Wondering how to start a business? We have all the answers you need to establish a business in the UK.
The UK market continues to be a vibrant hub for startups, with SMEs accounting for 99.2% of all businesses in 2023. This dynamic environment enables entrepreneurs to gather feedback on their products or services much faster than expected. The appeal of entrepreneurship, driven by ambition and the potential for significant financial rewards, draws many into the startup landscape.
However, starting a Company in the UK is not an easy task. With only about one-third of UK startups still operating after five years, it’s crucial to create a solid business plan.
Here is a step-by-step guide for starting a business in the UK—starting from scratch—and making it an immediate success.
Establish A Solid Business Idea:
While starting a Company doing something you love is ideal, you also want to ensure that it’s profitable and sustainable. Finding the right balance between passion and market demand is key. Once you’ve developed your idea, you can begin researching growth strategies and building the foundations of your business plan.
Research Your Idea:
Great business ideas come from having a great understanding of the target market. But how do you know if your idea is good or not? One of the best tips for starting a Company is to run a SWOT analysis.
SWOT Analysis = Strengths + Weaknesses + Opportunities + Threats. It’s a practical technique that help you analyse a Company idea in depth and create the appropriate strategy.
Strengths:
- Strong internal resources, such as skilled staff and tangible assets
- Unique selling proposition
- Expertise and specialisation
Weaknesses:
- Areas where your company lacks skills and knowledge
- Things your competitors do better than your company
- Resource limitations
- Unclear USPs
Opportunities:
- Undeserved markets
- few competitors
- New product/service needs
- Positive press coverage.
Threats:
- Emerging competitors
- Changing regulatory environment
- Negative media coverage
- Altered public outlook towards your company
So, when you plan to start a Company, do primary and secondary market research to answer specific questions on your SWOT analysis.
Primary Market research: Consider talking to your target customers, sending a survey, or conducting and recording the results of product tests. This is much deeper primary research.
- Who will purchase your product or service?
- How much people are willing to spend on your product or service?
- What does your audience think about your competitors?
- What are the Pain Points of Your Company?
Secondary research involves analysing your existing data to understand your potential market segment. This data includes, but is not limited to:
- Government data
- Recent surveys and studies
- Newspaper reports
- Recent company data
Create A Business Plan:
A business plan is your roadmap for starting a Company. It outlines your objectives and how you plan to achieve them, both in the present and in the future. While your business plan doesn’t need to be excessively long, it must be comprehensive enough to demonstrate a clear understanding of the market, your target customers, and your financial strategy.
A good business plan should have the following components included in it:
- Company Summary: An overview of your business, its background, and why it will succeed.
- Company Description: A concise explanation of what you intend to offer, why, to whom, and why your idea will work.
- Marketing and Sales Strategy: Details on pricing, distribution channels, competitors, customer insights, and specific marketing tactics.
- Products and Services: A detailed description of the products/services you plan to offer and how they will benefit your customers.
- Organisation Structure: Information on your business experience, the qualifications of your team, and the credentials/licenses that your employees will require.
- Company Operations: Details on the location, premises, production processes, and technology systems you’ll use.
- Financial Projections: Cash flow forecasts, income statements, balance sheets, and key aspects of your financial plan, including income sources, capital requirements, repayment plans, and collateral for lenders.
Register Your Business:
Once you’ve conducted thorough market research and your Company is ready to launch, it’s time to address the legal aspects. In the UK, there are three main types of Company structures to consider:
- Sole Trader: A self-employed individual who owns and operates a Company. Registration with HMRC is free, and you retain all Company profits after tax, which is paid through the self-assessment system.
- Limited Company: A company with a legal identity separate from its owners and directors. This structure limits personal liability by keeping company finances and taxes separate. You can hire an accountant to manage this. Your limited company must be registered with Companies House and HMRC.
- Partnership: This is similar to a sole trader setup, but the partnership and its partners must be registered for Self-Assessment. A partnership dissolves if one partner leaves.
Remember, your Company isn’t official until it is registered with HMRC or an approved formation agent like Companies House.
Organise Your Finances And Funding:
Separating your personal and Company finances is crucial, and opening a Company bank account is the first step. This helps you maintain a professional image and keeps your finances organised, making bookkeeping and tax preparation easier.
If you’re wondering how to start a small business with no money, don’t worry—there are many ways to secure funding:
- Small Company Start-up Loans: Various lenders offer loans for working capital, inventory, equipment, and more. Use a business loans calculator to determine how much you can borrow, depending on your revenue and credit score.
- Start-up Grants: Several government and EU-backed initiatives offer grants to businesses. These grants are awarded on a case-by-case basis, and if successful, the money doesn’t have to be repaid.
- Angel Investments: Angel investors provide capital in exchange for equity in your Company. They also offer entrepreneurial experience to help you succeed but will gain partial control of your business.
- Crowdfunding: This method involves raising small amounts of money from a large number of people to finance your venture. Alternatively, you can ask friends and family to invest in return for equity or a reward.
Pro Tip: The fastest way to extend the alternative lending options for your Company is by improving your credit score.
Insure Your Business:
Company insurance helps you to create a safe and secure working environment.
The type of insurance you choose will depend on the operations of your Company, but one or some combination of the following:
- Company Contents Insurance: A comprehensive cover for stock and materials against damage, theft, fire, or natural calamity. This coverage is necessary even if you already have a home contents insurance policy.
- Insurance Policies on Commercial Property: Protect your business premises in case of damage, theft, fire, or natural disaster.
- Professional Indemnity Insurance: Safeguard yourself from lawsuits that could be filed by unhappy clients.
- Public Liability Insurance for Small Companys: Defend against claims for bodily injury and property damage arising out of negligence by members of the public.
- Employer Liability Insurance: This liability insurance is available to protect your staff instead of the public.
- Company Car Insurance: Ensure any vehicle used for business purposes is properly insured.
By securing these insurance policies, you can protect your business from unexpected events and legal claims, ensuring long-term stability and peace of mind.
Equip Your Business With The Right Tools:
Investing in the correct tools will make a big difference in how smoothly your business operates as they help save you time and money while assisting you in making smarter decisions.
These are some useful tools you should consider when starting your business in the UK, even if this isn’t an exhaustive list.
Accounting software: The first thing on your list is accounting software like Xero, QuickBooks, etc., that can help you track every expense. This helps you prepare tax returns. Alternatively, you can hire an accountant to take care of your company accounts.
Domain registration: While registering your company, you will also need to buy a domain for website development. The domain name is usually your business name, followed by a “.com,” “.co,” or “.uk,” etc. For example, the company “TaxCan Accountants”, has a domain name “Taxcan.co.uk”
Virtual office address: Protect your home address and secure a permanent virtual office. This way, you could get postal mail while travelling and save time on admin.
POS Device: Purchase a card reading device to work on the go. With a card reader, you can accept payments in person or on the move.
CRM: Customer relationship management software improves customer relations. It helps save time and automates tasks such as collecting sales and marketing data, which is necessary for all businesses, especially small businesses.
Develop A Marketing Plan:
You have researched and put down the business plan and strategies- but how do you start marketing?
You can inform friends and family, attend network events, and place advertorials in the local press or online.
Digital marketing is the only way to get consistent results. It now accounts for 75% of the UK’s marketing budget, replacing traditional advertising.
Get a website:
So, your website is an online shop front to send people — a place where they can learn more about you and the things you sell. It takes your visitors only 50 milliseconds to make an opinion about your business. This is why you need it to work perfectly and ensure their first impressions are positive and memorable.
Your website should be clean, easy to navigate, and organised to highlight your key messages first. To establish credibility, it must function seamlessly across all devices and operating systems and present only accurate information.
Use versatile and cost-effective platforms like WordPress and Squarespace that remove the need for design experience to build user-friendly websites from scratch with available templates.
Optimise for SEO:
Once your website is live, it’s crucial to optimise it for search engines like Google. This involves researching the keywords potential customers might use when searching for your product. If done right, your site will rank higher in search results.
Keep in mind that SEO is a long-term strategy, so an increase in traffic may take some time to show.
Deploy A Social Media Strategy:
Social media is a powerful tool for reaching potential buyers, with approximately 16.4 million UK consumers making purchases through social platforms in 2022. By sharing relevant content that resonates with your target audience, you can drive traffic back to your website, encouraging visitors to explore more about your business and offerings.
It’s important to research and identify the most effective social media channels for your business. Platforms like Facebook and Instagram are great starting points, as they not only allow direct sales but also offer free ad training to help you market your business efficiently.
Prepare for business growth:
Scaling your business requires a careful balance of managing finances—keeping expenses low while ensuring profitability. Whether you’re expanding your marketing efforts, launching new products, or partnering with influencers, the primary objective is to boost revenue and establish a loyal customer base.
To streamline operations, many businesses turn to automation tools for tasks like lead generation, accounting, and email marketing. As your business grows, building a team becomes essential to handle daily operations. Depending on your needs, this team could consist of full-time employees, contractors, or freelancers.
How Can Taxcan Accountants And Cangaf Ltd. Help Start Your Business Journey In The Uk?
We believe that our tips on starting a business in the UK will help you avoid costly mistakes.
TaxCan Accountants and Cangaf Ltd. can help you establish your business in the UK, assisting in making a business plan to handle your company accounts effectively. Come to us for a personalised consultation on how your business will be registered.
