How do you start your own business?
excellent time to start a business
In this blog post, we outline a step-by-step guide to starting a business, as well as advice, tips and how you can found an online company.
Table of contents
- How to start a business in the UK (15 steps)
- What do you need to start a business?
- What are the challenges a business may face?
- How much does it cost to start a business?
- How old should you be to start a business?
- How to start a business as a teenager
- How to start an online business (with examples - Amazon, Instagram, eBay)
- Advice and tips on starting a business
- Recommended books to read on starting a business
Regardless of the uncertainty caused by the COVID-19 pandemic and the cost of living crisis in recent years, now could be an excellent time to start a business in the UK. In fact, many small businesses were founded and found success during the pandemic. In addition, almost half of all UK residents have begun a side business alongside their regular job, making the most of flexible working policies while undertaking activities in a passion of interest.
But people often ask themselves, "how do I start my own business successfully?" or "is starting my own business the right thing to do?". Of course, these are valid concerns to have, so it's essential to be 100 per cent certain and aware of the steps one should take to start a company.
But if you are sure you want to start up your own UK-based business and are wondering how to do this, then look no further, as we have all the information and tips you need to create a successful company of your very own.
How to start a business in the UK
1 Come up with a business idea
One of the first steps to starting a business is knowing what you want your company to be about. Think of your particular topic of interest or passion and what you would want your company to look like. Do you want to sell things that you have created or designed? Do you want to offer hairstyling for customers? Or are you happy to start and provide a tutoring service for others? It's totally up to you what you want to do for your business. If you want to set up a home-based business, we previously wrote a blog post with 50 ideas for a business founded and operated in one's house.
You may find getting into a particular industry hard when starting a business. Well-being and sustainability businesses have seen enormous growth that has accelerated due to the pandemic. Hybrid working options and flexible hours have also become the norm for some companies. You might want to consider this for your own business, depending on the type of industry you are entering.
2 Consider if your business idea will work
It would help if you were realistic when starting up a new business and developing an idea for it. Not only will your company be something you're passionate about, but it has to fit your skillset and possible prior experience. Do you have the knowledge required to start this business? Or will you need additional qualifications and training?
You also have to consider how original your business idea is. For example, there are hundreds of food-delivery businesses. But if you were launching your own, it's important to have something unique or new you could bring to the market, something that the other companies need to be doing. It's also essential to undertake market research to understand better the industry you are trying to enter. This will help guarantee your business to be a success.
We have also written a blog post with further information on testing a business idea.
3 Assess your business idea
Suppose you think your business idea will work. In that case, you will also need to assess and ensure that running a company fits your personal and professional needs. For example, do you have the time and flexibility required to run a business? Will it fit in with family and other commitments? Will you be able to run it full-time, or will the business be part-time alongside another job? Do you need to hire additional staff members to help you run your business, or can you do it solo? Will your business allow you to work from home, or do you require additional premises?
4 Identify your target market
You should never start a business without understanding your market and who they are. Depending on the type of business you want to start, you may already have an idea of who your target audience is. Hence, it's important to research them further. This can usually be done in the form of a survey. For example, if you wish to begin a dog grooming business, you could send postal surveys to those in your local area who own a pet dog. Your market research must not include friends or family members, so your respondents will give you an unbiased reflection of your business idea.
When undertaking market research, you could ask respondents if your product or service is worth the money, how much they would be willing to pay, what existing companies you will be competing with, and the best communication channels to market your business to your audience.
5 Find an MVP
Following market research, you must test your business idea to see if it will work long-term. You should therefore find a minimal viable product (MVP). An MVP will allow you to see how many people would be interested in your business and which area of your product or service is most successful. Examples of MVPs include having a pop-up shop in a local area or a test website using a low-cost platform.
Testing an MVP is vital to determine if you can expand your business. This is usually carried out early in the development process, allowing for tweaks and changes to be made in response to feedback from the target audience.
6 Check your finances
You must ensure that you are financially stable enough to run a business and be aware of any additional funding you may need. The amount of money you need will depend on the business you are hoping to launch. Some types of companies will be cheaper to launch than others. It might be easier to break up your costs into different categories to help you get an idea of what you will be spending:
- Essential investment: things that your business definitely needs to operate. For example, premises, stock, and a till system would be necessary for a shop.
- Helpful investment: things that will help you run your business and improve operations but are not essential. For example, a website with your own domain.
- Nice-to-have investment: things you would like for your business that might not improve efficiency but may provide smaller benefits. Like a helpful investment, these things are usually not essential - for example, a coffee machine.
You should also compare the available finance options and decide which would work best for your business. You may also be able to take out a business loan or grant - we have written articles about both of these previously.
7 Consider finance tools
After considering your finances, you must ensure you can track and manage the money your company makes. Business bank accounts are one of the first steps to managing your money, and it is a requirement if you're running a limited liability company. You can learn more about setting up a business bank account by reading our blog post about it.
Online tools such as F Xero are available to help businesses track their finances, file receipts and format invoices. As your business grows, consider finding an accountant or bookkeeper to help out, but this is unlikely to do in the early stages of running a company.
8 Create a business plan
Suppose you have evaluated your business idea, undertaken market research and worked out your finances. In that case, you can start putting a business plan into motion. In this plan, you will need to outline four key areas: business, marketing, finance and management, while also leaving space for your executive summary, which is essentially a pitch for readers and potential stakeholders. Finally, you should summarise your company's mission statement, describing what your business does and your aims for the future.
Here are some guidelines for writing a business plan:
- Know your target audience
- Make your business aims and objectives clear
- Keep the tone and style consistent throughout
- Make sure it's short and not too complicated
- Take a look at other business plan examples (these can be found online) so you have a good idea of how to structure your own
9 Register and trademark your business name
Once you've set up your business, you should register the company name with Companies House. After registration, you could also trademark the company name to protect its identity. We previously wrote a blog post on registering a business name and another on trademarks.
10 Choose your business structure
When registering your business, you must consider what type of company you are running. For example, will you be a sole trader, or will you be running a partnership? Will your business operate as a limited company or a limited liability partnership? Selecting the right one is crucial, as all of these business types deal with different tax issues.
The main differences between each structure are:
- Sole trader: you are the sole business owner entitled to all its profits. You are also liable for any losses the company makes
- Partnership: similar to above, but profit and liability are split between more than one person
- Limited company: a private business, with liability only tied to the amount of money one has invested
- Limited liability partnership: similar to a limited company, but multiple partners are involved
We also have a blog post with more information on the different types of businesses that operate.
11 Get business insurance
Most businesses get insurance to protect them from workplace risks, including staff falling ill or being injured, stock or premises damage, or legal issues. Depending on your business type and industry, you may need to take out a certain kind of insurance as required by law.
- Employers' liability insurance: covers the cost of compensating employees who fall ill or are injured in the workplace.
- Commercial motor insurance: for any business using a vehicle.
- Professional indemnity insurance: for the regulators of some companies, such as IT consultancies
We have a blog post with more information on the types of insurance a business can take out.
12 Brand your business
Your business will need to have a strong, distinctive identity for it to stand out to customers. How you brand your business is based entirely on the type of company you are running and the results of your market research. You will have to consider several factors:
- Who is your target audience?
- Who are your competitors?
- What product or service are you selling?
- How should you advertise your business?
You will also need to develop a company logo and, if using business premises, how these will be laid out and structured.
13 Create a website and email address
Most companies have a business website for people to find them online. Having a website will also allow customers to contact you via email or a contact form if they have any enquiries. Some companies may be entirely web-based. For others, such as shops and beauty salons, they may create a business website to have on the side as an additional form of marketing. In addition, website builders online, such as WordPress, Wix and Squarespace, will allow you to create your own business webpage, suited for viewing on both computers and smartphone devices.
Once you have a website, you should establish an email address for your business to deal with enquiries and send out marketing information. We have a blog post with more details on you can set up a business email and register a domain name for a website.
14 Find customers
Most importantly, a business will need customers attracted to the services offered if they want to survive. Consider how your competitors are able to find customers, how they market their products or services, and how they get the best return on the profits made. Finding customers for a business is a process of trial and error. Although you may have a specific target market in mind, you may have never marketed to them before. Therefore, it's important to try different methods to discover who would be most interested in your business and if your ideal target market will work.
15 Continue to grow your business
This is only just the beginning. As you run your business, you will only hope to see it grow and become more popular. Try collaborating with other, more established brands in your industry or charities, and ask for promotions in exchange for a free product sample. These can all help your business to achieve growth.
There is no right or wrong way to do this. However, as long as you prepare and research running a business, you can help your company go from strength to strength while adapting to changing situations.
What do you need to start a business?
The things you will require for your business depend entirely on the industry you are entering. We have already explained some of these things above and why they are necessary, but the main requirements for needed for starting a business include the following:
- A business plan
- Premises/offices if you are not working from home
- A business bank account
- A business website and email address if you wish to have an online presence or are operating entirely online
- Licences or permits, if necessary (for example, to play music, sell food or trade in the street)
- Additional employees if you are not working alone
What are the challenges that a business may have to face?
Even the most successful businesses don't always have a plain-sailing experience. The industry has seen many hardships in recent years, so it's essential to take them at face value and evaluate the impact they could have on your business.
Some of the problems companies have faced recently and will continue to do so in 2023 include the following:
- Supply chain logistics
- Soaring energy and mortgage/rent bills
- Rising fuel costs
- Brexit-related issues regarding the import and export of items
If you're looking to start a company this year, these are some of the issues you might have to face. Ensure you research the specific problems your industry is currently facing. For instance, if you're running a delivery business, you could face issues with Brexit and the prospect of delivering intentionally. If you're running a shop, you may have to deal with high rent prices. You might also need to follow the health and safety guidelines outlined following the COVID-19 pandemic.
How much does it cost to start a new business?
As discussed above, one of the most important steps for starting a business is figuring out your finances and understanding how much money you may need to run a company. The costs involved in starting up a new business depend on many factors and the type of industry you are looking to enter. You will need to consider the following:
- Any materials required for the products being sold, what manufacturers supply these etc.
- Taxes and accounting
- The cost of a website domain and business email address subscription, if applicable
- Equipment needed for premises, rent, petrol costs for vehicles
- The amount of marketing you will undertake and how (social media, print ads etc.)
- Shipping costs
- Any legal issues you could potentially face
If you start a business with little or no money, you will have to invest the profits back into the company. This is called "bootstrapping," which usually leads to slower growth but decreases the risk of financial debt.
According to research from Shopify, small business owners spent 31.6 per cent of their income on production costs in the first year of operation, with shipping costs factoring in the least amount of money at 8.7 per cent. The research also showed that 66 per cent of new business owners funded their companies through personal savings. In comparison, 21 per cent did so through a personal loan.
You will need to understand that the first year of running a business, particularly a small one, will not always be super profitable. Founders are often the last to be paid as the company's revenue returns to the business. Therefore, it would help if you also drew up a financial plan with how much money you currently have, how much you will need and how you will use it.
How old should you be to start a business?
Could you ever be considered "too young" or "too old" to start a business? Your age should not be a factor in deciding to begin your own business. You must be at least 16 years old to operate a limited company in the UK, and at 18, you can start a sole proprietorship or partnership
Research from Startups.co.uk, which analysed the ages of 68 entrepreneurs who founded a new business in the UK in 2021, showed that the average age of a new company owner was 35 years old, while the oldest new startup founder they heard from was 61. However, this does mean you have to wait until you are 35 before you can start a business. Some of the world's most successful entrepreneurs, including Mark Zuckerberg, Jeff Bezos and Steve Jobs, all began their own companies before they were that age.
How to start a business as a teenager
If you do want to start your own business before you turn 18, there will be additional challenges you may have to face. For example, due to your age, you may not be able to set up a business bank account and have access to additional finances. In addition, there are issues surrounding your legal status as a minor and the amount of work you are legally entitled to do. You would also have to balance running a business alongside your education.
However, these should not put teenagers off if they feel they have a good business idea that can be expanded upon when they turn 18. Teenage-run businesses are supported by organisations such as the Princes Trust and Young Enterprise, which offer advice for young entrepreneurs.
You can find more information on the Workspace website.
How to start an online business (with examples)
Many successful businesses began as online entities, later expanding due to their growing popularity. The internet boom in the late 90s and the rising popularity of social media platforms have helped to contribute to this. So if you're considering starting a UK-based online business, look no further. Below, we have outlined three of the most successful businesses on the internet and how you can start an online company similar to theirs.
Amazon is one of the largest ecommerce companies in the world, founded by Jeff Bezos from his home garage in 1994. It was initially intended as an online business for books, but today, they now sell many types of products. They have since expanded to focus on other areas, including online advertising, digital streaming of TV shows, films and music (Amazon Prime and Amazon Music) and artificial intelligence (AI).
How to start an ecommerce business like Amazon
Say you are interested in setting up a ecommerce business online and selling either products of your own or secondary items to make an income. It could not be more simple. Similar to how Amazon began, consider selling your products from home at first. Set up a business website and social media pages to advertise and sell the products and build a following. You could even sell items in your home garage like Jeff Bezos did. If the business becomes big enough, it could be expanded to have its own premises, with a warehouse for staff to manage the packing of orders placed.
How to start a business on Amazon
Operating a business on Amazon can be done through their website, allowing you to sell any items you no longer need to others of interest. All you have to do is make an account and advertise the products you wish to sell to others. Ensure you have packaging equipment to wrap up items and send them to the buyers' addresses.
Instagram is one of the most popular social media platforms, founded in 2010 by Kevin Systrom and Mike Krieger. Available on smartphone and tablet devices as an app, Instagram allows users to upload media, including photos and videos. The app has placed heavy emphasis on its "reels" format of videos, and Instagram Stories lets users upload photos and videos that can only be viewed for up to 24 hours. Instagram was acquired by Meta (then known as Facebook Inc.) in 2012.
How to start an Instagram business
Although many wonder how it is possible to start a business on Instagram, it's much easier than you may think. Instagram has led to the rise in so-called "social media influencers", who make money from their posts. For example, suppose you have a marketable platform attractive to a specific demographic who you wish to influence. You could set this up through an Instagram account. Many influencers focus on particular topics, such as health and fitness, beauty, fashion, food and animals. Some influencers also use Instagram to try and raise awareness of specific issues of interest.
If you do not want to be a social media influencer, you could easily establish a business of your own through Instagram. As outlined above, many ecommerce businesses use social media for advertising their products. In addition, some small businesses rely entirely on Instagram to promote and sell their products while attracting a following.
Like Amazon, eBay is also an online ecommerce company, but they differ in that they focus on consumer-to-consumer sales more so than that of its competitor. Pierre Omidyar founded the website in 1995, and it quickly grew to become a multibillion-dollar business. eBay is centred on the concept of an "online auction", which allows people to sell unwanted items online and allows others to bid the highest amount they desire to purchase it.
How to start an eBay business
Starting an eBay business could generate significant profits if you sell unwanted products, especially if you want to provide an auction-style outlet. Auctions work well for rare and hard-to-find products, allowing customers to bid high amounts in order to obtain them. You can also sell homemade items through eBay.
Advice and tips on starting a business
Most of the key information to beginning your own company has been outlined throughout this article. But if you're still stuck, here are some of the best tips on how to start a business:
- Make sure that this business is 100 per cent right for you and that you have the confidence and ability to be able to run it successfully
- Make sure your product or service is in demand
- Know your market/target audience, see what they want from you and how you can achieve this
- Have a business plan ready, and make sure it includes your aims and executive summary
- Have a strong brand identity and logo for others to be able to recognise it easily
- Make sure you have the right amount of finances to run a business. And once you have your company set up, be aware that you will need to manage your funds and make sure you have enough cash to continue to run it
- Have insurance to protect you, other employees and customers in case of risk in the workplace
- Make sure you choose suitable business premises and up-to-date working equipment, if necessary
- Seek help. Even established business owners need advice from time to time. Consider looking for a business mentor - we have a blog post on how you can do this
Recommended books to read on starting a business
When starting a business, reading books on the topic will help you best to understand the concept of running a company. Many experienced business owners and entrepreneurs have written books about their startup experiences, offering advice to aspiring business owners. Below are five of the books we recommend. All of these books are available on Amazon:
Fraser Doherty MBE - 48-Hour Start-Up: From Idea To Launch In 1 Weekend
Lisa Johnson - Make Money Online: Halve your hours, double your earnings & love your life
Bianca Miller-Cole, Byron Cole - Self Made: The Definitive Guide To Business Startup Success
Peter Thiel and Blake Masters - Zero To One: Notes On Start Ups, Or How to Build the Future
Lucy Werner - Hype Yourself: A No-Nonsense DIY PR Toolkit for Small Businesses