Table of contents
- Find your Business Niche
- Research your Business Idea
- Five Frequently Asked Questions About Starting a Business
- Find a Location
- Seek Financing
- Decide on your Business Structure
- Choose a Name and do the Required Legal Paperwork
- Get a Payments Processor
- Marketing and Promoting your New Business
Setting up a Business: Getting Started
Starting a business is incredibly exciting. There’s loads to do, loads to learn and loads of opportunity. The monetary rewards can be huge, but the personal rewards are usually even greater. There’s autonomy and the sense of achievement in knowing that every milestone is the result of your effort.
If you have a great idea for a start-up and are ready to take the next step, you’re in the right place. This guide will get you thinking about all the things you need to cover when setting up a business, from honing your idea to making your first sale.
Find your business niche
Starting a business is about finding an open area of a market and filling it. That is really what a niche is. You can discover yours by considering:
- What problem will your small business solve for customers?
- What are you trying to do that no-one else does?
- What can you do better than anyone else?
Your own specialised skills may help you to define what your niche is. Your desire to start a business may be fuelled by your wish to use those skills more or better. 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.
It’s crucial to think about the market too when settling on a niche. You need to know there are customers who want what your start-up will provide. You also need to understand who else is catering to those customers or may decide to in the future – who are your competitors?
Finding your niche is often the key to begin building your business. It can help create the ‘elevator pitch’ of your business – the one sentence that encapsulates what your business ideas really are, what your business will do and how. This is a crucial element of a business plan especially when trying to appeal to investors.
Research will help you to settle on a niche for your small business.
Research your business idea
Even if you are launching a side hustle, research is a great idea.
You’ll want to do your research around the process of starting a business and ensuring you meet any legal obligations (including reading this article). As well as that, there’s a lot of early research into your business ideas.
Research will help you to make decisions about what will sell and what won’t and where opportunities lie. It can help you to really identify and understand your target market and set a pricing strategy.
It’s wise to research:
- If there is a market/need/desire for your small business
- Who your customers might be and how best to engage with them
- Who your competitors are and what they are doing in the areas your start-up wants to target
- Industry trends
- How much people might be prepared to pay for the goods or services your business intends to provide
- Upcoming events or legislation that might impact on your business idea – whether creating challenges or opportunities
- What you 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 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 who are already working in the industry is a great research tool too. Providing your business is not setting 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.
Five Frequently Asked Questions About Starting a Business
How do you start a business?
There are several crucial steps involved in starting a business, including writing a business plan, securing financing, researching and choosing a location, registering your business, complying with tax requirements and acquiring the required licences and permits.
How do you write a business plan?
A business plan is like a blueprint for how you’re going to start, run and grow your business. Key components 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 do you finance your business?
There are a variety of ways you can finance your business: traditional bank loans, asking your friends and family, or other sources. Getting to grips with the finances and investments early on is a great idea. Put things in place to ensure you are financially ready to start a successful business and then stay on top of what is coming in and what is going out to remain profitable.
How do you decide on a business structure?
When setting up a business, it’s a good idea to consult with an accountant or lawyer to decide on a business structure. Types of business structures include sole traders, partnerships, limited companies and nonprofits. It’s a good idea to consult with an accountant or lawyer to decide on a business structure that fits the needs of your business.
What paperwork do you need to do to start a business?
The requirements for starting a business depends on the type of business you want to be. For some small businesses, there is very little paperwork required and you can begin trading straight away. For others, you will need to go through several stages before your company is up and running, including registering a name and handing over details of your key players to Companies House. You can read more on how to get started on our handy guide to registering a business.
Here are a few common licences and permissions you may need to consider for your start-up.
If you’re planning to:
- sell or serve food you must register with your local authority
- sell or supply alcohol you must gain a licence
- play music to the public, including background radio music, you’ll need a licence
- change the use of a building, such as from residential to commercial (a home to a shop), you may need planning permission.
- employ people, you’ll need employers’ liability insurance. You may also wish to consider other specific insurance policies including buildings insurance for any premises, public liability insurance if interacting with the public and other business specific insurance to protect you against claims.
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Write a business plan
A stellar idea is great, but you can only see it through to its full potential if you lay the groundwork. That’s where the first crucial step of starting a business comes in—writing a business plan.
A business plan is a blueprint for how you’re going to start, run and then grow your business—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.
A solid blueprint is critical for your prolonged success.
When it comes to writing a business plan, there’s no one size fits all but they all typically contain a few key components.
The below sections can be used as a template—including visuals like graphs and projections where appropriate. Length can also fluctuate depending on what you’re trying to do, but typically, business plans are between 15 and 20 pages long. Here’s what they should include:
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.
Think of this section like your 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.
Here’s where you dive deeper into the specific market you’re entering. What relevant data points would help people get an idea of your business segment? Where are the weaknesses in the market, and how will you fill that void?
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.
Here’s where you talk 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.
Seek additional training and resources
It’s rare that you have all the skills you need to start and run a business—especially if you’re doing this for the first time. You may have the skill set and certifications necessary to do facials, for example, but might fall short when it comes to running the day-to-day financials of your business.
Write a list of all the areas where you could use a little business coaching. Then seek out training or education to fill those gaps. Higher education colleges, evening university courses or online training sessions are a great way to get these additional skills and training affordably. Here’s where you may also seek out mentors, or even ask fellow small business owners how they got up to speed.
There may be areas, however, that have too steep of a learning curve to tackle on your own—legal or tax considerations, for example. In these cases, it’s best to seek out professionals who already have years of training and degrees in those disciplines. When hiring these people, be sure to do extensive research and call references to make sure you’re bringing on someone reputable.
Find a location
Where will you be conducting business? For obvious reasons, this can vary widely based on the type of business you’re running. If you’re a home contractor, for example, you may not even need to rent or buy a physical office - though you may need to consider planning permission or changes to your home insurance (find out more in our guide to starting a home business)
Choosing a physical space is one of the most challenging aspects of starting a business. But it’s also one of the most important and requires lots of research and planning. For help with this, talk with your city or borough councils, or consider bringing on a professional agent to help.
Aside from laws, fees and regulations, you should also consider your brand image, the safety and accessibility of the neighbourhood, your proximity to any suppliers you might need to work with, and any plans for expansion. Talk to fellow business owners in the area and consult free government-provided data by the Office of National Statistics to help inform your decision.
Seek financing (if necessary)
If you don’t have the capital required to start your business, you may need to seek financing. (Here’s where that business plan you wrote comes in handy.) Luckily, there are a number of avenues for securing small business financing including traditional bank loans and asking your friends and family. But before accepting money from any of these sources, there are some questions you need to think through.
For example, evaluate how you’d like to structure ownership of the company. If you don’t want to give up a stake, bringing on investors may not be the right option for you. If you’re accepting a loan or financing from an institution, be sure to read all the details. You should be careful about how much money you really need—and do meticulous calculations on how long it will take to pay it back.
Understand the tax and legal implications of your selected business structure.
Decide on your business structure
There are a number of different ways you can set yourself up as a business. Each type of business structure has a variety of tax and legal implications. Your business structure determines which types of income tax forms you have to file, for example. Because of this, it’s smart to consult a reputable accountant and lawyer before officially deciding on what form of business entity you want to establish.
To give you a cursory lay of the land, the main types of business structures are sole traders, partnerships, limited companies, partnerships and nonprofits. Check the government’s guide to starting a business for more detailed explanations of each of these business structures.
Choose a name and do all the required legal paperwork
It’s time to make things real. First thing’s first: decide on your business name and, if necessary, register it with the government. Registering a company name isn’t legally required unless you are a limited company and requires business owners to submit key information about their company, including a business plan and details of the key stakeholders to Companies House.
Once Companies House registers your business, Her Majesty’s Revenue and Customs (HMRC) will send you a Unique Taxpayer Reference (UTR) which allows you to register for corporation tax. You will need to provide your company registration number, as provided by Companies House, the date you started to trade and the date your annual accounts go up to. HMRC will then set you a deadline to pay your corporation tax.
Starting a business requires that your legal paperwork is in order.
If you’re planning on hiring employees, now is the time to familiarise yourself with all your legal obligations as an employer. You’ll want to cross your T’s and dot your I’s before you hire your first new team member.
Get a payments processor
Now comes the fun part—making your first sale. To do this, you’re (obviously) going to need 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.
A huge amount of sales are now done online, either entirely or via click-and-collect. Ensure you have a solution that allows your customers to buy and order from you whenever the mood takes them. A solution that allows sales not just via your website but your social media channels too will ensure you don’t miss out. 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. The 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 £16 + VAT, and you pay just 1.75% per card present transaction.
Marketing and promoting your new business
All businesses need to know how to market and promote themselves well. You can have the best small business idea in the world but if your customers don’t know about you, you won’t get very far. 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.
Excelling in your industry
You should follow these general steps when starting a business, but applying a cookie-cutter formula is easier said than done.
Each industry has a unique set of requirements and steps that you need to be aware of.
The steps can seem overwhelming—but they’re worth it.
The steps to starting a business can seem overwhelming—but they’re all worth it. No matter how stellar your business idea is, laying the groundwork is a crucial component of your success. Follow these steps, and you’ll be off to the races.