Starting a small business can feel like embarking on a quest with dozens of possible paths you could take. There are pitfalls and traps to avoid, but also rewards to be discovered by those who take the plunge.

Proper preparation will give you the best chance of success and that means creating a plan, choosing the right tools, following the rules and seeking wisdom from others.

Here are the 5 things every small business owner needs to know before starting.

Create a detailed business plan

Some entrepreneurs think they can get away with not writing a business plan and that the overwhelming brilliance of their idea will carry them to success. Here’s the thing: in exceptional cases, that’s possible, but you stand a far better chance of succeeding if you have a comprehensive business plan in place that details your core aims, strategy, financials and market analysis.

Creating a business plan before you invest a penny in your idea will allow you to spot any issues that could trip you up later on, meaning fewer resources wasted on false starts and, ultimately, faster growth. It’s also essential if you want to seek external funding from investors, who will want to see evidence that their investment will be worthwhile.

And don’t worry about being tied to your business plan – it’s a blueprint, not a bible. You can stray from it and revise it as circumstances change, but it’s always valuable to have a reminder of why you started this business in the first place, especially when you feel disheartened. 

Choose the right business bank account

There have never been more business bank account options available, especially with the emergence of digital-first banks. Choice is great in many ways but deciding between providers that frequently offer very similar terms, fees, and services can be tricky.

So, how to choose? Primarily, your business bank should have terms that match the scale of your financial activity. For example, many accounts have a maximum turnover and daily payment limits, which could restrict your options. You should, of course, compare monthly maintenance fees and core services – easy to use mobile or online banking is a must – but the quality of additional features can be the biggest differentiator. Overdraft facilities can be very useful for growing businesses, as well as access to data on spending and cashflow, which can provide essential insights. You may also be offered perks to help kick start your business.  

Finally, ask other business owners with similar requirements to your own who they bank with and what their experiences have been like.

The HSBC Kinetic Current Account is available to sole trader or single director shareholder businesses and you can apply in minutes, in app.

You’ll be able to manage your business finances through your phone, as well as see cashflow and spending insights and apply for an overdraft of up to £30,000 in-app. Subject to eligibility and Credit Check. Terms and conditions and fees apply.

Get ahead on compliance and regulations

Ensuring that your business is compliant with all necessary laws and regulations and that you’ve obtained all the relevant licences or permits should be a priority.

Compliance can be intimidating and even tedious when you want to focus on more exciting tasks but getting this aspect of your business sorted as soon as possible will free you up to focus on those more exciting things without worrying that you’re going to be fined or get into legal trouble.

Some regulations are highly specific. For example, to operate legally, businesses that handle food need to register as a food business, gain a food hygiene certificate, and get a premises licence. If you trade internationally, you’ll also need to check whether there are any foreign or international regulations that you need to comply with. If you’re unsure, consult legal professionals or regulatory bodies to make sure that you’re meeting your requirements.

Prioritise marketing

Even the most game-changing business idea will fail to gain traction without an effective marketing strategy.

The definition of effective marketing will be different depending on what sector you operate in and who your target audience is, and you should certainly tailor your messaging and channels based on those factors.

However, in this day and age, no matter what your product and service, a strong online presence is essential, especially for small businesses. The great thing about online marketing is that it’s highly accessible, flexible and democratic. There are many social media platforms to choose from and many ways to reach an audience. You can devote a small amount of resources to testing which ones get the best return on investment before committing to a full-scale campaign. Due to the interactive nature of social media, it’s also a great way to build communities and get instant feedback on what works and what doesn’t.

Seek advice and guidance

That romantic image of the thrusting entrepreneur going it alone and succeeding against the odds is a compelling one. But whether you are headstrong, extremely confident, or simply precious about being challenged on your decisions, there’s no good reason not to seek advice from those who have gone before you.

A mentor or advisor can help you avoid the common pitfalls that plague early-stage businesses, tell you things you’d never know without experience, and even help you feel less alone when times are tough.

That doesn’t mean you should blindly follow everything they say – your circumstances may be completely different – but use your judgement to decide what advice applies and what doesn’t.

If you can, find someone who has operated in the same sector as your business, so that you can get highly specific advice about how to navigate the challenges and opportunities of your industry.

Conclusion

Success is never guaranteed, and many factors are outside your control. However, if you follow the above steps, you’ll create a solid foundation for growth.

Remember that adaptability and a willingness to learn are also key traits for small business owners. The commercial landscape is constantly shifting, and staying informed about industry trends and being responsive to changing consumer preferences will contribute to the long-term success of your small business.

This article was written as part of a paid-for advertising content campaign with HSBC.