Starting a business is exciting but it can also be daunting. Turn your entrepreneurial dreams into reality by following our guide to the practical steps you’ll need to take.
So, you’ve got an idea for a business and you’re ready to make it happen. Congratulations! It doesn’t matter if this is a side hustle or a bigger venture, there are some important jobs you need to do to ensure your new business meets all of the key legal and administrative requirements.
Of course, ticking these boxes is no guarantee of start-up success. So we’ve also highlighted some other key tasks that will ensure that your new venture gets off to a flying start.
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Decide on a business name
A good business name should be original, distinctive, easy to remember and it should encapsulate what you offer. Start by brainstorming a long list of contenders, then test each one against these criteria:
- Is the name already listed at Companies House?
- Is the online domain name available?
- Is someone using that business name on social media?
- Is the name too restrictive if your business diversifies over time?
- Is it easy to read, say and remember?
- Does it stand out from the crowd in your marketplace?
Choose your business structure
The next step is to decide how you want to structure your business. These are the options:
Sole trader: If you’re self-employed and you don’t employ any staff you can operate as a sole trader. This business structure is easy to establish and you can keep all your profits after you’ve paid tax on them. However, you are personally responsible for any losses your business makes.
Partnership: If you set up a business with another person you can structure it as a partnership. This is similar to a sole trader set-up but the partnership, as well as the individuals, must be registered for tax self-assessment.
Limited company: Setting up a limited company is more complex but it can offer advantages. The company has a legal identity, separate from the owners and directors, which can protect you if your business gets into debt. A company can also offer tax efficiencies - money earned is taken out of the company as a salary and/or dividends. You are likely to need a good accountant to help you manage the company finances, including corporation tax.
Limited liability partnership: This is similar to a private limited company but responsibility is shared between partners.
Register your business
You don’t need to register your business if you are self-employed but you do need to tell HMRC that you are working as a sole trader and sign up for tax self assessment. As a sole trader, you can trade under a business name but you don’t need to register that name.
Every business needs some kind of insurance. The kind of cover you need will depend on your specific requirements. You’ll need specific contents insurance to protect stock and materials, even if you work from home. If you have premises that your customers can visit, you’ll need commercial property insurance as well as public liability cover. If you provide services, it is also worth getting professional indemnity insurance which will protect you if a customer is not happy with the service you have provided. Employers’ liability insurance is essential if you employ staff.
Apply for licences and permits
Lots of businesses require a licence or a permit before they can legally trade. These include: food businesses, taxi firms, child care providers, manufacturers, import and export businesses, hairdressers, tobacco or alcohol retailers, farms and many more. The government Licence Finder tool can help you find out what kind of licence you need for your business.
There are also government regulations that cover everything from storing customer data and selling goods online to disposing of waste. It’s up to you to make sure you are aware of the regulations that apply to your business and that you adhere to them.
Getting your business ready for launch
There are some other key steps you’ll need to take in order to give your business the best chance of success.
Do a SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis is a useful exercise to help you understand what makes your business special and to identify the areas that you’ll need to improve on. Strengths and weaknesses will be specific to your business, while opportunities and threats relate to outside factors such as competitors and market conditions.
Write a business plan
A business plan can help you set goals and achieve them. It’s also an important tool to help bring others on board, especially if you are looking for funding.
A good business plan should include:
- A summary of what your business does
- Where it sits in the market and what makes it different
- The management structure of the business
- Marketing and sales plans
- Finances including sales projections and cashflow forecasts
Lots of successful businesses are started on a shoestring or with a bit of help from friends and family but if you need more money to get your business off the ground there are a number of funding options.
Your high street bank may offer loans for small businesses like yours. Another option is the government-backed Start Up Loan - an unsecured personal loan of up to £25,000, with a fixed interest rate of 6% per year. The loan can be repaid over one to five years and there is no early repayment fee. If your application is successful, you’ll also get up to 12 months of free mentoring. Other funding options include grants, crowdfunding and angel investment.
Create a brand
Every business has its own unique identity that helps it stand out from the crowd. This is your brand. It’s not just important to look good as a business – you also need to be consistent in your branding to create recognition and grow a following. Key branding elements to focus on before launch include: a logo, your company colours, the typeface you use on your website, the style of photography you use, the tone of voice you use in all your communications and the words and phrases that best describe what makes your business special.
Organise your business finances
Every business needs a system for keeping records, paying tax and managing finance. One of the first things to organise is a bank account. You can use your personal account for payments if you are a sole trader although it’s a good idea to keep business and personal finances separate. If you are working through a limited company you have to set up a business bank account. Most charge a fee so it is worth shopping around. Start as you mean to go on by creating a system for recording all your income and business expenses. Subscribing to an accounting app like Xero or FreeAgent will make it much easier to send invoices and manage cashflow. If you are registered for VAT, you’ll need to use an app to submit VAT returns under Making Tax Digital. A good accountant could well save you money in the long run and will be able to advise you on how to keep business records.
Build a website
Almost every customer begins their buying journey online so a website is essential. No matter how your business operates, your customers will expect to find you online and they’ll want to get information about who you are, what you do, where you’re based, your opening times and other essential information. If you can sell your products or take bookings online, you should. A good website doesn’t have to be full of bells and whistles though. Make it simple to navigate, include calls to action and provide all the necessary information and images. Your websites can give shoppers the confidence to buy - use it to show people who you are, tell your story and share positive feedback from happy customers. Once you have a website up and running you can create social media accounts on Facebook, Instagram, Twitter and others.
And finally, don’t go it alone
There’s a wealth of free advice, help and support out there for would-be entrepreneurs:
- Find everything you need to know about starting a business on the Donut websites;
- Call the government Business Support Helpline;
- Contact your local Growth Hub - there are 38 in England. There are also business support services in Scotland (Business Gateway), Wales (Business Wales) and Northern Ireland (Invest Northern Ireland).
- Join the a small business body like the British Chambers of Commerce (BCC) or the Federation of Small Businesses (FSB);
- Connect with small business owners on Facebook or find a mentor that has experience in your sector.