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Start your own business in 10 essential steps
Starting a business is exciting but can be quite overwhelming. Follow our 10 essential steps to turn your dream into a successful and sustainable start-up.
1. Start with the big idea
When starting a small business, you need to dream big. Right now, with so many business ideas going online, there are plenty of ideas for start-ups out there. The sky's the limit if you can combine an existing passion with a new business idea.
But first, you must find a way to beat the competition. Think about whether you're aiming to do it cheaper, better, faster, more conveniently or more sustainably – what's your unique selling point?
2. Do your market research
Market research is essential when setting up a business. Don’t invest time and energy into your idea only to be undercut by an obscure competitor. Go online and make sure you fully understand what you’re getting into.
Identify your customer and what they want
Think about your target customer’s age, gender or likely profession. How many of them are there? What drives their buying behaviour? Why might they choose your business?
Then get out and talk to people. Head to a shopping centre, a cafe or a trade fair and ask people what they think – or organise a focus group. If you have a prototype, watch people interact with it. But most importantly of all, listen out for valuable insights.
3. Form a business plan
Before you start doing anything concrete you’ll need to build out your business plans, which includes refining your business model, choosing the most appropriate structure and writing a formal business plan which you’ll need to move ahead.
Refine your business model
Will your sales minus costs provide a healthy profit now or in the future? How long can you keep going if demand starts slowly? Can you scale up if things go well? What about seasonal demand, weather trends and the overall economic situation? Have you considered sustainability in terms of products, suppliers and marketing communications?
Choose the right business structure
There are several business structures to consider, so you should seek professional advice about which is the best option. The most common are:
- Sole trader – the simplest option with the lightest tax and regulatory burden. However, you will be responsible for any debts.
- Partnership – you’ll share financial responsibility, including losses, but are taxed individually.
- Limited company – more complex, but a good option if you want to scale up. The business is legally separate from the people running it, so you would not be personally liable for any debts.
Write a formal business plan
Every business needs a formal business plan. You can use it to raise funding, get a business grant, sign-up suppliers and negotiate with potential customers.
See our guide to find out what to include in your business plan, how to set objectives and develop your strategy.
4. Secure business funding
Once you have your business plan, you can look for funding if you need it. But remember that many successful businesses started on a shoestring.
Financing a start-up
You need to secure the financing your business needs to reach its potential. So, where do you start?
5. Think of a unique name
Take the time to find a name you feel comfortable with. It can be helpful if it summarises what the business does, but that won’t always work in, say, a premium sector. Sometimes it’s good to have a name that sits well within a sector, but not if you’re looking to disrupt it. Ideally, your business name should be memorable, easy to pronounce, scalable and searchable.
Check that the name you want is available by searching through Google and Companies House. And, if possible, choose something with an attractive and available domain name.
6. Consider business premises
Some businesses require premises, but you should explore all options before committing to long, expensive leases. Pop-ups, co-working spaces or market stalls can help you test your concept while keeping costs down.
It’s also fine to run your business from home when starting out. You may not need planning permission, providing:
- you don’t need to make significant alterations
- it remains primarily residential
- you don't inconvenience your neighbours.
Also, check that running a home business doesn’t invalidate your home insurance policy.
7. Check legal requirements
Make sure you consider the following as part of your business plans.
Consider getting an accountant
As well as keeping your finances in order, they can advise you on dealing with HMRC.
Register with Companies House
Every limited company or LLP must register. Your accountant can help with this.
Inform HMRC about your business
You may need to pay tariffs or get permission for certain types of import/export trading.
Registrations and permits
Check whether you need specialist registrations or permits, for example with the Food Standards Agency.
Information Commissioner
Businesses that process or store personal information must register with the ICO.
Inform your local council
If you have moved into new premises, you must register for business rates if applicable.
8. Open a business bank account
Having a dedicated business account has lots of benefits. Limited companies are legally required to have a business account and although freelancers and sole traders aren’t required to have one, it can make things easier.
Having a business account enables you to keep your personal and business finances separate, making it easier to manage your cash flow and complete your tax returns. It will enable you to build a credit history for your business, which can be helpful later on if you need additional investment or other types of finance to help your business grow. It can also help create a more professional image with your customers and suppliers.
Our business accounts come with everything you need to get your business finances off to a great start. As a start-up, you'll get an instant decision on up to £5,000 credit* to help you manage your cash flow and get your business off the ground. You'll also get free accounting software to help you stay in control of your finances and digitally submit VAT to HMRC.
9. Plan your marketing
A good marketing plan is vital – you must be in the right place with the right offer for the right people.
If you’re selling artisan foods, that could mean a well-located market stall with enticing leaflets. If it’s online courses, you could try social media posts that drive prospects to a website. Find out what works for your business, and don’t be afraid to try something new.
10. Get started
Once you’ve completed all these steps, you should be ready to officially open for business! Open the doors or start taking your first orders.
Remember that reputation is everything, so be sure to provide your customers or clients with a five-star service. Keep focused on your goals, be organised and adaptable, and the rest will follow.
Information and guidance
Is self-employment right for me?
From the advantages of working for yourself to financial responsibilities, this guide shares key considerations.
Understanding VAT
Read this business guide to gain a broad understanding of VAT, how it works, when to register and the potential benefits.
How an accountant can help your business
This guide covers the many benefits of hiring an accountant to keep on top of your business finances.
Tools and training
At a different stage of your journey?
Here are other ways we can help your business
How to manage your business
A selection of guides and products to help with the day-to-day running of your operation – focusing on money and tax, insurance, and people.
Growing your business
A selection of products, case studies and guides to help you look to the future and expand your operations.
*Eligibility criteria apply.
All lending is subject to status.