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.
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.
“I realised there was a huge gap in the market for fast, healthy food,” says Carly Jones, founder of Kettlebell Kitchen. “Most people said it was a ‘mad’ idea but I was determined to prove them wrong. I made the leap and it worked!”
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?
Will my startup business idea make enough money?
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.
Now find out about potential customers. You need to know who is most likely to buy from you (i.e. 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?
Based on your market research, work out whether your business idea is viable (step 3). How much revenue (i.e. 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.
Produce a startup business plan
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).
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.
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.
“Two years ago the pop-up route was becoming a more and more viable option to get a business off the ground,” says Dan Place of Northern Soul Grilled Cheese. “We took a lease out on a market style building in the Northern Quarter, Manchester, and styled it on an inside-out NYC food spot.”
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 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.
“I hired a graphic designer to do my branding and I’m so glad that I made this investment,” says Sarah Empson of Geo Heaven. “It’s helped me to realise my brand identity and has made my brand much more cohesive.”
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, and, as previously mentioned, different social media channels. A mix is likely to offer a solution for your new business.
Setting up a startup bookkeeping system and bank account
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.