper level.

I challenge you to start brainstorming on and researching into the ways you can deliver more value (as well as the offer(s) you can make to be the vehicle delivering that increased value). Also get clear on who you most want to serve in this deeper way. Figure out what values (or traits or attitudes) that exist among the people who have been energising for you to work within the past.

It’s important also to remember that it’s always helpful to have a clear vision of what the ideal life you’re moving toward is. The more vivid your vision is, the better you can articulate it for yourself. Start there. And make a commitment to revisit your vision at least once a week and to refresh it at least once a year (ideally once a quarter).

Confidence

A want to finish this paper with a word about confidence. Ever since I started my programmes the one constant ‘problem’ people tell my they have is a lack of confidence. For some it’s fear, for others its not knowing what they don’t know and for many its not wanting to let themselves and their families down.

Now there are two types of confidence. There’s the confidence in your work and results, which, at the beginning, might be difficult. Then there’s self-confidence that you can make this work.

Each and every day will be a struggle if you don’t have the self-confidence that you can make this work. Keeping your self-confidence is one of the most difficult things you’ll have to deal with. Sometimes it will be hard to even look in the mirror and say, “I’ve got this”.

So right now tell yourself “I can do this”.

I’ve coached people of every type and seen people with little or no confidence in themselves blossom and grow into real entrepreneurs (and not just business owners). Anyone can do it, including you, with the right mindset.

Success doesn’t happen by accident. It is not the preserve of talented or gifted people. Success is a choice.

If you look at – or ask – any successful person to find out what makes them different from ‘ordinary’ people, you’ll find it’s two things:

1. The way they think; and
2. The way they behave.

Choose to think and behave like other successful people and you will be successful too. Look at their habits for clues; they have habits, behaviours and routines that they repeat from the time they wake up to the books they read.

And if you decide to become a successful business owner – and enjoy lifestyle freedom and financial certainty - you must think and behave like people who are already playing in that league.

Only 20% of business owners are successful (and 20% of that 20% are super-successful). The rest are just getting by or struggling. So if you do what most business owners do then you are doing the wrong things. This is a really important lesson, because if you repeat the habits of the majority (who aren’t successful) rather than the successful you’ll be doing the wrong things too.

To begin with it may not be easy; it takes hard work to find and engage with the right people, attend the right events, take the right courses and read the right books. You won’t find them at networking events like BNI and the Chamber of Commerce; they are the last places you want to be unless you want to be anything other than ordinary.

In this programme I’ll be exploring some of the things you should be doing (and some you shouldn’t) to grow and become successful. To get started here are some of the behaviours and beliefs of successful people.

This may seem a strange place to start but it actually determines a lot of the things you’ll do next. Setting up your business in the right way keeps costs down. It can also help prevent your working relationships turning sour (one of the major causes of business failure) if you are working with someone else. So first you need to decide which structure to use to set up your business:

1. a) A sole trader ,
2. b) Partnership, or
3. c) A limited company.

Noel’s Note: Start as a sole trader (or a limited company if you and a friend have bought this opportunity together). You can always ‘incorporate’ (set up as a limited company) at a later date. If you prefer to have the added protection of a limited company from the start, we will also look at how to trade as a limited company. This may sound daunting if it’s all new to you but you’ll be able to talk through any concerns and questions to put your mind at ease.

Type this link into your browser bar to book your free chat: www.calendly.com/noelguilford

Here’s some information on each structure:

Sole Trader

As a sole trader, you’re self-employed with no special legal structure. There is no distinction between you and the business. For simplicity alone, the sole trader is often the preferred choice for many start-up businesses; setting up is quick and easy and you can easily form a limited company later and transfer the business to it.

The major disadvantage is that you are personally liable for all your business debts. This means that your own assets — all of them — are at risk. Also you are entitled to fewer social security benefits, your options for raising money are limited and it is harder to sell the business or pass it on.

If you decide to be a sole trader, you must tell HMRC that you have started a business (and, if applicable, register for VAT.) (See “What to tell HMRC”.)

Each year you will be required to file a self-assessment tax return following the end of the tax year. Tax on your taxable profits is due every six months on 31 January and 31 July in the year following, so be sure to set aside sufficient provision against your profits to pay your tax. Non-payment by the due dates will result in automatic interest charges and, in some circumstances, penalties.

Noel’s Note: From your accounting spreadsheet, take the net profit each month and put 20% of this into a savings account. This will cover your tax – with more left towards a holiday! Business expenses are generally deducted from income if they are incurred wholly and exclusively for the purpose of your Bookkeeping business. Most expenses which form part of the day to day running of the business will be allowable. Notable exceptions are expenses of a “capital nature” (such as buying a computer) and entertainment (such as taking a client out for lunch).

For your expenses of a capital nature you can claim what are called “capital allowances”.

Partnership

A partnership has similar advantages and disadvantages to a sole trader, but there is one other factor to take into account which is that each partner is personally liable for all the business debts of the partnership (other than tax on profits), even if another partner caused them. So think very seriously about going into partnership with someone.

If you and a friend have bought this opportunity together then set up a limited company rather than a partnership. If you do decide to set up a partnership, to avoid disputes, we recommend that you have a partnership agreement drawn up (and agreed by all partners) which sets out the commercial understanding between the partners such as profit sharing, drawings, dissolution, retirement etc. A good commercial solicitor will draw this up for you.

For all practical purposes, much of what is said for the sole trader can also be said about the taxation of a partnership. There is, however, slightly more regulation and admin for a partnership because you have to submit a tax return for the partnership as well as one for each of the partners.

Limited Company

The final common business structure is a limited company. The first and most important point, for the owner of a new small business, is to understand that a company is a completely separate legal entity from its owner. It’s the shareholders who own the company, and the directors who govern the company’s activities. It’s really quite easy to set up a limited company so we’ve included a guide about how to do this at the end of this resource. A limited company must prepare and file annual accounts at Companies House (but you will not need an accountant to audit your accounts). Normally, the liability of the owners (shareholders who own the company’s shares) is limited to the amount they agree to invest in the company by buying its shares. However, there are still circumstances where personal liability may arise, for example, by giving personal guarantees or security on company borrowings, or the company trading wrongfully or fraudulently. As with a partnership, if your business is going to have more than one owner, the owners must determine what their working relationship will be. It is vital to discuss the main issues and write them down in a shareholder’s agreement (see below).

We recommend two further steps that the owners of a company take at the outset:

1. If there are only two of you (or two couples) don’t have a 50:50 shareholding: make it 51:49 so if you do fall out there isn’t a deadlock. We have known banks freeze a company’s bank account until a deadlock is resolved.
2. Secondly, appoint a trusted business friend you both agree on as a mediator to resolve any serious differences. What really sets a company apart from a sole trader or partnership is that a company pays corporation tax rather than income tax. This is paid on the profits (these include trading income, investment income and capital gains) remaining after deducting the salaries of the owners (which are taxed under PAYE). Corporation tax is generally payable nine months after the end of the company’s accounting period.

National Insurance contributions - both employers and employees - also have to be paid on salaries including those of company directors. For most small owner-managed limited companies it is sensible to pay the director’s salary at the level of the annual personal tax allowance (thus avoiding PAYE) and top this up with dividends which do not attract national insurance. However you can only take a dividend out of profits, so if you make losses initially while you are building up your business you will have to take your remuneration as salary. Another point to note is that further tax is payable when these (net of tax) profits are extracted from the business. The amount of tax payable depends on how this is done as there are different tax rules and rates of tax applicable depending on whether the profits are extracted as dividends by the shareholders or as a salary/bonus taken by the employees/directors. Don’t worry if this information seems overwhelming as you can ask any questions as part of your one hour call with our Chartered Accountant. On an ongoing basis, a good accountant or bookkeeper will remind or advise you.

What should be in my Shareholders’ Agreement?

A shareholders’ agreement helps all the people involved in starting a new limited company know where they stand, just like a partnership agreement. It should cover key issues for the business and likely ‘what if’ scenarios, including:

• Investing money. Who contributes how much and in what form (e.g. as shares or as a loan), for what reward?
• What happens if more capital is needed next year? How much will the company need to borrow and on what terms?
• Withdrawing money: what dividends, directors’ fees and salaries will be paid?
• What happens if one person needs to take out extra money?
• Responsibilities: who makes decisions? Who is responsible for each business area? How will progress be monitored?
• Growth: How fast will you expand? Into which areas of business? How much risk are you ready to accept?
• Split up: can you buy each other out? Can you split the company up? How? And how will the shares be valued?
• What to do if one of the shareholders dies, becomes ill, wants to retire or reduces their involvement.

Discussing and settling these issues is vital from the start. It minimises the risk of people feeling they are putting in too much time and effort for too small a share of the rewards and provides for what happens if they fall out at a later date. You can instruct a solicitor who is experienced in dealing with small businesses to draw up a shareholders’ agreement for you.

How to Register a Limited Company

This process is only relevant if you have decided to incorporate your Bookkeeping business as a limited company. You should have already chosen a business name and checked that it is available at www.companieshouse.co.uk You should now go to www.gov.uk/register-a-company-online and you will need the company’s name and registered address (probably your home address).

If you don’t want to use your home address, your accountant may allow you to use theirs or you could use a local serviced office (search ‘serviced offices [your area]’); Names and addresses of directors (probably just you); Details of shareholders and share capital (the amount of money you put in to form the company – usually a nominal amount).

Then just click on ‘Start Now’ and complete the online forms. There is no minimum amount of share capital you must subscribe for so we suggest £10; when asked for the types of share just enter @ordinary shares of £1 each. It will cost approximately £15 (at the time of writing this) and you should receive your certificate of incorporation within a week.

Congratulations! You are now both the owner of a limited company and a company director. When you register a limited company at Companies House they will automatically tell HMRC who will write to you with your unique tax reference (UTR). Keep this safe – you will need it in all dealings with HMRC and your accountant may need it too (if you have one). Treat your UTR with the same respect you give your NIC number. Your company is a separate legal entity and will be responsible for paying its own tax such as corporation tax (and VAT and PAYE if you also register for these). Any dividends you are paid by your company are treated as your income and taxed on you at your marginal rate. You must declare these on your self-assessment tax return.

If you decide to trade as a sole trader (or work as a partner in a partnership), you must register as self-employed with HMRC, even if you already pay tax via the self-assessment system each year. You can register online at www.gov.uk/set-up-soletrader/register.

Once you start trading as self-employed, you will need to pay your own National Insurance contributions (NICs). You will automatically be registered for NICs when you register as self-employed. NICs are calculated when you submit your self-assessment tax return and must be paid by 31st January of the following year. HRMC will contact you to remind you of this.

The registration process is easy but I am here to help you if you get stuck. If you decide to form a limited company, Companies House will automatically tell HMRC who will write to you with your company’s unique tax reference (UTR). This is a separate UTR than your personal one. Keep this safe – you will need it in all dealings with HMRC and your accountant may need it too (if you have one).

Treat your UTRs with the same respect you give your NIC number.

Self-Assessment Tax Return: you will have to file a self-assessment tax return if you are either self-employed or a director of your company for each tax year ending 5th April, and pay any tax and national insurance owing by 31st January of the following year.

For sole traders and partners, it will include their share of profits before drawings. For directors of limited companies this will include your salary and dividends from the company for that tax year.

You can go online at www.gov.uk/self-assessment-tax-returns to access your return. If you have not already done so you may have to access the Government Gateway first (http://www.gateway.gov.uk/). This is the website you use to register for government online services and will allow you to access any of the government service which are online.

Anyone running a business should know the financial state of the business on a regular basis, but more importantly should be able to use the financial information about the business to manage it more effectively, increase revenues, save costs and take important strategic decisions about the direction the business should take. Understanding your business numbers – when they are produced properly – is what frees your time to be able to do the right things and spend the right amount of money on the right things to develop and grow your business.

David Jenyns from Systemology has kindly allowed me to add Daniel Priestley's book to the Resource Centre; well worth reading.