What is Turnover in Business?
Turnover is easily confused with profit in business. It is a good marker in knowing the health status and general performance of your business. This article will guide you through understanding what business turnover is, and in simple terms, guide you through calculating it. The article will also give you a comprehensive guide on how to start a new business and provide an insight into which businesses have a huge turnover in the UK.
What is Turnover?
Turnover is the total amount of sales your business makes in a given period. Sometimes turnover is simply referred to as income or gross revenue. Knowing the figure of your turnover at any given time of your business is essential because it will help measure your business performance, enabling you to plan and secure investment. If you are planning to sell your business, the turnover figure is an important measure in valuing your company.
About Starting a New Business in the UK
Below are the steps you need to take when starting up a new business in the UK.
Step 1: Decide How Your Business will Trade
The first step in setting up a new business is defining the status of your business, whether you want to trade as a limited company or a sole trader.
Sole Trader: You will run your own business and have complete control over it. You will keep all the profits after tax and will be solely responsible for the debts of the business. In this case, your personal assets and finances are at risk.
Limited Company: when you register your private company with the companies act, it becomes a limited company. The company might have multiple owners and has limited liability. In this case, your personal assets and finances are protected in case the business falls into debt.
Step 2: Write a Business plan
This is a very time-consuming but essential part of setting up your business. A business plan is necessary because it will serve as an indicator as to whether your idea is viable. It also transforms your idea into a workable blueprint and prepares you for business ownership. A business plan will consist of the following parts.
Executive Summary – Summarize your business idea, including goals and all the basic startup information. It should be informative but brief and precise.
Market Research – Shows the functional capabilities of your business. It includes potential customers, their location, demographics, and preferences.
Competitor Research – Understand your competition and how it may affect your new business. Include ways of overcoming possible challenges that may come as a result of the competition.
Business Finances: This will give you a picture of whether your business idea will be profitable or not.
Cost of Running the Business: Researching on running costs and honestly accounting for them will help pricing your products.
Sales Forecasts: this is a rough prediction of your business turnover. However, you should always prepare for the worst-case scenario because this figure may not be accurate.
Cash Flow Forecast: this will help you predict the amount of money that will be passing through your business. From this, you can tell the shortfalls that your business may encounter in the future.
Step 3: Find a Source of Finance
If you need external sources to fund your business, you can turn to the alternative finance market and check out useful solutions such as,
- Startup business loans
- Limited company loans
- Business credit cards
- Invoice finance products
- R & D tax relief
Step 4: Check and improve your credit score
Use a credit checker to know your credit rating and the business financing options available for you.
Step 5: Set up an online presence for your business.
You could consider a website or a social media page that will be suitable for your business. Online presence is significant for your business.
Top 5 Businesses Which Give Huge Turnover in the UK
Private and corporate clients seek the services of barristers, patent agents, solicitors, bailiffs, and notaries to carry out their legal activities. The demand for legal work in the UK is always on the rise, although the turnover is expected to fall in the current year due to factors like the negative effects of Covid -19, a decline in merger and acquisition activity, and business uncertainty following the EU referendum.
As a contractor, you can focus on commercial building activities or on small-scale maintenance contracts from local markets. Construction contractors get their turnover from completing contracts, renovations, repair, fulfilling maintenance, and remodeling contract obligations. The spectrum of service to be offered by this business is multifaceted.
This is a business that offers expert assistance and advice in designing and planning computer systems. It integrates communication technologies with computer software and hardware. This business will provide consultant advice to clients from all sectors of the economy. Particularly important markets for this business are clients from the public sector and those from the financial service sector. Demand for services in this sector is largely generated by technological advancements and business confidence levels.
Security and commodity contracts brokerage
As a broker in the security and commodity contract brokerage, you will be dealing in the financial markets on behalf of others. Large stock market sell-off during the year has seen the industry turnover slightly distorted. This industry has very high volatility, and in some cases, this is beneficial to the industry
Banks generate their income by charging interest rates on loans, overdraft fees, and card fees. Since covid -19, personal lending has grown as consumers have become increasingly dependent on debt to fund their spending. Banks are, however, surrounded by economic uncertainty and a strict regulatory environment.
One main factor that will determine your new business’s success is your preparedness to start up the business. This article has given important insights into what you need to do before you kick-start your new business. The article has also given insight on the high turnover businesses in the UK market that you could consider when thinking of a business to start.