How to start a business ?
You dream of being your own boss ? You would like to live from your passion ? You are ready to have your own business ?
Here's a little guide about how to start your own business. Those steps, in this order or in a different one, are what you should do long before signing up your first clients.
Steps to start your own business :
1- Evaluate your idea and write a first summary business plan
Having an idea is the beginning of the journey of owning your business, but to make sure you have everything on your side to make a successful start in the entrepreneurial world, you will need to assess your idea, research the market and establish an initial business plan. This step is a major one as it will allow you to see if your idea is viable. Start by questioning yourself about your idea, but also about customers, resources and money ; What kind of suppliers will you need, how much will it cost you to launch your business, will you need staff, who are your customers, etc. Because you are probably excited about it, you are probably not the best judge therefore don’t hesitate to turn to your friends and family to get their advice and their perspective of the market. It could help you to have a clear view and so to avoid an overly optimistic business plan.
Ok, your idea is viable ? Your are ready to be a business owner ? Let’s go to Step 2 !
2- Decide your company structure
There are 3 types of companies in the UK:
Sole trader: This business-type is where one person is owning and running the entire company. No employee, this person is entitled to all profits and liable for any debts or damages. This is the type of business e.g. freelancers or independent plumbers as they work by themselves.
Limited company: This kind of business is completely separated from its owner meaning the owner is liable for any business debts to the extent the put into the company. Most of the companies in the UK are set up like this e.g. a hairdresser or a cake shop.
Partnership: This type of business is where owners are business partners, meaning they share profits, debts and expenses. This type of business is commonly used by dentists, law or accounting firms or vets. For your information, a partner doesn't need to be a person it could be a limited company partnering with another limited company.
Which one is the best for you ? Before you finalise your decision, you should meet an accountant, which is bringing us to Step 3.
3- Find an accountant to help you start your business
There are forms to fill, decisions to take about the type of company you want ... and as starting a business is not a day-to-day task, I'm sure you will or have thousands of questions about owning a business. It is exactly why you will need the help of an accountant. They know the rules with HMRC, they know what is best financially and the pros and cons of each type of company. They will also be your best help to create a budget and your first forecast. Budgeting and forecasting are crucial in the development of your company since they put into numbers the goals of the owners and give a framework to the company. Your accountant will also be able to help you with bookkeeping by either showing you how to do it or by doing it for you and make sure you comply with the law for when your business will be up and running.
For the next years, your accountant will work with you to build and grow your business. It is then important to find one that you like and that offers what you need. Have a look at our latest article to know How to choose the right accountant for you.
4- Choose your company name
You now know where to start and what to do to comply with the rules. It is now time to decide the name of your company. As choosing a name for a child, this task is not an easy one. The name of your company will be the same for decades and it will be printed everywhere, so it is important to choose the right one.
Have a look on Internet to inspire you but also to see what is available and what is not. If Jo the cake-baker is already taken, you might need to find something else as you can't choose something too similar or exactly the same as what is register at Companies House. You will also have to check if the name you have in mind has already been trademarked by another company, you can check that here. When you have a few potential ideas, talk with friends and family to see what they think about your ideas or if they have any suggestions. Repeat it, answer the phone by saying that name. After all of that, I'm sure you will have the perfect name for your company.
With the digital world that we are now living in, you will need to secure a domain name. You can buy it on Internet. Of course, that can influence how you will name your business. If jothecakebaker.co.uk is taken, you might want to slightly change it so your name and your website match. As soon as you can, secure your domain, therefore when the time comes to create your website, you will be sure to have the right domain name.
5- Write a business plan
Here comes the serious and critical step. You've now register to HMRC, you set up the type of company you are, you have a domain name booked, it is now time to establish your plans for the next 5 years. In step 1 you have drafted a summary business plan to see if your idea was viable. This step is different as this plan is not a summary, it is the picture of the life of your business. What do you want? What are your objectives? What type of clients would you like ? What are you expecting? This step is crucial as it will give you direction. It is like drawing the map to reach your ultimate destination and over the years you will follow that map.
In your business plan, you need to describe your marketing, sales and financial strategy and keep it updated with the evolution of your business. You will need to imagine yourself realistically for a 1 year period then 3 and 5 years. I know, in 5 years things might have changed from A to Z, but it is important to write down SMART objectives and to project yourself in the future as this plan will be your map to guide you. Having a plan based on 5 years will help you when it will be time to take important decisions, but also to convince the bank to give you a loan. By clicking here, you can find some examples to help you get started.
In your plan, you will need to establish the target market. One useful tool is to use the SWOT. It will help you to determine who are your competitors and how can you stand out of the crowd. Then, you can write your marketing strategy. How will you reach your customers, how will you gain clients, how will you keep them satisfied and informed about your business, how will people know about you ... And of course, talk about money. How much do you need to sell your products or services to be profitable, how much do you need to make profits to reach your objectives, do you need to rent an office and equipment ... Of course, your accountant and business adviser can accompany you by helping you to do financial projections. Don't forget that his job is to help business owners and most of the time, he is also one of them. He has the knowledge and the experience to support you, so why not using him ?!
6- Meet your bank
Even if you don't need a loan, you need to meet the bank to open a business bank account if you want to generate revenues. Every business owner needs a business account because you need a separate legal entity to you. Of course, if you are a sole trader, it might not be required but it is recommended to do so. Your accountant will probably let you know. Meet different bank companies, see what they are offering and choose the one you prefer. Of course, some have better offers for small businesses, some will give you a bank account free of charge for transactions and some might offer complimentary products like insurance. But in the end, there is no recipe for that step, just go with what you feel is best for you and your business.
7- Set up your communication and your new office
Congrats !!! You are almost a business owner. The last step, that seems logical but can be forgotten, is the communication and your new office. If you have your office at home, organise a space dedicated to your office. If your rent an office, don’t forget to install internet and set it up for employees or meeting. Also, seems basic but you will need a phone number and an email address. Clients need to reach you so you need to have communication in place for Day 1 of your business.
Communication can go further, and should do. Start by subscribing your business to Google Business. It is free and it will help you to be seen on Google and found by clients. Then if somebody in your area is looking for a cake-baker, you could pop up on his map and get a new client. Another way to gain customers and establish your brand is to be on social media. It is time to create your Facebook, Instagram, LinkedIN, Twitter… accounts and share it with your friends and family. More followers you will have, more you will be known, and then hired. If you don't know how to do this, ask a professional in marketing to give you a hand. At PRWS, we can either show you how it works or take charge of your social media accounts.
Final advice !
Best advice I can give to a brand new business owner is to find somebody who is also a business-owner. Being an entrepreneur is not easy and you might sometime need advice or to clear your mind during hard days. That is when a mentor become useful as they can help you, listen to you and advice you. And no need to look too far away to find a mentor, your accountant is also an entrepreneur who went through the same steps as you. Therefore, they can be more than a simple accountant to you, they can be your business adviser !