Today, there is more opportunity than ever before to start a new business venture. This guide will show you the basics of how to start a small business UK.
Do you want to have an additional source of income, realise a lifelong dream or simply make money online? Whatever the reason, starting a new business can be a life-changing experience. This guide will help you get off to the best start.
How to start a small business UK in 9 steps
- Business idea
- Business name
- Legal structure
- Business plan
- Business records
Step 1: Your Business Idea
The first step is your business idea. What are you going to do? Do you intend to make products and sell them to customers? Or perhaps you intend to provide a service to customers? Is your business physical, or will you operate online?
It all starts with an idea. Without a credible business idea, you cannot continue. You should hopefully have an idea of what you want to do. If so, spend time researching your business idea. Who is the competition? What are the typical prices offered? Is there a wide market for your business idea? Do as much market research as possible.
If you do not have a clear idea, but simply know you want to create a business venture, there are things you can consider to help. For example, do you have any hobbies or interests? Do you have any particular skills? What do you do in your current employment?
Ask yourself these questions and see if, from the answers, you could formulate a business idea.
Step 2: Choose a Business Name
With a business idea in place, you must choose a business name. A business name is important for various reasons. Firstly, it will be used in the next steps and used if you need to register your business. Secondly, it will form your brand and help you choose a domain name and start a website for your business.
Choosing a business name can be one of the trickiest processes! Ideally, it should be catchy. It should also be relevant to what your business does, and/or the industry you are part of. Also, if possible, it should include a keyword or keyphrase that could appear prominent on search engines.
If you are struggling for inspiration and have no obvious names, you could use a name generator. You can find many business name generators online such as the Shopify free business name generator. These use AI technology to generate business names based on keywords you provide.
Step 3: Choose a Legal Business Structure
Depending on the type of business and who is involved, you may also need to register a specific business structure. The three main structures for small businesses are:
- Sole Trader: The easiest option. This requires no registration (except self-assessment), but there is no legal distinction between your business and yourself.
- Partnership: This could be an option if you intend to start the company with a business partner or multiple partners.
- Limited Company: This is the most complicated option but it clearly distinguishes you from your business.
This checklist for starting a small business UK will provide more information on this subject. The type of business structure you choose may also affect the type of business bank account you can open.
Step 4: Create a Business Plan
To be successful, it is important to create a business plan. Jumping straight into a new business venture with no clear idea of what you are doing is a recipe for disaster.
The business plan should be as detailed as possible and should include:
- Basic business information (name, industry, people involved)
- What your business does (products, services, the problem it solves)
- Business structure (legal structure, employees, location etc.)
- Business goals (short term, and long term)
- Market information (competitors, target customers, current trends)
These are just a few important examples. You could also consider including a SWOT analysis of your business (Strengths, Weaknesses, Opportunities, and Threats). This is a simple analytical format that helps you clearly identify the potential obstacles your business could encounter.
Essentially, your business plan must outline your clear strategy for how you will achieve your goals and operate your business.
If you’re looking to get funding for your business, in the form of an investment or bank loan, you will need a more comprehensive business plan that can be scrutinised by potential investors or banks.
Step 5: Secure Funding if Necessary
Depending on the type of business and your own financial status, you may need to secure funding in the form of a small business loan or an investment.
The type of business you intend to create has a large bearing on this. For example, if you are an online business with minimal overheads and digital products, you may simply be able to fund your business with your own cash.
Alternatively, if you intend to manufacture and sell physical products, for example, you may need to pay for things like inventory, raw materials, and staff. Unless you have significant personal finances, funding may be needed. You could also potentially consider a small business loan if this is right for you.
Step 6: Create a Means to Operate Your Business
With all the above in place, you must obviously have the means to operate your business. This step will vary depending on what your business is, and what you do.
The first step is establishing how you will create your product/service. For example, if you are making physical products, where will you make them? Are they handmade? Do you need a factory? Alternatively, if you are providing a service, how will this work? Is it an online service? Or do you need transport for face to face services?
The second step is then looking at distribution and how you will fulfil orders. How will customers receive your business and pay for the products or services? For example, do you need to create an online store? Or do you need a physical storefront? What about managing inventory and store your products? Do you need a warehouse or can you simply store products in your home?
You must do whatever is necessary to make your business operational and ready to sell your products and/or services.
Step 7: Pay for Business Insurance
Business insurance is another essential thing to consider. Regardless of the type of business, it is important to get proper insurance. This protects you from unforeseen events such as theft, accidents, legal fees, and asset damage.
The type of business insurance you need depends on your type of business, and the employees you have. Different types of insurance include:
- Professional Indemnity Insurance: This covers you if your client loses money due to your services.
- Public Liability Insurance: This is vital if you have customers visiting your site/store, or you provide work on clients’ properties.
- Employers Liability Insurance: This is required by law if you employ people for your business.
- Small Business Health Insurance: This provides healthcare and cover for you and any employees you have.
- Business equipment insurance: If you have equipment used in production processes for your business, you could benefit from this type of insurance. It will cover accidental damage and faults etc., but generally not standard wear and tear.
Step 8: Create Underlying Business Records
Every business also needs records. These records may be for accounting or for legal requirements.
Financial records are vital to maintain your cash flow and understand the liquidity of your business. Maintaining accounts are also a legal requirement for limited companies. You could consider using accounting software like QuickBooks to keep track of your finances.
Inventory records are important especially if you create physical products. Firstly, you must keep an inventory of the raw materials required in production. It is important to strike a balance between keeping enough inventory to fulfil orders, but not keeping too much and tying money up in stock.
Secondly, you must keep track of your product inventory. Many online stores and eCommerce fulfilment providers include inventory management tools.
Sales records and customer data are important to keep track of your business performance. You can then use these figures for sales projections, and to see if you are hitting your expected targets. If you want to keep any customer data, you must be sure to comply with GDPR regulations regarding data protection and privacy.
Step 9: Look at marketing and promotions
With everything in place, you can now look to market your business. Today, businesses have a fantastic range of online marketing options. This includes:
Some physical marketing may still be relevant to your niche, although digital marketing is now the way to go – depending on your target audience demographics. Look at your business and decide what types of marketing are relevant. You can then look to create marketing strategies.
The strategies should clearly define your goals and expectations. Also, you should be clear on how long the marketing campaigns should run, and when you will review their impact. There are many tools available for online marketing, and also platforms that specialise in things like social media marketing.
How to start a small business UK summary
We hope you have found this guide on how to start a small business UK useful. It is an involved process and this is not something that can be done overnight. However, it is possible to succeed providing that you are dedicated, and are willing to put in plenty of hard work and effort.
If this guide to how to start a small business UK helped you, please recommend DigitalSupermarket.