With redundancies expected to soar when businesses eventually emerge from lockdown and those on furlough lose their jobs, many of us are thinking of going into business for ourselves.
Last year saw a record number of companies created, with an extra 84,758 businesses setting up in 2020 compared with 2019.
Indeed the number of firms incorporated in Britain during the four weeks to mid-December was over one third higher than during the same period last year.
The year-on-year growth rate for new company registrations has been in double digits since June 2019.
If you have worked for an employer all your life, the idea of setting up on your own can seem daunting. Here is a free start-up checklist to take you through every step of creating your own business.
#1 – What’s your business idea?
First, you need to have a great business idea.
British entrepreneurs have always been good on capitalising on the emerging business trends that could boom in the near future and beyond.
- What’s the problem that you’re addressing?
- How can you help solve it?
- What is the need in your local area?
- Who is the competition?
- How big is the potential market?
Ground-breaking digital business ideas have found their beginnings in humble garages, dorm rooms, and home offices. Don’t be afraid to think big. Mattel, Harley Davidson and Disney all started out as hobby businesses. How can you turn your passion project into a business?
If you’re stuck for inspiration, here are five low-cost ideas for starting your own business post Covid-19.
And if none of those suggestions light your fire, you could always explore buying an existing business as opposed to starting your own.
#2 – How to market research your business idea
So, now you’ve got your new business idea, but is it any good? Every would-be entrepreneur runs their business idea by their nearest and dearest, gauging their reaction.
Yet fewer than one in 10 small businesses set up shop because they actually see a gap in the market. This is because they don’t really do any market research, instead trusting their gut instinct.
But market research is not just for big businesses and it doesn’t need to be expensive. In fact, with relatively low budgets and restricted resources, smaller companies may have more to gain from early and effective insight into their customers, and yes, it can be done a shoestring budget.
Research can identify demand for your goods or services before your start-up launches, it can help you understand your customer – what motivates them and engenders their loyalty – and it could save you money in the long run.
#3 – What’s your USP?
Whatever your business is, the truth is that someone else is doing it too – and the success of your start-up depends on how well you stand out in your particular crowd.
That means pinpointing and developing your unique selling proposition (USP). Your USP is what makes you the go-to supplier in your area. If you’re not pitching yourself go-to person, your USP needs a bit of work.
The first lesson of business is to have a USP. Without this, success is tough. Unfortunately, the importance of a unique selling proposition is often overlooked. If you’re entering a crowded market, it can be terribly difficult to find one aspect of your brand that hasn’t replicated elsewhere.
For many business leaders, just identifying their USP can be hard enough, never mind working out if it needs to be tweaked and how to go about improving it.
Here we list six ways a small businesses can define its own USP. You could concentrate on one point of difference or it could also be a combination of types.
#4 – Decide on a business name
Choosing a name for your business can be difficult. We all intuitively know that getting the right name is important, but actually thinking up something we’re happy with is hard. You’ll be hard pressed to find a common English word that hasn’t already been trademarked but at the same time, you need your name to be memorable and accessible. So how do you find that perfect name?
You can find a how-to guide to choosing and registering a name for your company here.
And once you’ve chosen that unique and memorable business name, you will need a website address or domain name to go with it. Here is a guide to ensuring your domain name matches your business brand.
#5 – Draw up a business plan
A business plan is a nuts and bolts action plan, an essential tool for both marking out the future and reviewing the course along the way. The business plan is a document that states the business goals and how they will be achieved. Every business should have a business plan. It might be a brief one-pager or it may be an all-encompassing report including marketing and finance plans.
Still don’t know what a business plan looks like? You can find examples of business plans here.
#6 – Are you a sole trader or a limited company?
Being in business on your own, if you don’t set up a limited company at Companies House to run your business through, then by definition, you’re a sole trader.
There are pros and cons to being a sole trader as opposed to running a limited company. On the one hand, being a sole trader means less admin and costs. You can find everything you need to know about becoming a sole trader here.
On the other, you and your company are one and the same, which means if your start-up fails, your personal assets – such as your home – could be on the line.
You can find interviews with other start-up business owners here explaining their thinking about setting up a company and how they went about it.
#7 – How to register your company
Okay, so you’ve decided to set up a limited company. You can find a complete how-to guide as to registering your start-up at Companies House here.
One thing to think about is where you want to register your company name. Even if you work from home, you may want to register your business address separately – at the very least it will stop that tsunami of junk mail flooding your letterbox!
#8 – Expenses you can claim setting up your business
One thing you can do when building your start-up is claim back all the money you’ve spent on registering your company, buying computer equipment, setting up your website and money you’ve spent on professional advisers.
And whether you work from home as a sole trader or have a limited company, you can find out what you can claim in business expenses here. The actual process of reclaiming allowable business expenses can be found here.
#9 – How to choose a business bank account
Unless you’re a sole trader, you must have a separate business bank account. Even if you’re a sole trader, keeping your personal cash separate from your business makes sense. As your business grows and expands, it’s extremely important to separate your business finances from your personal, day-to-day living.
Here are eight questions to ask when deciding which business account is right for you.
And once you’ve zeroed in on the right kind of business bank account, you can find a comprehensive guide to who offers what here.
#10 – Choose a payments processing system
You’ll probably want to be able to take payments either in person or over the phone, which means having to use a payments processing system with a card reader. You can find a complete guide to payments processing systems here.
And if you have customers in the US, you’ll need a payments processing system which can handle transactions in American dollars. You can find out more about accepting overseas payments here.
#11 – Creating a purchase order
Now that you’ve set up your business, whether it’s sells physical goods or a digital service such as your valuable time, you will need to create and issue a purchase order (PO). You can find a complete guide to setting up and issuing purchase orders here.
#12 – How do you find a business premises?
Even before the Covid-19 pandemic, the rise in co-working spaces seemed inevitable. Post pandemic, many established businesses may be looking to get out of fixed leases and look for flexible workspace. Co-working or traditional office? Which is right for your start-up? According to estate agent Savills, a good rule of thumb is to go for a flexible office solution while you’re growing but move to a fixed office location once your headcount stabilizes. You can find a piece analyzing the pros and cons of coworking spaces here. And once you have decided on where you want to be, here is a five-point guide to moving office.
#13 – How to negotiate with a landlord
Okay, let’s say you’ve decided on a permanent office space. Negotiations with a landlord can often be fraught. How much deposit do you have to leave? Is there a break clause mid-tenancy? Who pays for infrastructure repairs and upkeep? You can find an eight-point guide to negotiating a commercial lease here.
#14 – How to find the best deal on phone and broadband
Every business, even one run from home, needs broadband and a phone line. Yet the kind of package you need varies from business type to business type. Here is a guide to the right kind of telephony package for different types of start-ups.
#15 – How to find an accountant
Every start-up needs an accountant and a bookkeeper. The bookkeeper manages the day-to-day accounts of your start-up, while an accountant advises on tax efficiency, VAT and paying tax on profits. First, you need to find an accountant. You can find an article here on questions to ask yourself when searching for an accountant.
However, an accountant does much more than prepare end-of-year tax returns. They can often be a trusted adviser and sounding board. Read about how to get the best out of your working relationship with your accountant here.
One thing you don’t need to hire an accountant for is running your own payroll. You can find out about handling your own payroll direct with HMRC here.
#16 – How to choose accountancy software
Last year, HMRC rolled out its Making Tax Digital initiative, compelling 1.2 million VAT-registered businesses which earn £85,000 plus in turnover to file returns online. Those businesses now must submit their quarterly VAT returns under the new system. Despite the pandemic, HMRC still plans to roll out Making Tax Digital to all corporation tax.
This means that you will have to use an officially sanctioned digital accountancy package to run your business.
You can find a comprehensive guide to which accountancy software package is right for your start-up, whether you’re a freelancer, a microbusiness with a small amount of stock or something grander here.
And you can find a glossary of all the different types of tax you might need to pay, including corporation tax, VAT and National Insurance here.
#17 – How to create a website
Another must-have for any start-up is a website. It could be as simple as the online equivalent of a business card giving your contact details. Or a bells-and-whistles ecommerce site, which calculates inventory and has a sophisticated built-in marketing system.
Last year, nearly 2m small and medium-sized businesses did not even have a website. Yet it has been estimated that the cost to any business that doesn’t have a website averages at £173,769 per year in lost revenue, despite the average monthly running cost of a website being less than £18.
Here is a comprehensive guide to six of the most popular website creation platforms to launch you into cyberspace.
#18 – How to market your start-up digitally
Great, you have your website but now the problem is how to get noticed. Given that there are already nearly 2bn websites on the internet, it’s like everybody has been handed their own tiny bullhorn. Here is an essential guide to small business marketing. However, you can find tips as to how to make your website stand out here and here and make sure that you get on that all-important first page of Google.
One skill you will definitely need to grasp is search engine optimization (SEO), which helps Google and other search engines notice your website and boost it up the rankings. Here are six easy wins to boost your website ranking.
#19- Hiring your first employee
Congratulations, your start-up is doing so well there’s too much work for you to do alone. So, you need think about hiring your first employee. You can find tips and guides to taking on a full-time member of staff here and here.
#20 – How to export for the first time
Now that Britain has left the European Union, the government is encouraging small businesses to think about exporting to the wider world. Ninety-five per cent of businesses do not export to the EU. Here is a complete guide to exporting goods abroad for the first time.