Are you thinking of starting a business in the UK but don’t know where to begin? You are not alone, as more than 200,000 people set up companies each year. Let’s take a look at how to get started and make the most of your business idea.
Is it hard to start a business?
At the start of 2019, the UK had 5.9 million different businesses registered on its shores, with 76% of them being sole traders. These include a vast range of different sectors, from jewelry, fashion, catering and food service companies to property, consulting and car rental firms.
Add to that the 1.1 million companies that employ less than 10 people and it becomes obvious that these small firms are the lifeblood of the British economy. What this also means is that there is a lot of support out there for people who want to start their own business.
Each and every business is different, but some common factors affect everyone – regardless of whether you are starting something as small as a dog walking business or planning to start a multi-national corporation. It takes time, research and a whole lot of bravery (not to mention start-up funding).
Therefore, you need to be passionate about what you do, otherwise, there is little chance of success. Dr Nik Kotecha started his medical supply company with a desk and a fax machine in his garage back in 1991.
Today, Morningside Pharmaceuticals is worth more than £65 million. His advice is simple:
Find your passion and you will find your purpose. Once you have found your purpose, only then can you begin, develop and grow your business.
Is there market demand for your business?
Market research is a huge topic and new businesses often struggle to find the information they need to start off developing a market research plan.
A well written market research plan will aim to answer the following 3 questions:
- Is the business viable, both technically and financially?
- What are the primary risks involved in bringing this business to market and what info do you need to minimize these risks?
- How likely is it your strategy and business model will be successful?
Take these questions and apply them to your business idea. For a dog walking business, these questions could look like:
- Can I logistically provide this service and what are the costs involved in setting up? Do I need a vehicle?
- Is it risky to take temporary care of people’s pets? How do other businesses mitigate this risk and what insurances do I need to provide this service. Are there enough customers to achieve my business goals?
- Do I have the right approach to spreading awareness of my business and how successful could my business be?
Where do you find market information?
Do you want to know more about the current state of your chosen industry in general? Check out polls, forums, news articles and the Office for National Statistics for this type of general information.
Most importantly, you must know who you are selling to. The group you want to sell to is known as your target market.
For more specific information, consult the oracle (Google). Bricks & mortar stores are easy to find if they’re on Google maps – you can even just type in the service you’re looking for rather than a specific business name.
Now, who are these competitors and what type of person do they serve? Are they a budget option, a premium option, a niche option? It’s important that you learn this information about your competitors in order to identify any gaps in the market you might want to explore.
Account for costs
This is absolutely crucial. Many small businesses get unwelcome surprises because they haven’t fully researched what goes into starting and running a business.
What insurances do you have to pay? How about permits, licences, certification? And have you accounted for the taxes you need to pay? What about pension contributions and national insurance contributions? Do you need transport? All these and more need to be taken into account.
Caroline, who owns a small company that provides cleaning services in Aberdeen, Scotland, set up a business on her own in 2014. Looking back, she says that costing is crucial.
I had no idea about the overheads involved and there were a few surprise costs. If I could give myself from six years ago some advice, it would be to make sure you look into every possible cost in advance. It doesn’t pay to be naive.
Write a business plan
By doing this, you will give yourself a clear idea of your business structure, as well as what you are going to do and how to achieve it. Not only will this help you to decide who you are trying to reach and how to succeed, it will also allow you to discover any flaws or unexpected costs early-on before they become serious.
Taking your first concrete steps
At the end of the day, the government wants your business to succeed, as it will bring revenue through taxation and give you more disposable income. Therefore, they offer a great deal of help and advice, as well as financial incentives to help you get on your feet.
Your first port of call should be the finance support section of the Westminster government’s official website to see if your business fits into one of their funding schemes. Different schemes are available through the UK’s devolved parliaments in Scotland, Wales and Northern Ireland.
The UK government’s Business Support website has a huge array of case studies that will let you see businesses similar to your venture and what they did to get started.
How do you get start-up funding?
One of the most common questions people ask when they want to start a business is: ‘how do I get funding?’ Starting a company is not cheap, but don’t let not having enough (or any!) money stop you from pursuing your dream.
Most people who start a business from scratch in the UK do so with little or no cash, so you will need to look for a way to raise capital
. No matter the type of business you are looking to open, there are funding options available to you and the good news is that you can do it in a few ways.
Government grants are available in different forms. A direct grant is a lump sum of money given to a business to help it get started. However, other alternatives that save you money are possible, such as lower business rates, free equipment and lower costs.
- Soft loans
Rather than going to a bank and convincing a bank manager to lend you money at his or her desired rate, you can get a soft loan from the Start Up Loans scheme, which is backed by the government. They offer lending of up to £25,000 with an interest rate of 6% – this also includes free business support and mentoring.
- Equity finance
This is more unusual for smaller businesses, as it involves essentially selling a share of your business in return for government finance. It can result in reductions in income tax but also has some strict stipulations as to the size and age of the firm.
As you can see, setting up by yourself is an achievable goal, as long as you are prepared and willing to work hard. The tools are in place for success, so now all that is left for you to do is take the plunge. Good luck and let us know if we can help you build your dream into reality.