How To Start a Business in 11 Steps

1. Determine your business concept

Had a creative idea that you think could fill a gap in the market? Perhaps you’ve figured out a way to meet a consumer need or a product or service that makes other businesses more efficient.

The first step to turning this lightbulb moment into a workable venture is to expand it into a business concept. A business concept gives focus to your idea, fleshes it out, and defines its practical purpose.

Still not sure what a business concept is? Take the example of Paul Tran. In 2017, Tran saw a gap in the male hygiene market and came up with the business concept of MANSCAPED – tools and products specifically designed for male grooming needs.

Turning your aha moment into a business concept means putting it down in writing. It will then become the roadmap you use while you assemble all the resources you need. This is a crucial element of a business plan, especially when trying to appeal to investors.

Think of your business concept like your Dragons’ Den pitch. It should express your passion, sum up your idea in a nutshell, and explain what your business will do and how.

Not sure what to include in your business concept? These ideas will help:

• A short description of your business and why you’re starting it

• The market need or niche you’re trying to fill

• Your core products or services

• Your target market

• Your business model

• What makes your concept unique

• Your competitors and what you will do differently

• Your goals

If you’re still waiting for your lightbulb moment, your own hobbies and interests are a good place to start. Many business leaders advise focusing on what you are passionate about to succeed. You’ll also have a significant head start if you already have a lot of knowledge and experience in the field you wish to run a small business in.

2. Research your product, audience and competitors

You may have your business concept nailed down, but you’ll need to do your research to ensure it is viable. Ploughing ahead and hoping for the best without knowing what you’re getting into is a surefire way to lose money when setting up a business.

Even if you’re only launching a side hustle, a thorough understanding of your product, audience and competition market and the potential barriers you’ll face can help you avoid the common pitfalls that can cause you to fail. You’ll also want to do your research on the legal process of starting a business.

Research will help you to make decisions about what will sell and what won’t, and where opportunities lie. It can help you to identify and understand your target market and set a pricing strategy.

It’s wise to research:

• How much it will cost to make and market your product

• Upcoming events or legislation that might impact your business idea – whether creating challenges or opportunities

• Who your customers might be and how best to engage with them

• How your competitors are currently targeting customers

• Industry trends

• Legal aspects such as licences or permits, and insurance

• How much people might be prepared to pay for the goods or services your business intends to provide

• What resources you’ll need to get your business off the ground. Consider a website, business premises, legal or accounting advice – and the costs involved.

Online is a great place to start your research. There you can find a wealth of information about the market, customers, competitors and the industry. It’s also a point of inspiration for developing and adding to your business ideas.

Visit competitor websites, Facebook and social media pages. Review sites where customers are talking about goods and services similar to those you will provide, such as Trustpilot.

You can also use tools to see how many people are searching for keywords and phrases relevant to what your business will provide, helping you understand the size of the market. Google Ads Manager is one free option.

If your business will provide face-to-face services or sales, via a café or shop, for instance, visiting competitor outlets is another great idea. See what they do well and what opportunities they are missing.

Speaking to people already working in the industry is also a great research tool. Providing your business is not set up in direct competition with theirs, people are often really forthcoming with advice on what to do and what not to do when starting out.

3. Calculate your startup costs

How much it will cost to get your new business off the ground will clearly vary depending on your chosen industry. For example, launching an online language tutoring business from home will cost significantly less than opening a brick-and-mortar fashion store.

Understanding this one-time expense is crucial if you want to avoid financial surprises down the line. Here’s what you need to factor in your startup cost calculation.

Equipment

Whether it’s just a laptop for your freelance writing business or a kitchen full of gleaming appliances for your new restaurant, the equipment can take up a significant proportion of your startup costs.

Licences

Many types of businesses require permits to operate legally in the UK, for example, to play music, sell food or trade in the street. To find out whether your business will require a licence to trade, check the UK government’s business licence finder.

Insurance

Insurance is not just a way to protect you, your customers and your staff, some venues and suppliers might also require it as part of your contract. Even if you’re running a business from home, you should check with your home insurer that you’re covered for business activities.

Location

Where will your business do business? While rent, restaurant and office space costs vary depending on the industry and location you’re in, this can make up a significant proportion of your start-up costs. Even if you’re working from home, you might require a storage facility such as a warehouse for stock.

Stock

You want just the right amount. Too little stock and you’ll miss out on sales, too much can tie up your valuable resources.

Marketing

Starting an e-commerce business? Typical marketing costs include website design, search engine optimisation and social media advertising. If you are starting a brick-and-mortar business, you will need to spend money on location, signage and promotions.

Utilities and energy bills

Front-of-mind for many businesses, energy bills can significantly dent your bottom line. Even if you begin by working from home, you will need to consider the increases in your home energy bills in your calculations.

Legal costs, tax and accounting

Will you need a solicitor for important documents or an accountant to manage your taxes? Whether you need to engage the services of professionals depends on the complexity of your business, but it can be money well spent, particularly as accountants can help you maximise deductions and minimise taxable income.

Employees

Will your business need to recruit? Besides offering a competitive salary to attract the right people, you may need to look at the costs of employee benefits or training

4. Develop a brand strategy and brand identity

Nailing down your brand identity and strategy is key as you’ll use it to create your content, marketing, product design, packaging and website. In fact, develop a brand strategy and it will become your north star, guiding just about everything you do.

Still not sure why brand identity is so important? Consider it this way. Have you ever noticed that, while two brands might offer exactly the same in terms of products or services, you relate to one more than the other? You might not be able to put your finger on why, but Apple seems cooler than Microsoft, Haagen-Daz is more sophisticated than Ben & Jerry’s and Dove is more down-to-earth than Olay.

It’s no accident that each of these brands has its own clear, distinct personality. It’s been thought about and carefully honed so that it shines through everything they do, informing everything from their advertising and marketing to their social media posts.

Having a strong brand identity and strategy is important because people relate to other people, not companies. When a brand has a clear personality, people associate it with positive traits and resonate with one more than another.

Here are some tips to help you think about your own brand strategy and identity:

Carry out a branding exercise

If your brand was a person, who would they be? Having a clear idea will help you brainstorm everything from your name, mission statement, unique selling point, voice and visual identity.

Think of a name

With some 5.5 million businesses in the UK it can be tough to come up with a unique name that’s also the perfect fit for your business.

Inspiration can come from the branding work you’ve already carried out, or take some naming tips from other successful companies. IKEA is an acronym for Ingvar Kamprad Elmtaryd Agunnaryd - the founder’s first name, last name, farm he grew up on and village. Adobe is named after the Adobe Creek which ran behind its founder’s home. Amazon is so-named because Jeff Bezos wanted a moniker which started with the first letter of the alphabet and meant something huge.

Do some research to make sure your chosen name is not already taken, and then check out social media profiles and domain names. If your chosen domain name or social media profile is available, buy it immediately to secure it as your own.

Find your brand voice

Drinks maker Innocent has a brand voice that is informal, witty and irreverent. Nike’s brand voice is aspirational, motivational and encouraging. Old Spice is masculine, humorous and confident. How do you want your own brand to sound?

Defining your brand voice will ensure consistency in your messaging, something that can make your business easily recognisable in a crowded market.

Build your visual identity

Did you know you have just 50 milliseconds to make an impression on your customers? Visuals really matter when you’re setting up a business. Not only will they help you get noticed and recognised, but they can also be a key differentiator between you and your competitors.

Your visual identity is a unique representation of your brand – one that your customers will instinctively associate with you. Make sure that the visual elements (colours, fonts etc) of your brand are consistent across your communications, packaging and logo.

5. Create a business plan

A business plan is like a blueprint for how you’re going to start, run and grow your business. It’s something you can look back on for reference and measure yourself against. If you’re seeking outside funding for your venture, you often need a business plan to show that you’ve thought things through carefully and have a path to growth and profit.

When it comes to writing a business plan, there’s no one size fits all. But typically, all good business plans contain the same key components. These include an executive summary, business description, market and competitive analysis, your service or product line, an operations plan and any financial considerations. You can find more advice via our dedicated piece: How to create a business plan.

How long should your business plan be? While the length isn’t set in stone, typically, business plans are between 15 and 20 pages long. Here are the key components of a business plan in greater detail:

An executive summary

As the first section of a business plan, an executive summary should be a top-line synopsis of your business and how you plan to accomplish your goals. Because it’s often people’s first impression of your business, it’s the most important section. You might consider writing your executive summary after you’ve completed all the other sections of the business plan—so you know the key points to stress.

Business description

Remember your business concept? You’ll be able to refer back to it when filling in this section of your business plan. Your business description is a bit like an elevator pitch, i.e., how would you concisely answer the question “What’s your business all about?” This part should also include where you see the most potential and opportunity for your business, and why.

Market analysis

Here’s where you dive deeper into the specific market you’re entering. What relevant data points would help people understand your business segment? Where are the weaknesses in the market, and how will you fill that void?

Competitive analysis

Walk through your competition—what are other businesses in the space doing well, and where are they falling short? If you don’t currently have competitors, walk the reader through how you’ll continue to stay ahead of the game should another business choose to enter the market.

Read our in-depth guide on market analysis for more.

Service and product line

This section details exactly what type of service or product you’re offering. Be sure to include any intellectual property, as well as research and any associated development that might be required to offer your product or service.

Operations and management plan

Present a clear picture of how you’ll actually run day-to-day operations. Will you need employees? A space for shipping or inventory? Describe all that here.

Financial considerations

Here’s where you talk about money. First off, how much do you need to start? And then to grow? Detail any capital you already have. And if you need more, describe your strategies for procuring it.

6. Choose your business structure

There are a number of different ways you can set yourself up as a business, each with its own tax structure and legal implications. You have to choose which business structure you wish to be when setting up a business so that HMRC can assess your taxes correctly. You can change from one type of business structure to another, but it’s best to minimise the number of times you chop and change since they entail some administration costs.

The main types of business structures are:

• Sole trader (also known as a sole proprietorship)
• Partnership
• Limited liability company

So how do you choose between them? They all have their own pros and cons. Setting up as a sole trader is a simple way of starting up in business, but lacks protection – any business debts you incur will be counted as personal debts. A business partnership lets the two of you set up together without the legal obligations of a limited company, but you will be responsible for all debts too. A limited liability company requires more administration and cost, but your personal finances are not at risk if the business fails.

Check our Guide on UK Business Entities for more detailed explanations of each of these business structures.

7. Register your business

Companies must be registered in order to be legally recognised as a business in the UK. At the very least you will need to register with HMRC to ensure you are paying your taxes to the correct amount and deadline.

The business registration process may vary depending on which type of business structure you’re proposing:

Sole trader

To set up as a sole trader, you need to tell HMRC that you pay tax through Self Assessment. You’ll need to file a tax return every year.

Partnership

You must register your partnership for Self Assessment with HMRC if you’re the ‘nominated partner’ responsible for sending the partnership tax return. The other partner needs to register separately.

Limited liability company

Use this government service to register as an LLC company with Companies House. You will be registered for Corporation Tax at the same time.

Read our guide on how to register your business for a more detailed explanation.

8. Build and launch your website

With the world going online for almost everything it needs, a good website is no longer just a nice-to-have. And, if you’re going into e-commerce, your website is your entire business, from shop window to payment processor. Ensure you have a solution that allows your customers to buy and order from you whenever the mood takes them.

Whereas once this would require the services of a designer, or hours of your own hard graft, e-commerce website builders have moved on. Now they offer the chance to build a free e-commerce website that’s up and running in a matter of minutes, using slick website templates designs that align with your brand.

Look for a solution that allows sales not just via your website but your social media channels too, so you can meet your customers wherever they hang out online. Square Online is a simple, low-cost option that does exactly that, plus it’s quick and easy to launch.

9. Fund your business

With the average cost of funding a new small business about £5,000, it’s perfectly possible to launch a business without outside investment. You could even start a business with no money at all if you already have the skills and equipment you need.

But what are your options if you’re not choosing a low-cost model for your startup business? Here’s a list of the most common ways to fund your business, along with the pros and cons of each.

Asking family and friends

Borrowing money this way may seem attractive, but it can lead to conflicts that erode your relationships.

Securing a bank loan

The most obvious way of raising money for your business. However, banks have become increasingly risk-averse over the past decade or so.

Crowdfunding

What do Brewdog and Peloton exercise bikes have in common? They’re both wildly successful brands that used crowdfunding to get off the ground. Crowdfunding’s a great way of ascertaining whether there’s a market for your brand, but it can take a lot of work to generate interest and traction.

Sourcing outside investment

So-called angel investors are always on the lookout for businesses that can help them to grow their investments. However many can be as risk-averse as banks.

Government startup loans

Loans range from £500 to £25,000 with a comparatively low-interest rate of 6%, but are only beneficial if your proposed startup’s needs are fairly modest

For a more detailed explanation, read our guide on raising funds for business.

10. Choose a payment provider

To make your first sale, you’ll need to choose a way to accept payments. Do your research, but any solution you go with should be affordable and easy to set up. It should also accept credit cards and debit cards and have no complicated fees. Selling online? Something like Square Online is a simple, low-cost option that is quick and easy to launch.

In person, people are increasingly ditching notes and coins and opting for card payments, and the rise of contactless shows no sign of stopping. If you don’t accept cards, you’re likely to miss out on some sales. Square Reader, which accepts all major credit cards and contactless methods like Apple Pay, lets you securely accept card payments everywhere. The card reader is just £19 + VAT, and you pay just 1.75% per in-person transaction.

11. Grow your business

You can have the best concept and business plan in the world, but if your customers don’t know about you, you won’t get very far. All businesses need to know how to market and promote themselves well but, if you’re just getting started, advertising and marketing are a vital way to help you grow your business.

The great news is that, due to social media and the internet, there have never been so many low-cost marketing options for start-up businesses. All small businesses need to be on social media and can use it to their advantage to grow.

When you are a small business with limited resources you have to decide where to focus your efforts for maximum return. A Facebook page may be an alternative to a full-blown website. If your products are very visual, an Instagram page may be the ideal solution. You may not have time to be on all platforms and to run them all well so choose the right platforms for you. You can set up a simple online shop in a few clicks and ensure you can make sales via your social media pages too.

Keeping in touch with customers via email campaigns is a highly effective way to build a loyal customer base and make repeat sales.