Starting a business has never been more popular as a career pathway but there's a lot to think about. We've looked at the key steps you need to take when setting up a business, from the planning stage all the way through to launch.
Record numbers of people in the UK are starting their own business. According to the Centre for Entrepreneurs, 589,008 new businesses were registered in 2017.
Technology has made it easier, quicker and cheaper than ever to start your own business. Some people start a business to earn more, while others seek greater flexibility so they can better manage work and family commitments.
Being your own boss can be more rewarding, enjoyable and satisfying, but it takes hard work and commitment. The hours can be longer and there are no guarantees that your new business will survive.
Your new business could be based on knowledge or skills you’ve already gained or you could try something completely different. Your new business could be based on your hobby or a gap you’ve identified in a market.
Early on, decide when your business will operate. Will yours be a full-time, part-time, spare-time or a seasonal business? Will you sell offline, online or both? To consumers, businesses or both? Should you buy an existing business or start from scratch?
Should you set up a business on your own or in partnership? You should feel confident that you have the necessary knowledge, skills and personal qualities to run a successful business (although support is available). And you should know what the realities are because it can affect your life and that of others.
So, how can you get your new business off to a flying start?
Successful businesses are built on great ideas, so devote enough time to coming up with a viable startup business idea (step 1). Essentially, that means enough people buying what you’re selling at the price you charge so you generate enough profit to survive and grow.
Inspiration for new business ideas can come from many places. Some startup business ideas are unique, but in truth, most are variations on existing business ideas. If your business idea isn’t unique, you must find ways to be special. Give people a clear reason to buy from you and not your competitors.
Once you’ve come up with your business idea, carry out basic market research (step 2). Firstly, find out what competition you’ll face. Who are your competitors and what do they sell? How do they sell it and how much do they charge? How could your business be better?
Now find out about potential customers. You need to know who is most likely to buy from you (ie your target customers), where they are (local, regional, UK or overseas?), what they want/need, when they buy, how and how much they pay. What do they like and dislike about their existing suppliers?
Have samples or anything you can use to show what you plan to sell and speak directly to potential customers. Ask them what they think of your business idea/products/service and – crucially – the prices you plan to charge. Record feedback and use it later to improve your business idea.
Based on your market research, work out whether your business idea is viable (step 3). How much revenue (ie money from sales) will you make each month? Will you make enough money to cover all of your likely costs and generate enough profit to create a sufficient wage for yourself?
Absolute honesty is advised. If your business idea isn’t viable – think of a new one. Alternatively, a few changes might do the trick.
By now you should know what you should sell, how, which customers you should target and how much you should charge. These are all crucial questions when you start your own business. You must also work out roughly how much it will cost to start your new business and know where you’ll get the money to launch your new business.
Now you should start producing your business plan (step 4). You can finesse and finalise before launch. Having to write a startup business plan means having to answer key questions about your market, your products/services, what your business is, where it fits in, what it’s trying to achieve in the next few years and how (ie your strategy).
The figures (aka “financials”) are the most critical element of any sound startup business plan. Although actual costs, revenue and cash flow figures often differ from forecasts, if they’re based on reliable market knowledge/research, they can show that your business is viable (on paper at least).
Having a sound business plan shows that you’ve considered your business and its market sufficiently. That awareness is essential. It also shows that you’ve thought about where you want to take your business and how – rather than just hoping it will develop in the right way.
Business plan financials can also help you to judge performance and progress (or lack of). A lender may expect to see a sound business plan if you approach them for startup funding or finance. To ensure it remains relevant and useful, update your business plan regularly. An accountant can help you to prepare your business plan.
You now need to decide where your business will be based (step 5). If you can run your new business from your home, it will really help you to minimise your costs – a key aim.
It will also mean you’ll lose less money if your new business fails. Minimising costs means you’ll have to make fewer sales to break even and generate profit. And you can claim for certain expenses when running a business from your home.
Whatever your business, you’re still likely to need a basic home office or be able to work or do admin at home. List all of the items you’ll need – from IT and a telephone through office furniture to stationery. If you can use what you already have – fantastic. If not, borrow, swap or buy second-hand. Only buy if there’s a genuine business need.
If your new business needs premises, start searching as soon as possible. Think carefully about location and space; shop around for best value and negotiate firmly with landlords. Seek legal advice before signing a commercial lease. Find out how much you’ll pay in business rates and insurance.
You’ll also need to source items for your premises, whether that’s machinery, equipment, tools, IT, telephones, furniture, fixtures and fittings. You may also need to decorate, fit out or secure your new premises, as well as arrange wifi and telephone connection.
You might also need to buy stock or materials, so start sourcing your suppliers (step 6). And shop around for best value and negotiate firmly if your business needs a commercial vehicle (decide whether to buy or lease).
If your new business needs to take on staff, leave enough time to recruit the right people (step 7). Make sure you understand your obligations under employment law. Also, sort out insurance for your business (step 8) – some types you need by law.
You need to create a winning brand for your new business (step 9). Branding means the perception created in people’s minds when they think of your business. When creating your brand identity, first focus on what your business stands for – its values. What is your USP? Offering genuinely superior customer service can really set your business apart for little additional cost.
How can your brand be best evoked by your business name? When choosing a name for your business (step 10), also be guided by the need to attract customers (as well as legal considerations). Also, consider where you’re likely to appear in search engine results and whether you can get your preferred website address (ie URL) when registering (find out).
Your brand identity (eg choice of colours, typefaces, logos, marketing strap line) should also evoke your brand. If you have budget, using a branding consultant can prove wise. If you do it yourself, keep it simple. Take influence from brands you like, but don’t just copy them. Apply your branding consistently.
Creating a website (step 11) is another crucial startup task. Some new businesses create their own, while others with budget pay someone else. Even if you don’t sell online, having an impressive website can really help you to attract customers, many of whom will want to check you out before enquiring or buying. With your website complete, establish your presence on social media websites (step 12), because this can also help you to engage, attract and retain customers.
Explore other marketing options – online and offline – because if people don’t know you exist, they won’t buy from you. While postcards, leaflets and word of mouth work well for many small businesses, for others the answer lies in PR, online content marketing, pay-per-click advertising or email marketing. A mix is likely to offer a solution for your new business.
Explore no-cost and low-cost marketing options first; find out what works best. Based on your market knowledge/research, create a basic marketing plan for your new business (step 13). If you can engage customers before starting your new business, you’re more likely to make sales when you launch.
By law you must record all payments entering and leaving your business, so that you can pay the necessary tax. You’ll need to set up a basic bookkeeping system for your new business (step 15).
Cloud-based bookkeeping software is very popular (manual systems less so) and many accountants who provide services to small businesses can advise you or provide readymade software accounting solutions. If you employ people, you’ll need one that calculates/records wage payments, tax deductions and National Insurance contributions.
Aim to maintain accurate, up-to-date financial records for your new business from the start. It can prevent serious problems. Even if money is tight, consider hiring an experienced accountant to help to fulfill your tax obligations.
The next challenge is to find the right bank for your new business (shop around – they’re a supplier like all others), open a business bank account (step 16) and ask what support they provide to startups. All that remains now is to set a date and officially launch your new business.
A business idea doesn't have to be unique or original. However, you must be able to make enough profit to keep the business afloat and pay yourself and any staff.Read more
Having a robust business plan to guide you when you're starting out can be the difference between success and failure.Read more
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