Here are nine essential steps for starting a business in the UK
As of 2023, 99.2% of all businesses in the UK will be SMEs. The reason is? It's exciting to start your own business, and it can be incredibly lucrative.
But before you jump in, you need to consider a lot of factors. It's imperative to do the necessary preparation to ensure your business is successful, as just over a third of startups survive beyond five years.
You'll learn practical tips to position yourself for both immediate and long-term success in this guide about starting a business.
1. Create a solid business plan
Business ideas should solve people's problems. Having a successful and sustainable business is part of the dream, but you need to make sure it is profitable and sustainable as well.
Starting with something you love and something you do well is a great place to start. As soon as you have developed your idea, you can begin researching growth strategies and developing your business plan.
2. Research the idea you have
A SWOT analysis can help you determine whether your idea is viable or not. Good business ideas are born out of plenty of market research.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. In order to develop the right business strategy, you will need to analyse your business idea in more detail.
You can answer certain questions by conducting primary and secondary research in addition to your SWOT analysis.
Using questionnaires, interviews, and product trials, primary research involves testing your business idea on your target audience:
What is the target audience for your product or service?
You want to know how much your products or services are worth to people
Competitors' opinions from your customers
Problems your business may face
You can gather information on your target market by looking at existing data. This data can be found in the following examples:
Government data
Studies and surveys conducted recently
Newspaper reports
Recent company data
3. Prepare a business plan
The business plan outlines what your company will do along with current and future goals for success.
Business plans don't need to be extremely long, but they should be comprehensive. Describe your financial plan/funding strategy, your target market, and your understanding of the market.
It is important to include the following in a business plan:
Business summary: An overview of your business and what you plan to achieve.
Business description: A brief description of what you plan to offer, why and who to, along with why your idea will be a success.
Marketing and sales strategy: Details on your customers, competitors, pricing, distribution and marketing tactics.
Products and/or services: A detailed description of the products/services you offer and how they’ll benefit your customers.
Organisation structure: Details on your professional credentials, those of your team and the people you plan to employ.
Business operations: Details on business location and premises, production and IT systems.
The financial projections include cash flow forecasts, accounts, and balance sheets. Income and revenue sources, capital requirements, repayment plans for borrowings, and guarantees you can offer lenders should all be part of your financial plan.
4. Get your business registered
The next step is to determine your business' legal structure once you've conducted your research and it is market-ready.
Sole traders, limited companies, and partnerships are the most common types of small businesses in the UK.
Sole trader:
An individual who owns and operates their own business. HMRC registration is free, and you keep all business profits after tax, which is paid through Self Assessment.
Limited company:
Separate legal identity from owners and directors. By keeping company finances and tax separate, it limits personal liability. To manage this, it is usually helpful to have an accountant on board, but it isn't a requirement. You must register your limited company with Companies House and HMRC.
Partnership:
In a similar manner to a sole trader, the partnership and its members must register for self-assessment. When one partner leaves, a partnership must dissolve.
A business must be registered with HMRC or an approved formation agent of Companies House.
5. Manage your finances and funding
Having a separate business and personal bank account is a great way to start off.
It keeps your finances more organized and makes you look more professional. Therefore, bookkeeping and tax preparation will be easier.
It's not impossible to start a small business without money. There are many ways to cover startup costs and fund your business. The following are among them:
Small business start up loans:
You can borrow money for working capital, inventory, equipment, and more with a startup loan or small business loan.
Start-up grants:
British Small Business Grants, InnovateUK, and Horizon Europe are among the government and EU-backed initiatives that provide business grants. You don't have to pay back grants if you are successful. Grants are offered on a case-by-case basis.
Angel investments:
Capital is given to new business owners in exchange for equity by angel investors. As a stakeholder, they will gain partial control of your business while lending entrepreneurial experience to help you win the market.
Crowdfunding:
Business capital is sourced through this method, in which many people contribute small amounts to finance a business venture. In return for equity or a reward, you can also ask friends and family to invest.
6. Get your business insured
Having business insurance ensures a safe and protected working environment.
Your business operations will determine which type of insurance policy you need, but you may need at least one of these:
Business contents insurance:
Coverage against damage, theft, fire, and natural disasters. Even if you have a home contents policy and work from home, this is required.
Commercial property insurance:
Providing protection against damage, theft, fire, and natural disasters to your business premises.
Professional indemnity insurance:
Reducing the risk of unhappy clients making claims against you.
Small business public liability insurance:
Providing you with protection from claims made by injured or damaged members of the public.
Employers’ liability insurance:
Employees' liability insurance is the same as public liability insurance.
Business car insurance:
Any vehicle used for business purposes is covered.
7. Provide your business with the tools it needs to succeed
Investing in the right tools can save you time and money and help you make better business decisions.
There are a few effective tools that you should consider when you start your business, even though this isn't a definitive list.
Accounting software:
Tracking business expenses and preparing for tax season is easier with accounting software. You'll get all the latest cloud-based tools set up by Zyla, and training will be provided at every step.
Domain registration:
To have a professional email address, you'll also need to register a domain name when registering your company.
Your name is the first part, followed by .com and .co.uk. for example!
Virtual office address:
Ensure that your personal address remains private by securing a permanent virtual office address.
In addition to saving you time on admin, this allows you to receive mail from anywhere in the world!
CRM (customer relationship management) software:
Small businesses need CRM software to maintain strong customer relationships and save time - from automating tasks to tracking sales and marketing data, this is a must-have. Often, expense administration ta3kes up valuable time that could be better spent elsewhere.
8. Develop a marketing plan
You’ve conducted your research and put together your business plan with strategies in place – but how do you start marketing your business?
There are all kinds of ways to do this: telling friends and family, attending networking events, advertising your product or service in the local press and/or online, and many more.
The most likely place to see consistent results is through digital marketing. Making up 75% of the UK’s total marketing budget, it has surpassed traditional marketing, growing by 9.6% between 2020 and 2021.
Below we list the important things to consider when marketing your business:
Get a website
Your website is essentially your online shop front and the place to send customers to find out more about you and your products or services.
Taking only 50 milliseconds to form an opinion about your website, you want to make sure its functionality is seamless.
Your website should be simple, easy to navigate and organised so that visitors see your most important messages first. To gain credibility, it should work on all devices and operating systems, and only contain true information.
Budget-friendly developer platforms such as WordPress and Squarespace let you use templates to build user-friendly websites from scratch, without prior design experience.
Optimise for SEO
Once your website is up and running, it’s important to optimise it for search engines (SEO), like Google. This involves researching keywords that potential users might use when looking for your product – and if done correctly, the search engine will point to your website.
Bear in mind that this is a long-term strategy, so you may not see a rise in traffic volumes straight away.
Deploy a social media strategy
Social media is a sure way to get the attention of potential buyers – with approximately 16.4 million consumers in the UK making purchases via social media channels.
Posting relevant content that appeals to your target audience will help drive traffic back to your website, where they can find out more about your business and the products/services you sell.
While it’s not necessary to be on every social media channel, it’s worth doing some research to figure out what the best channels are for your business specifically.
Facebook and Instagram can be good places to start, as they allow you to sell directly from your social media account. They also offer free ad training to help you market your business effectively.
9. Prepare for business growth
Scaling your business involves balancing your finances – keeping costs down while remaining profitable.
Whether you’re expanding marketing operations, introducing new products or collaborating with influencers, your main goal is to increase revenue and build a solid customer base.
Many businesses introduce automation technology to help manage tasks, such as lead generation, accounting and email marketing.
As your business scales, you’ll need to build a team to handle daily operations – and depending on your business needs, this could be in the form of full-time employees, contractors or freelancers.
For expert advice and support with your startup, contact Zyla Accountants today.