Start a Business

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Looking to set up on your own and build a business within the UK? Running your own business can deliver many potential benefits. However, before you get started, there are a lot of factors you’ll need to consider.

The sheer number of things you’ll need to learn before you start a UK business can be overwhelming. To make it easier, we’ve put this simple guide together for you to follow.

Planning and preparation

It is said that most new businesses fail within their first year? While there are a lot of factors that can determine the success of a start-up, inadequate preparation increases the risk of failure.

Prior to setting up a business, these are some of the things you’ll need to do:

  • Research your competitors and target market
  • Ensure you have the relevant qualifications and licenses
  • Understand how much it will cost
  • Choose a business name

Researching your competitors is important because it gives you an idea of whether your proposition is viable. How will your business do things differently in a competitive market? If it can’t, it isn’t likely to survive. You’ll also need to research your target market. What are their needs and who are your ideal customers? This will help you to drive in new customers once the business is up and running.

Another thing to consider is whether you’ll need any special qualifications or licenses. Certain types of business require a license, such as those that deal with food preparation or ones looking to trade on the street. Make sure you have all the necessary qualifications and licenses prior to starting your company.

Perhaps one of the most important things to plan for is the cost of starting a business. Some types of businesses require very little to get started. However, if you need any special machinery or equipment, it could get expensive. Write down all the expenses associated with the start-up. This will give you an idea of whether you’ll need any financial help to get going.

Finally, if there is a need for your business and you have all the qualifications you need, it’s time to choose a business name. Make sure the name isn’t taken first. You can do this by using the name availability checker through Companies House. If it isn’t, you’ll have the option to register the business name. However, you should only do this after you have determined which legal structure the business will follow.

What legal structure should you choose?

For most businesses, there are legal structures you can choose from: sole trader, partnership, and limited company.

Setting up as a sole trader is the easiest structure to follow. There are no legal distinctions between your business and you. A partnership is necessary if you set up with somebody else, while a limited business is a more complex structure. If you set up a limited business, it will legally separate you from the company, but will involve a lot more admin work.

It is worth researching more about each structure before you decide which one is right for your business. If you plan on hiring employees, a limited business would typically be the better option. Alternatively, a sole trader structure would suit those looking to work by themselves, such as a plumber or engineer.

Do you need a business plan?

Everyone looking to start their own business in the UK should ideally create a business plan. This helps you to plan out your goals, identify any potential challenges, and work out how much it will cost. The more comprehensive the business plan, the more chance you’ll have of making your new venture a success.

Another reason you’ll want to put a business plan together is if you need to apply for funding. Investors and creditors will often want to see a copy of your business plan before they determine whether to lend you the money you need.

If you’re unsure how to create an ideal business plan, you’ll find plenty of guides and information online.

Secure funding

If you need to secure funding to start a business, you have plenty of options. They include:

  • Start-up loans
  • Business grants
  • Crowdfunding
  • Family and friends
  • Guaranteed loans

Start-up loans tend to be the most popular option. Offered by traditional banks and independent lenders, they usually have low interest rates and can be offered unsecured. This means your business won’t be at risk if you fail to make the repayments at any point in the future. There are different types of loans and interest rates will vary. Therefore, you should look into all of your options before choosing the right loan for you.

Business grants are like start-up loans in that they provide you with a lump sum to set up the business. However, unlike a loan, you usually won’t have to pay the grant back. Alternatively, you could try crowdfunding. This involves raising the money you need through peer-to-peer lending, or through shares in your company. This isn’t a suitable option for all businesses, but it’s great for those with high growth potential.

If you don’t want to start your business in debt with creditors, you could ask friends and family for help. This is often the first place that entrepreneurs turn when seeking funding for their ventures. While you might still need to pay the money back, you won’t have added interest to worry about. Of course, this isn’t always a viable option for everyone, and borrowing money from family and friends can put a strain on your relationship.

Finally, guaranteed loans are there for those who have been turned down by traditional lenders. They are run through schemes for businesses that don’t have a trading history, or who can’t afford to put down any security on the loan. Keep in mind that these loans do tend to have quite strict conditions before you can apply.

Once you have secured the business funding you need, it’s time to get your business set up. That means, stocking up on products — if you sell them — and ensuring you have all the necessary equipment. Once everything is in place, you’ll then need to start work on bringing in the customers.

Marketing your business

One of the main challenges you face when you run your own business is constantly driving in new customers. When you start your company, nobody is going to know you exist unless you tell them. This means you need a good marketing strategy in place.

There are a lot of ways you can market your business these days. Digital marketing has become the main option for start-ups, allowing them to market their business on a budget. You’ll want to create a website and build up a social media presence. Start a blog to help you to attract organic traffic. You can also send emails and newsletters to visitors who sign up via your website. Look into the different digital marketing methods and how to follow them correctly.

While digital marketing should be given a lot of focus, don’t neglect offline marketing methods too. Sending out flyers and printed marketing materials can help you to target local customers. You can also attend networking events in your industry. As they often say, “it’s not always what you know but who you know”. You could end up making valuable contacts who could help boost your business.

Having a solid marketing strategy in place will help you start attracting clients while building up brand awareness.

Other things to consider

We’ve already covered the most important steps to follow before setting up a business. However, there are a few other things you’ll want to consider too. These include:

  • Tax liabilities
  • Whether you need insurance
  • Business records

Unless you only plan to earn £1,000 or less from your new business, you’re going to need to register with Companies House, or HMRC. Sole traders register with HMRC and pay income tax, while limited businesses register through Companies House and pay Corporation Tax. If you pay income tax, you’ll receive a personal allowance. With corporation tax, on the other hand, you’ll pay 19% as soon as the business makes any profit.

You’ll also want to determine whether you need insurance. There are different types of business insurance to choose from, such as public liability, professional indemnity and self-employed health insurance. Remember, when you work for yourself, you don’t get any employment benefits such as a pension or health cover. You’ll need to organise these things yourself. The type of insurance you’ll require will depend upon the nature of your work and whether you are offering products or services.

Finally, you’re going to need to start keeping business records. This is to make sure your tax runs smoothly each year. Try and keep your personal and your business finances separate from one another. This will ensure you don’t get confused when working out your expenses later on.

As you can see, there’s a lot to do when you are starting a business in the UK. The above is just a brief guide on the steps to follow to get your new business off the ground.

For more advice about setting up a business, get in touch. Our experienced staff can run through the best options for your circumstances and make starting your own business that much easier.

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