How to start your own business in 14 simple steps
So, you’ve got the seed of an idea. Now to learn how to start a business from scratch and make your vision a reality.
When it comes to starting your own business, there’s a whole host of things to sort out – from checking whether your idea’s got legs to deciding on your company structure, registering on HMRC and working out how you’re going to fund it.
Starting your own business is never easy but, by following these 14 simple steps, you’ll be sure to start off on the right foot.
How do I start a business?
1. Float your idea amongst family and friends
Every good idea has to start somewhere. Usually, that’s likely to be in your head! The first step to transforming it into something tangible is to start speaking about it.
Start by telling as many people as you can about your idea and asking whether they think it’s worth pursuing. Whether it’s your family, your friends or the barista at your local coffee shop, listen carefully and note honestly all the responses.
Every small business at the beginning of its journey is going to face a few doubters. However, if the majority of the people you’ve asked don’t think it’s a good idea, ask why. Is it because of a problem with the business idea itself? Is it because you haven’t managed to accurately describe your value proposition? Or are family members and friends worrying that you’re taking on too much?
Make sure that you carefully consider all the responses when making a decision on whether or not to proceed.
2. Do your market research
Next, it’s time to start refining your business idea and testing whether or not it stands up under scrutiny.
Define your target audience, your assumptions about them, and the ways in which your business is going to meet their needs. Then, carry out some customer research to find out whether your assumptions are correct, either using a Google Form or by tracking down and talking to members of your target audience in person.
Don’t forget to carry on tweaking your idea and your assumptions as you go, in line with what you learn. It might help to carry out a ‘SWOT analysis.’ This is where you list your business’ strengths, weaknesses, opportunities and threats. By becoming aware of each, you can play to your strengths and prepare yourself for obstacles that might come your way.
3. Check out the competition
As part of your market research, consider who your competitors will be (or if you don’t have any direct competitors, consider those closest to you). Where are they based? What products and services do they offer? What’s their pricing like?
By looking at what they do well and what they could improve on, you can start to form a clearer idea of your USPs (unique selling points) and find your niche.
Most importantly, you’ll want to pinpoint why a customer should choose you over your competitors. There are many different reasons this could be, from cost to customer service, quality to ethics. Whatever it is that makes you stand out from the crowd, this is something you’ll need to put front and centre of everything you do.
4. Consider your pricing structure
Now that you have a clearer idea of what you’re going to sell, who you’re going to sell it to and what makes you special, consider your pricing structure.
You’ll need to choose a price point that:
Your target audience will be able to afford and will be willing to pay.
Will give you enough of a profit margin.
Will allow you to remain competitive given what your competitors charge.
You’ll also have to consider where you sit in the market. Are you a luxury brand? Or are you a cost-effective alternative to your biggest competitors? This will affect what you decide to charge and vice versa.
5. Choose a business name
Once you’re clear on your business’ value and the ‘why’ behind it, it’s time to brainstorm your business’ name. This is one of the most important decisions you’ll end up making as it’s both the name your customers will know you by and the name that will appear on all your legal documents!
Ideally, your business name should be short, sweet and memorable. If possible, it should also describe what your business does (there’s a reason we called ourselves ‘Day’s Accountancy Services!’). Not only will this make it easier for your customers to understand what you do, but it will also help you to be more easily found on search engines.
Most importantly, check that nobody else is using the name you want and ensure that it’s available for social media accounts and a website domain. That way, you’ll know that you can create a consistent brand across all channels.
6. Create an initial business plan
Now that you’ve pinned down a lot of the nitty-gritty details about your business, write it all down to create an initial business plan. By noting down your business’ objectives and how you plan to achieve them, you’ll be better placed to reach key goals and approach your business in a structured way.
Here are some of the key elements you should include in your business plan.
Executive summary: A short summary of your business and your objectives.
Business model: Note down the products and services you plan to offer.
Market: Provide some context about the market your business will enter. This includes summarising your business’ target audience, analysing its competitors and clarifying what place your business will occupy.
Finances: Make a note of your current financial situation, your forecast for the next 12 months and what your main expenses will be.
People: Write down who will be involved in your business and what you all bring to the team in terms of skills and experience.
Business plan summary: Summarise the key points from your business plan in bullet point form.
Don’t worry if there are a few gaps at this stage. You’ll need to continue revisiting and adding information as you tick off the next steps on our checklist.
7. Get an accountant
We’d recommend getting an accountant’s help sooner rather than later. We may be biased, but there’s a good reason, we promise!
Not only will an accountant be able to advise you on all of the above steps, but they’ll also be able to help ensure you comply with regulations (such as helping you to register with HMRC or set up Payroll). Plus, they’ll be able to assist you in setting up your business in a way that’s as tax-efficient as possible.
Take some time to consider how you’re going to manage your company’s bookkeeping too. You’ll need to ensure that you record all your income and expenditure and collect and organise the relevant invoices and receipts to go with each transaction.
You can choose to do this in-house (in which case, your accountant can advise you on the most efficient way to do so) or you can ask your accountant to help you out with basic bookkeeping services. Read our bookkeeping guide for help making a decision.
8. Choose how to structure your business
This is another step that your accountant will be able to help you with. There are many different legal structures under which you can start your own business. Most people will be choosing between setting themselves up as a:
Sole trader. Setting yourself up as a sole trader is probably the easiest route, but you will be responsible for your business’ debts. So, consider the risks. It’s likely to be most suitable if you’re starting a low-risk business.
Limited company: If your business is higher risk, you could form a limited company which would mean your business’ finances would stay separate from your personal finances. However, you would become a Director, which would come with added legal responsibilities.
Partnership: If you’re forming a business with someone else, you could form a partnership. This way, you’ll be responsible for your business’ debts, but jointly with your business partner.
You could also choose to set your business up as a social enterprise or an unincorporated association. Need help deciding which type of business to set up? Just get in touch for a free consultation.
9. Register your company
Once you’ve decided which type of company you’d like to set up, you’ll need to make sure that you register it properly. Your accountant can help with this.
If you choose to set up a limited company, you’ll need to register it on Companies House. If you like, you can do this yourself or we can do it for you to make sure everything is set up correctly.
Once you’ve completed the process, your company will normally be registered within 24 hours. If you decide to set up as a Sole Trader, on the other hand, you’ll just need to register as self-employed with HMRC.
10. Work out how to fund the setup
Consider your initial outgoings and how you’re going to fund them. There are likely to be a fair few upfront costs that you need to fork out before your business starts generating an income. These might include:
Website design / hosting.
Marketing.
Company phones.
Offices.
Equipment.
Staff (payroll and pensions).
Some of these will be one-off costs, while others, such as payroll and rent, will be recurring. Ideally, you’ll have enough initial capital to provide adequate cash flow for at least the first three to six months, while you establish your business.
It’s also important to consider how much it will cost to run your business in order for you to break even. You’ll need to put realistic goals in place that will allow you to reach that point.
We always recommend considering what your daily cost to run your business will be, working on the basis of 45 weeks a year to cover sickness and holidays. That way, you’ll get a daily cost to cover.
11. Get a bank account
You’re going to struggle to start trading until you have a bank account. So, this is a big moment!
Consider what kind of bank account will suit you best. If only company Directors are going to be processing payments, one of the newer banks such as Tide or Starling might appeal to you. Their modern apps make it easy for you to check your business’ bank balance on the go, while some of them even allow you to generate invoices from within the app.
If you’re looking for a bank account that can be managed by a staff member who’s not listed as a Director on Companies House, you’ll probably need to set up a business bank account with a more traditional bank. This can take a bit longer, so be sure to think ahead instead of leaving it until the last minute.
When deciding which bank account to choose, it’s worth checking that the bank will link with accounting software. Using software that interlinks with your bank can improve productivity and save valuable time for growing businesses. As QuickBooks Accredited ProAdvisors, we often work with our clients using QuickBooks. Linking QuickBooks to your bank account will allow you to manage your business finances on the go.
12. Get insurance
Do you already have insurance? If so, will it cover your business’ activities?
The likelihood is that you’ll want to get specialist insurance that will protect you in your line of work, such as Professional Indemnity, Public Liability or even Employer Liability insurance if you’re going to be employing staff. Of course, different businesses will require different levels of protection, but ultimately, it’s best to be safe rather than sorry.
13. Get ready for launch
Now you’re nearly ready to go, it’s time to get your business ready for launch.
You’ll need to obtain all of the tools, equipment and resources that your business will need in order to function (this could include a company mobile phone, stationery, machinery and even offices). If you’re planning on employing people, you’ll also need to work with your accountant to register them as employees with HMRC and to set up payroll and pensions. Just remember to talk to your accountant about what expenses you’re eligible to claim.
You’ll also need to get your brand ready to be viewed by your customers. So, you’ll need to spend some time nailing your online presence, from building your website to setting up any social media accounts and making sure that your branding is consistent across all channels. If you’re a brick-and-mortar business, this will include obtaining premises and figuring out how to make them welcoming to potential customers.
14. Market like crazy
Congratulations, you’re ready to launch! Now all that’s left is to help your customers to find you – and, once they do, to give them an unparalleled experience.
Consider what channels will be most effective in helping you to reach your target audience, and double down on your marketing efforts there. This might include pay per click, social media, SEO, banner ads, advertorials and more.
Once you’ve got those first customers through the door, focus on providing them with as much value as you can. Assuming they’ve had a great experience, that’s your opportunity to ask them for reviews or to refer their friends. Not only do customers acquired through referrals have a 37% higher retention rate than others, but they’re also four times more likely to make a purchase (according to Extole). It’s too good an opportunity to miss!
Starting your own business next steps
Ready to start making your vision a reality? Starting your own business isn’t always plain sailing, but it’s almost always worth it in the end.
If you have a business idea you want to pursue and you’re not sure where to go next, why not book a free consultation with us? We can help advise you on the best structure for your business and will be able to guide you through the process of setting it up step by step. We look forward to hearing from you.