Starting a business: the basics
If you are considering starting up a new business, you need to consider a number of factors to ensure the best chance of success.
As well as your product or service, you will need to think about what you will call your business, what sort of structure it will have and how you are going to run it. You should also think about how you are going to attract customers and where the money will come from for setting up while the business finds its feet.
This guide outlines what you need to do, and where you can find the information you need, to plan your new business. It gives guidance on business plans, proper finance and the legal requirements that must be met when starting up a business.
You can incorporate your limited company online with Companies House using the web incorporation service, for incorporating a private company, limited by shares, with model articles of association.
What to do before you start your business
There are videos, e-learning tutorials and guides available on this site to help you before you start your new business. You will need to research and develop your basic business idea, and work out what you are going to call your business and what form it will take. You should also think carefully about the product or service that you want to sell, the audience you’re selling to and what you have that makes you stand out from the crowd.
You must also think about how you are going to finance the start-up and what effect it will have on your personal finances while you wait for profits to show.
The following material will help you better understand what is required to start a business:
- decide if you have what it takes to be your own boss
- develop your business idea
- think about the money
- understand the different business types
What are your start-up options?
When considering starting a business, you should think about the different options available to you. You might want to start your business full-time or part-time, or even in your spare time. You could choose to work from home or separate premises, to buy an existing business or to invest in a franchise, depending on your experience, lifestyle and resources.
You should also think about assessing your own skills and where you might need some extra development or support — for example, looking after the business’ finances.
The following material will help you to understand your options and choose which business is right for you:
You can also look at the following guides:
- choose the right premises for your business — explains how to choose the right premises and consider the options available to you as a start-up
- starting a business from home explains the benefits of working from your own home and the issues you might want to consider
- buy a franchise explains what franchising is and why it might suit you more than starting your own business
- buy an existing business looks at the issues around buying an established business, which may be quicker and easier than starting from scratch
- common mistakes when starting up — and how to avoid them — this guide will help you avoid the most frequent assumptions and mistakes made by new business owners
Finding and keeping customers
When you start up your new business or become self employed, you will need to have a clear understanding of what an ideal or typical customer looks like. You will also require a way of identifying groups of customers with a similar profile.
Understanding target customers and their needs is a key aspect of your market research. Developing a marketing and sales plan is an important next step in planning how you will reach these customers through promotional activities while also enabling you to budget for the cost.
Once you have gained new customers it is vital that you build a long-term relationship with them so that you can enjoy their repeat business. It is significantly easier and cheaper to do business with existing profitable customers than to find new ones.
Retaining valuable customers also requires you to understand in detail the effectiveness of your customer service as seen from the customer’s point of view. This customer feedback on your performance will help you to make informed decisions when making adjustments to your offer. It also increases the likelihood that your customers will talk about you positively to others and make referrals.
Finance for start-ups
When you start up in business or self employment you will need money to get under way and to keep the business going until you get paid by your customers. You will also need to cover your personal expenses until the business can support you.
There are many different sources of funding for start-ups including personal savings, money from family and friends, bank loans, grants and equity funding from private investors. Creative thinking and planning your cashflow might save you money and make it less costly than you think to start your own business.
The following material on this site can help:
Tax and legal issues for start-ups
Once you have decided to start a new business, you need to make sure that you have all of the legal formalities in place. This includes choosing the right legal structure to suit your particular circumstances and ambitions as well as registering with HM Revenue and Customs. Should you choose the limited company route you will also need to register with Companies House.
Depending on your business idea, you may need to seek specialist advice on Intellectual Property Rights (IPR) protection, whether this is to cover copyright, trade marking, design registration or patenting.
Keeping and maintaining accurate records as well as ensuring that you pay tax and National Insurance are essential requirements when you set up in business or go self employed.
The following material on this site can help:
- choose the right business model and legal structure for your business
- get to grips with business taxes
- protect your business and premises
Your business plan
Planning and thinking about your business is a necessary process to undertake before, during and after you start. The headings in a business plan can be simply thought of as a checklist of questions you need to ask to reassure yourself that your venture will work. Writing the plan down is just as important because it helps to clarify your thinking and demonstrates your commitment to move forward. It also identifies where you intend to get to and how you intend to get there.
Other benefits include the chance for you to focus your mind on how you intend to run your business and to identify early on any areas or issues that you may have missed. You will also be able to review your progress against your forecast and make any necessary adjustments to get you back on track. Having a clearly presented document will also make it easier for any specialist you may use to provide support. In the case of raising funds from a bank or investor a business plan will be a necessary requirement.
Although the structure of business plans do vary, they will typically include an overview, a short description of the business idea and opportunity, what makes it different, who will be involved in the business, how you will provide your product or service, your marketing and sales strategy, and financial forecasts that will show the expected profitability.
The following material on this site can help:
The following guides will help you to put together a business plan:
- prepare a business plan — looks at the essential role that creating and using a business plan plays in starting a successful new business, and describes all the different components of a plan
- use your business plan to get funding — describes how to present your business plan to the right people in order to secure funding.
Thank you for reading.
This was originally posted at Starting a business: the basics | Venture Labs, however, our website is very much in alpha! We look forward to creating new content very shortly 😊
