We’ll be honest, starting a business is no small feat. But becoming your own boss and transforming that lightbulb moment into an actual business is pretty exciting.
Why do you want to start your business?
Starting a business can mean more money and freedom but there’s a lot of work to put in first. We hate to say it, but at times you’ll need to make sacrifices and difficult decisions.
If you know the logic behind it, it will help you stay motivated and, crucially, having clear goals will help you plan how to achieve them more efficiently.
So, ask yourself why you’re starting the business. Someone who starts a business to do good in the local community will have a different approach to the person who simply wants to make enough to live on without working for someone else.
The starting a business to-do list
Every business is different, and everyone has a different way of starting theirs, but in general:
Research everything. Who are your customers and competitors? How much money will you need to start?
Choose a legal structure. Will you be a limited company, a sole trader, or something else?
Prepare a business plan (including a marketing strategy!)
Apply for or raise funding if you need it
Learn about managing and recording your finances
Understand your duties and obligations
What to do before starting a business
Knowledge is power, so do as much research as possible before you commit headlong to anything.
Research the viability of your start-up business for customers and competition.
If you have a great idea, it won’t go far without demand. The most successful businesses get where they are by solving a problem or meeting a need. Even if you do need to explain what problem you’re solving first! Undertaking some serious market research will help you understand your target market, which puts you in a better position to reach out to them and make sales.
See who your likely competitors are, too. For example, checking their prices gives you an idea of what people are prepared to pay, which in turn helps you plan how much you must sell to make a profit. If you’ve got a great idea for a start-up, don’t be tempted to rush into anything. Be prepared!
How do I choose a legal structure when I start a business?
The type of legal setup that you use when you start a business can affect everything from how it trades, to the amount of tax it pays.
Without going too far into the nitty-gritty of different business structures, the most common ones include:
Creating a business plan for your new business is crucial for a number of reasons.
If you intend to apply for funding or finance, you will almost certainly need a robust business plan which sets out your goals, projected income, and expenditure. Make sure you have good research and logic to back up your proposals!
A plan also helps keep a business on track. You’ll make better decisions if you know what you’re working towards, though you can always make changes as you progress and discover what works for your venture.
Your business plan isn’t a static document. Reviewing it regularly can help you see if you’re on track, or if your plans have changed (in which case, some of your decision-making might too).
If this is your first business venture and you’re currently working for an employer, you might consider doing both side-by-side. This does have its advantages, such as the security of a regular income whilst you start your business. It can help you launch the business gradually, with less pressure to make hasty decisions.
You must still keep financial records of all business activity, and pay the right amount of tax and National Insurance to HMRC.
You should also learn more about the trading allowance
If you’re a sole trader whose self-employed income is less than £1,000 in a tax year, you won’t need to register for Self Assessment or pay tax on this income. You can claim the trading allowance even if you’re also working for an employer. Which might be useful to know if you’re launching your business gradually!
Finding support and funding for your start-up business
Do you have enough money to start a business, and if you don’t, where will you find it? With so much to think about, this can seem overwhelming. Being realistic in your financial planning will help relieve some of this pressure.
While banks may be eager to lend money, interest rates can be higher at times of economic uncertainty. Similarly, if you’re considering looking for investment, decide what you’re willing to exchange for this.
As well as investigating loans (and on that note, look beyond the high-street banks), there are alternative sources of funding.
There are hundreds of grants and schemes supporting the growth and development of fresh new businesses. It just might take a bit of research to find them. UK Startups recommend narrowing your search down on the basis of:
Specific funding requirements
Good habits when you start a business
Reading the news, it’s pretty clear there’s always something going on which will affect the way you start your business. That said, some start-up business advice is timeless.
Have a marketing plan
Once you’ve done your research into target audience and branding, use this knowledge to inform your marketing strategy. Trust us, it’s right up there with your business plan.
Marketing your business well is essential to success, no matter how uncomfortable you may feel getting out there and selling. Again, like anything in business it helps if you have a plan. This means planning your strategy for social media, content marketing, PR, marketing events and SEO.
It sounds complicated, but even if you want to start your business slowly and rely on word-of-mouth recommendations to grow – that’s a plan!
How your business looks, sounds, and seems (known as branding), and whether this is the right message for your business.
The best way to let people know your business is on its way
Whether you’re starting an online business (like an ecommerce shop), an offline one (like plumbing), or a combination of the two (a physical shop that also sells online).
Open a business bank account
Unless you are a very small sole trader who plans to keep things below the trading allowance, it is a very good idea to set up a business bank account.
Having a separate bank account is a legal requirement for limited companies anyway, but it’s strongly advisable for any business.
It’s also particularly useful if you enter into a general partnership! Opening an account for the partnership itself means everyone can see exactly what’s happening with the finances, and multiple people can access the account without things getting messy.
Makes it much easier to complete your tax return and accounts
Help you make much more reliable business decisions, based on actual facts
Means you’re more likely to claw back every single allowable expense.
Starting a business with no money (or not much)
Starting a business can be an expensive process, though this does depend on what it is that you’re doing. Someone starting an online business or offering a digital service, such as copywriting or graphic design, typically has much lower start-up costs than someone opening a shop (which will require stock, premises, insurance…)
Whatever you’re starting, keeping costs down is important – especially in the beginning. The lower your costs (without compromising quality) the faster you’ll reach that crucial break-even point and start turning a profit.
Get your timing right
This covers everything from ‘when should I launch my business’, to dealing with supply chain management. Timing is everything.
What’s the best possible time to start your business?
Launching your business at the best possible moment can help you save a lot of money. For example, you could spend your all of your marketing budget advertising sunglasses in December, or you could spend it in the summer when more people are likely to be interested.
If you need to buy a lot of equipment, is it more financially efficient to wait until a time of year when these items are usually cheaper? There are also other costs, like paying for storage or rent, before you’re quite ready to get things going at that level. And on the subject of storage…
Timing applies to inventory management too
Carrying too much stock gives sellers a storage problem, which could force you to drop the price (or fork out for extra storage). Timing can affect non-physical sales, too. If you sell a service, manage your time to avoid over-committing to the extent that it damages your ability to deliver a high standard.
Do you need to pay for workspace?
Renting or buying space is often one of the biggest expenses that a start-up business faces. It’s also fairly common for it to be unnecessary – we’re here with the tough love!
Unless it’s absolutely necessary to work from a specific premises, consider whether you can save money by starting your business elsewhere. For instance, working from home, and using video calling, instant messaging, and then using hot-desk spaces if you need to meet face-to-face.
Buy used equipment
You might be tempted to go all out and buy a ton of brand-new furniture and shiny equipment but it’s not always necessary. You can save a lot of money by buying used items that are still in good condition. Then you can replace them, if necessary, when you have the money spare.
Hire freelancers rather than staff for short-term projects
Freelancers and agencies allow you to hire in skills and services for your business, without committing long-term like you would with an employee. Unless you need ongoing help, looking for a freelancer is likely to be more useful, especially at the start.
Haggling for a better deal might make you feel uncomfortable, but this happens all the time in the business world. Getting a better deal saves money which you can invest elsewhere in the business. Alternatively, you could try offering a swap of services that would benefit both parties. They can only say no.
Consider starting your business online
Technically anyone can start up an online business, especially with so many online marketplaces making it even easier to open up shop. It can reduce the amount that you need to spend on physical premises on an expensive high street, and the associated costs that come with it (which is often why online accountants are more competitively priced than the traditional local ones!).
Common mistakes which people make starting a business
The start-up phase of a business is intense, exciting, busy, and sometimes overwhelming. You want to get it right. You want to succeed. So, what are the most common mistakes start-ups make, which you can avoid?
Don’t forget to act after all that planning
Yes, really. Research, planning, profiling, drilling everyone for advice. These are all essential when you start a business. But it’s all too easy to get lost in the quagmire of planning, without actually getting anything done. There comes a point where you have to just DO.
Chasing the money rather than the growth
It’s incredibly easy, especially if you’ve got investors and bank loans to satisfy, to chase revenue blindly. Of course, making money is important – after all, dreams don’t pay bills.
However, too much revenue chasing, and you may find yourself compromising on your goals. Which, in turn, dilutes your brand, and business primary focus.
Separate emotions from business
An enormous number of start-ups are borne out of passion. This emotional investment can also blind you to reality, and make business decisions harder to make. Don’t misinterpret the strength of a potential market just because of how you feel.
Remember who’s in charge
Start-ups need intense leadership, whether they’re one person, or many. Whilst it’s fine to take advice and to consult others, be careful that your decision-making isn’t fuelled by a desire to please others, rather than by what’s best for the business.
Accept limitations and curb perfectionism
You are one person. You have limitations. It’s ok. Even superheroes have a sidekick. Put ego aside, and make sure that things are getting done by the best people for the job.
Don’t be afraid to diversify
Sudden changes can come out of nowhere (Covid’s effect on global business being one such example). Don’t be afraid to adapt if you can or if you need to.
Don’t forget your accountant!
It’s easy to get swept away with your new business venture, but remember that accountants see this stuff nearly every day. Use their expertise to build your business, be more efficient, and save money.