Setting up a
marine business

Launching your marine venture

Many people dream of turning their sailing or boating hobby into a business – it could be a full career switch, or to generate a subsidiary source of income.  In the marine industry, it’s very common for businesses to start in the spare room, but some marine entrepreneurs prefer to take on premises from the start.  Either way, there are various factors to consider, including crucial aspects related to Marine Trade insurance.  We have put together some key points to help get you started on your journey.

Early on in the set up process there are decisions to be made as to the type of business you are setting up – legal structures include sole trader, partnership, community interest company, or a limited company. We have looked at the most common options.

Partnership

If you’re going into partnership with a friend or family member, consider what will happen if you have differing ideas further down the line.  How will you split ownership of ideas and innovations? What will happen if one of you wants to sell your share of the business?  Do you intend to employ staff, and if so, will you offer them shares in the business?  With a partnership, both partners share personal responsibility for the marine business, including any losses that may transpire.  Profits are shared and each partner will pay tax on their share.

Sole Trader

If you set up as a sole trader you will be self-employed and able to directly retain any profits that the business makes.  However, as in a partnership, you will also be personally responsible for business debt and any losses that the business may make.  You can offset costs incurred in the running of the business and you will need to register for VAT if the turnover goes over the threshold.  Both partnership and sole trader businesses need to be registered with HMRC for tax purposes.

Limited Company

If the business is set up as a limited company, your personal and business finances are kept separate with any liabilities or debts limited to the company.  As a company director, you pay yourself a wage via PAYE and can also draw income from company dividends if you make a profit.  It is worth discussing this with an accountant as there can be personal tax benefits working through a limited company compared to sole trading and partnerships.

A limited company can be set up by an individual, or there can be multiple shareholders, guarantors, and directors.  There are company record keeping and filing obligations which have to be met annually and company information is generally available for the public to view, so thought needs to be given about the registered address.

LLP

Another option for setting up a marine trade business is as a Limited Liability Partnership (LLP) which combines the shared responsibilities of a partnership with that of a limited company.

It is worth taking time at the formation stage to identify the right company structure for your business.  The UK government provides lots of useful information here.  Various private organisations such as Rapid Formations also provide information and services to make setting up a business a relatively simple process.

Market Research

It’s important to conduct market research to identify your target market and potential customers.  Carry out research to see if the product or service that you want to base your business around is unique and if not, check to see what any competitors are doing.  Questions to ask yourself could be:  Why will your customers buy from you?  What will you do that your competitors are not doing?  How much will customers be prepared to spend on your product or service, and will you be able to make a profit?  What do you want to get out of your new business?  Is the market growing and developing?  How best to reach new customers?  What channels are best to use to promote your business?

This should be an ongoing process throughout business life to make sure that your business is always relevant and adapting to market changes.

Marine Business Plan

Create a business plan to help you work out how to make your Marine Trade business a success.  The business plan will help you to develop your business idea further while identifying any potential issues.  What will your Unique Selling Proposition be?  This will provide the foundation for the entire business, so it needs to be clearly defined.  The business plan should include financial projections including costs you anticipate incurring and revenues you expect to generate, marketing strategies and your goals.  Also include details on who your target market is and how you anticipate reaching customers.  How will you sell your products and services? What are your objectives and strategies?  The business plan should also cover financing the new enterprise and the aforementioned company structure.

Summarising the plan into a short executive summary and creating a punchy elevator pitch is valuable to help sell your marine business concept to anyone you speak to about it.

Marine Business Name

Brainstorm with friends and family to come up with a memorable business name that will reflect your mission.  The name will be the centre of your brand identity.  Will it mean something to your customers while differentiating you from your competitors?  Will the name work as the business matures?  Think about how your name will work as part of a logo and across your marketing materials, with a complementary tagline potentially bolted on to it.  Does it work as a website address and is the domain name available?

Marine Business Financing

The costs of setting up and running a start-up vary greatly between businesses.  Funding may be available from a variety of sources, but it is worth initially looking at UK government finance support as it encourages business and trade growth.  It could be a grant, a loan, R&D tax relief or funding for innovation and sustainability projects.  Commercial loans can be obtained from a bank or building society, but make sure you work out how much interest you will be paying and how much you will be paying back each month.

You may have personal savings, or you may be comfortable borrowing start-up costs from friends or family.  Other options could include getting an investor on board, working with a business angel or crowdfunding. Work out how much you will need to start your business, from premises to wages and paying bills such as a mortgage while you are setting up.  Also consider the fact you may not make a profit for some time.

Marine Business Employees

If you’re planning on employing staff, you will need to consider employment contracts, employer’s liability insurance and explore how your marine business can attract and retain talent, as well as invest in ongoing training and development programs.

Complying with payroll expenses and benefit rules including paying the national minimum wage, employer national insurance contributions and running PAYE is a legal requirement. You will also need to comply with any workplace pension requirements and decide how you will support staff with their families and childcare.