While the idea of starting your own business can seem daunting, it’s actually a quick, easy and affordable process; one most people can do for themselves by following these ten steps.
1. Assess viability
When you have an idea for a business, you need to assess whether it’s viable or not. Consider whether there’s a market for your products or services, who your customers will be and if they would be willing to pay for the goods you’re selling.
If you aren’t sure if your idea is viable, seek the advice of industry experts or business leaders, many of whom are happy to act as mentors to people just starting out.
2. Write a business plan
Every business needs a clear plan that outlines what they’re going to do when they’re going to do it and what they want to achieve. Plans should include how products and services will be marketed and potential profits.
Make sure your business plan is realistic, especially if you’re using it to source financing from banks or investors as they may hold you to any financial claims you make.
3. Create a cash flow forecast
Every new business needs money to get off the ground and keep operating until it begins to make a profit. Consider how much you’ll need including to buy equipment and supplies and pay salaries. Look at where any initial funding will come from, be that a business loan or savings, potential income and expenditure. Use this information to create a cash flow forecast for at least the first year.
If your forecast doesn’t show you making a profit in year one, this doesn’t mean you shouldn’t start your business. Extend the forecast for three to five years and see if you’re making a profit then. If you aren’t, you may need to reconsider.
4. Decide on a business structure
Many first-time business owners set themselves up as sole traders initially because it’s the simplest and quickest way to start trading. Other options include forming a partnership, limited company or limited liability partnership (LLP). If you decide to become a sole trader or form a partnership, you’ll need to register with HMRC; if you decide to form a limited company or LLP, you’ll need to register with Companies House.
Each option has pros and cons, and you can find out more information on each on the government’s website.
5. Set up a business bank account
While this isn’t absolutely essential, it’s a good idea to set up a business account rather than having the money go into your personal account, especially if you’re managing large transactions. This means there’s less to unpick when it comes to finalising any accounts or taxes.
If you’re applying for a business loan, many lenders require you to have a business account. It’s worth setting this up before making any applications, this way you can easily evidence your company’s cash flow.
6. Decide where to base your business
Depending on the type of business you’re setting up, you might need to find premises from which to operate; this is especially true if you’re creating products to sell or employing staff. Do your research before you sign any lease, looking at things like footfall and accessibility to help you make your decision.
If you do have the option of working from home or renting a desk in a shared office, these are much more affordable options when you’re first starting out and well worth considering rather spending your initial capital on buying or renting office space.
7. Apply for licenses, trademarks and patents
While this won’t be applicable to every business, many require licenses in order to operate or trademarks and patents to protect intellectual property. Licenses are issued by the local or national government, and a full list can be found on the government website, along with details on how to register a patent.
While you might be keen to get started, resist the urge to start trading before you get any required licenses. If you do, you could be subject to fines or other restrictions.
8. Brand your business
While they say you shouldn’t judge a book by its cover, many customers do judge a business by the impression it leaves them with, which is why getting your business branding right is vital. This includes coming up with a name that’s easy to remember, an attractive logo, and consistent messages that let potential customers know what you do and what you stand for as a business. Use the same logo and messaging on all your paperwork and marketing materials.
If you aren’t the creative type, it’s worth investing in the services of a graphic designer or marketing specialist to help you come up with your branding.
9. Develop an online presence
Last year in the UK 77% of people accessing the internet did so to research goods/services before making a purchase, showing just how important it is for your business to be online. This includes a website that promotes your products and services and social media profiles that help potential customers find you and let you interact with customers.
You don’t need to be on every social media platform, only those that are used by your customers. Research which the people you want to reach use and post on these sites regularly.
10. Set up business systems
To ensure your business runs smoothly, and you’re able to access information quickly and easily, including financial and performance data, spend time setting up systems that work for you. If you only have one or two clients, this might mean tracking your finances on a simple spreadsheet. If you’ve multiple clients or a large product base, you’ll need more complex systems.
Take advantage of any trial offers on software, allowing you to try before you buy, making sure they’re fit for your purpose.
Depending on what type of business you plan to set up there is a good chance you will need some form of business insurance to ensure you a protected in the event of the unexpected. Business insurance comes in many forms and it is wise to speak with a broker to see the type of cover you require.