Effective Ways to Start a UK Business
You’ve spent years dreaming of being your own boss. You know you have a good idea and the hard work ethic to support it. Now is as good a time as any.
The UK has one of the friendliest environments for an entrepreneur. New business set-up is fairly easy and corporation taxes are low. Then why do almost 60% of small businesses fail to thrive past three years? Most blame can be put on a lack of preparation and planning.
This is why we’ve assembled this guide full of crucial information. Every potential UK startup needs to plan correctly before opening its doors. Planning will increase your chances of success. Read on to learn how to compose a business plan, devise market strategies, obtain funding, and more.
FIRST THINGS FIRST – IS YOUR IDEA VIABLE?
Is your product or service going to fill a need or solve a problem? A SWOT analysis can be performed on your idea to answer these basic questions. After the analysis, market and competitor research needs to be done. Let’s explore each more in-depth.
SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities,
- Strengths – What makes you better than your competition?
- Weaknesses – What are things your competitor is better at? What do you think is your Achilles heel?
- Opportunities – What are the holes your product is going to fill in the market? What makes right now the right time for your business?
- Threats – Will your business be in a changing market trend? Does your niche have heavy regulation?
Market research defines who your customers are.
- Make a profile of your customer – How old are they? Where do they live? What are their interests? Describe who will be buying from you.
- Search the internet – Look for studies done on the group you just described to see if you can glean information about your customer base.
- Ask questions of everyday people – Run survey questions of family, friends, and people you meet daily. You want to find out if they already use a product similar to yours. What could you provide that they can’t find now in the product they use?
This analysis will let you know where your customers get the same product or service now.
- Who is your competition – Some you already know. Customers will broaden your knowledge about who they buy from.
- Compare your competition – Not all businesses target the same audience. Some will be upscale while some will offer a discount version of the same product. Maybe different ages or ethnic groups are valued.
- Find your playing field – By analysing your data, you can map how your strengths and weaknesses can yield the most success in the market.
CREATE YOUR BRAND
Once you are confident there is a need and a place for your product or service, you need to define who you are to your customers.
Establish your business name
- Should create a positive first impression
- Needs to be easy to read and pronounce
- Can people remember it?
- Make sure it’s not offensive
Ensure your name is original
- It needs to stand out
- Avoid being too general – people want to easily connect your name to your product
- Make sure it is original -This UK.Gov name checker is easy to use
- Decide which TLD (top-level domain) you will use
Create A Logo
Logo creation should be designed by a professional to ensure fonts, sizing and colours align with your brand messaging. A good logo should be:
Once you create a logo it is automatically yours. To prevent future infringement, you can secure your rights through Gov.UK
IDENTIFY YOUR BUSINESS STRUCTURE
There are 4 types of legal business structure. Your business needs to identify as one of them. Don’t panic, you can change this down the road if your situation warrants it.
- Sole Trader – self-employed, running the business by yourself.
- Limited Company (LTD) – owners and directors are separate from the company.
- Partnership – operates close to the Sole Trader, but partners have to do a self-assessment registration. Also, if one partner quits, the partnership must dissolve.
- Limited Liability Partnership (LLP) – As far as accounting and registration, this is close to a private limited company. The difference comes from partners sharing the responsibility.
This Gov.UK link covers the different structures and how to register with the HMRC. We also highly recommend creating a separate business banking account to organise your finances.
Remember if you are creating a limited company you need to provide an address for your business, many people like to keep their home address private so choose our Glasgow mailing address service. Our service allows you to use our address for your registered office, plus we don’t restrict what you can use it for so can also use it for Google, HMRC, Banks etc.
CREATE A BUSINESS PLAN
This is where the rubber meets the road, so to speak. Many new business owners skip this step to open their doors as quickly as possible. Then they don’t understand why their model wasn’t sustainable. Here are the steps of a well-developed business plan to direct your business goals, direction, and growth.
- Summary – a synopsis of your business and what your goals are
- Marketing Plan – identifies your customers, pricing, competitors, distribution, and methods
- Business Idea – identify your offering, who it targets, and what makes it successful
- Management System – credentials of you and your employees
- Financial Forecast – cash flow, balance sheets, and accounts details
- Business Performances – location of businesses, where production occurs, and IT systems you will use
Your business plan doesn’t have to be lengthy. It needs to be all-inclusive.
DON’T FORGET TO MAKE A BUDGET & FINANCIAL PLAN
A business budget forecasts how much money your business will generate. It also shows:
- If you will need to borrow money
- Identifies your break-even threshold
- Your start-up cost
- Generates a product price
- Answers if you can hire employees
We recommend creating two versions. One will account for a great start for your first year. The second should show a slower development. The two versions help you prepare for either outcome. Investors and bank managers will expect the
FAMILIARISE YOURSELF WITH PERTINENT BUSINESS REGULATIONS AND LAWS
There are many rules, regulations, and laws governing every type of business model in the UK. Visit Gov.UK to see which pertains to your business. The business section covers everything from business taxes, employee expenses and benefits, as well as data protection, and more.
Unless you are very, very well off, you’ll need help to keep your small business afloat until it becomes sustainable. Here are a few avenues to explore.
- Start-up grant – the advantage is no repayment. Although hard to obtain, they also come with business support.
- Start-up loan – this is an unsecured personal loan backed by the government. The amounts range from £500 up to £250,000 and have 6% yearly fixed interest rates. In addition to the 1-5 year repayment period, you’ll also get free mentoring for up to a year.
- Bank loan – several major banks still offer unsecured loans up to £250,000, but they are hard to get.
- Angel Investment – a successful investor exchanges capital for equity. They will also have a bit of company control.
- Crowdfunding – financing is provided in small amounts by huge numbers of people. You get the benefit of creating public attention and tying up financing.
WILL YOU NEED A LICENCE OR PERMIT?
Depending upon which industry your business falls under, you may need a licence or permit to operate. Find out by visiting Gov.UK. It will also provide guidance to find your local authority contact.
Rent is one of the largest business expenses new owners are hit with. Here are possibilities to consider.
WORK FROM HOME
If possible, try to work from home if your model allows. This will enable you to deduct some home expenses like broadband, electricity, and more. Click here to check for additional acceptable tax return deductions.
If you decide to rent space, review these considerations:
- Location – can customers find you?
- Cost – gauge how much rent and utility bills affect your business costs
- Terms – is your lease flexible? Can you extend if you need to? Can you end early if you need to?
- Repairs – establish who is responsible for which services at the beginning
START YOUR MARKETING
Here are some suggestions to introduce your business to your customers.
- Create a website – the majority of shoppers today start their shopping
- Hire a professional for the best impact.
- Create your digital marketing plan
- Identify your business goals
- Perform SWOT analysis
- Identify your target customers
- Position yourself in the correct market
MAKE SURE YOU HAVE SUPPORT
You’ll need help navigating uncharted waters to reduce and prevent costly mistakes. Here are some great resources:
Hire an Accountant
ARE YOU READY?
Starting a new business is easy. To operate that business year down the road takes preparation and planning. Make time now to craft a solid plan for success tomorrow. Remember Clyde Offices provides a range of back office support services to small businesses including, the virtual office we can also provide virtual administration support and telephone answering.