A Guide to Setting Up Your Own Business
In recent events, with COVID, furlough and lockdown, we saw a spike in people setting up their own businesses. Therefore, we thought it would be interesting to dig deeper to see where the most successful entrepreneurs in the UK graduated from and what degree they chose to take. We have gathered data from LinkedIn to find that most of the entrepreneurs in the UK attended University of Oxford, with the most popular university course for future entrepreneurs being Business.
If these remarkable entrepreneurs have inspired you to finally pursue that start-up company idea, but you’re worried because you never attended university, studied a different course, or are just unsure of the process, then Utility Bidder is here to help. Below is our comprehensive guide that will take you step-by-step through the process of setting up your own business and has some insider tips that will help your business prevail.
Starting a business by yourself can seem dauting and overwhelming, but with dedication, passion, resilience, and hard work, you can join the six million other small and medium-sized businesses in the UK.
Setting up can be quick, cheap, and easy, with the possibility of establishing a business in a day.
Evaluate Your Start-Up Ideas and Inspiration
Firstly, you need to come up with business start-up ideas. Easy, right? You will need to establish why you are setting up your own business before you make any further steps. If it’s purely money-motivated, then you might have difficulties staying focused later down the line if you run into issues. Your start-up company idea should be something you are passionate about, happy to put money, time, and energy into and believe it will solve a problem in the world or bring another person joy.
Your idea doesn’t have to be unique and revolutionary - even the most notable businesses took what was already on the market and adapted it. Tesla, for example, started with the idea of making cars purely electric. Your hobbies are a great place to start; you already have the passion, knowledge and understanding of the market to turn this into a potential multi-billion-dollar business.
Research Your Start-Up Company
So, you have your business start-up idea, now what? Benjamin Franklin’s quote: “failing to prepare is preparing to fail” is crucial here. You will need to spend time researching as much as possible to give you the upper hand. Some ideas of what to research:
- Define and analyse your target market.
- Understand your customers.
- Research a business name and define your brand.
- How to protect your intellectual property.
- Create your marketing and sales plan.
- Evaluate how your business model work in the current market and consumer behaviour.
- How to fund your business.
Once you have completed your research, then you can test your business premise. Many entrepreneurs don’t test their business models and end up wasting time putting effort and energy into ventures that were never going to work. Test your idea by exploring different routes into the market, such as setting up an online store (WordPress or Shopify), sell over the phone or carry out email marketing.
When testing your start-up company, you will need to be precise about how to measure performance. This will help gauge success or failure for your business. You could measure performance based on:
- How many products can you sell in a day, a month, three months?
- How much revenue can you produce?
- How much customer interest can you generate? Is this through followers or likes on social media or reviews?
If you have completed your research and tested your business premise, then writing your business plan will be much easier. The business plan is an important document and is vital for securing finance - it should detail the objectives of your business and how they will be achieved so investors and partners know exactly what they are joining. Your start-up idea business plan should be a living document that is regularly updated throughout your company’s life.
The research should have also identified your start-up costs. How will you fund this? Will you use your savings, or loans from friends or family? There are several options to help your business become financially secure, including various government fundings, small business loans and grants from banks or building societies, or other sources including Crowdfunding or the Prince’s Trust.
In the short term, your start-up company may live in a back bedroom or office, but as you grow, you may decide that you want to hire premises. More space could mean more stock sold or more staff to help your business grow, but you’ll need to keep in mind the additional costs.
For your premises, you will need cover insurance costs, as well as checking if you need licences or permits for food or music. Additional costs, such as business rates on premises and office equipment, will need to be added to your start-up costs, but small businesses can apply for discounts and could claim equipment and property as expenses.
Just like a home, your office will need to have gas, electricity, and water supplies. These start-up costs are usually overlooked, but cheap utility bills could help your business save money and save energy. Utility Bidder has helped over 68,000 businesses save up to 45% on their energy bills; our fully comprehensive service can help your business find you the best cheap utility bills. See how much you could save here.
The Start-Up Company Legal Structure
You will have to choose a legal structure for your start-up company. These include:
- Sole Traders – this is the simplest business structure, where you are personally responsible for your business.
- Limited companies – this means that there is a legal and financial distinction between you and your business. There are more reporting and management responsibilities, but you can pay for additional help form external sources, such as an accountant.
- Partnership – this enables two or more people to run a business together, they are all equally responsible for business’s debts.
Once you have decided what legal structure your business will have, you will need to register it. If you are a sole trader, then you will need to register with HMRC as self-employed through a few simple forms. If you are registering for a limited liability partnership (LLP) for your limited company, then you will need to download a LP5 application form from GOV.UK and follow the procedure.
Alongside the legal structure, there are tax responsibilities. Limited companies will need to register with Companies House, pay Corporation Tax on the profits made from the start-up company, pay VAT, and file a company tax return. A sole trader will need to submit an annual Self-Assessment tax return but can claim money back on expenses and reduce the tax bill.
Once the legal side of your start-up company has been set up, you will need to choose a bank account for your business. There is no correct method to choosing the perfect bank account, so you will need to opt for the one that is best for you and your business. You could shop around and see which banks have the highest track record of working with small businesses, which offers the most incentives to entice new start-up companies, and which have the highest reviews from small business customers. However, it is important to remember that it can be difficult to change banks if you are unsatisfied with your service, so make sure you spend time researching.
Protecting your Start-up Company
A record keeping system is vital for you to reduce time sorting paperwork when tax obligations roll around and more time relaxing and enjoying your business. If you are a sole trader, then it is important to separate personal and business finances - this ensures you have a clear idea of what you can spend for business purposes.
There are lots of record keeping software available to complete monotonous tasks, such as sending and creating invoices and monitoring outgoings. If you would prefer, you can hire an accountant to help you keep your small business on track to save money and become more financially secure.
Your start-up company is your dream and your passion, so it is important to protect it. There are various protection plans you can have in place to counteract the unpredictable, including:
- Intellectual property protection – protecting intangible, creative property that will safeguard your brand and business from people using it without your permission.
- Small business insurance – providing a lifeline when the unexpected happens.
- Public liability insurance (PLI) – protecting your business from losses caused by property damage or customers hurting themselves.
- Employers’ liability insurance (ELI) – safeguarding a business from financial loss if a staff member has an employment-related injury or illness.
- Business contents insurance – protects a company’s equipment, tools, and stock on the premises.
These tips have hopefully given you an idea of how to create the start-up company of your dreams and build a successful business. Good luck!