Eight steps to setting up your new business

Are you planning to start a new business venture? It can seem like a challenge at the outset, especially given current circumstances, however, now could actually be the best time ever to launch a new business!

Since COVID it’s become clear that market gaps exist with supply chain issues, changes in behaviour and health concerns. Your product or service could solve some of these problems and our eight-stage process will guide you safely through what you need to do to get started.

Around half a million new UK businesses are launched every year, often with great success. If they can do it, why not you?

The key lies in putting a plan together before you start – that way, you won’t be overwhelmed by the task ahead, and can concentrate on turning your brainwave into a profitable enterprise.

Stage 1 – What’s the big idea?

You might be excited by your plans, but can you turn them into reality? Spend time thinking about your business concept, and what makes it different from the competition. Are you offering a new product or service? Or is it cheaper, better, or more convenient for your customers than competing offers?

Maybe you haven’t settled on that killer idea yet. If so, it’s worth looking at things from the customer’s point of view. What do they want? What are the challenges they face in trying to achieve their goals – and how can you help?

Another question you should ask yourself is this: how will it work online? Most successful businesses today have an online presence; the internet is a great way to find customers, and for them to find you. Keep your online plans in mind as you move forward.

Stage 2 – Are you ready to commit?

Let’s be honest, starting a business is hard work. It’s better to decide at the beginning whether or not you’re truly prepared to put in the time and effort to make it a success. Take an objective look at your situation and consider what suits you. Are you ready to devote yourself to it full time, or is it something you want to run on a part-time basis, alongside other work or family responsibilities?

Being realistic about your level of commitment will help you develop a clearer picture of the sort of business that’s right for you. Can you do it all alone, or will you need to think about employing extra help during demanding times? Do you want to work from home, or will you need to hire commercial premises to really make a go of things?

Asking yourself these questions not only helps you clarify your level of commitment to your new enterprise; it starts to shape what your business will look like.

Stage 3 – Let’s make a plan

By this stage, you should already have some idea of what your business will look like, and what you’ll be doing within it. Now it’s time to work out how you’ll make a success of it.

Think about your business during its first five years, and what it will need to survive and thrive. How many customers will you need? What will you need to charge them? How much will you need to reinvest back into the business? What sort of marketing will you need to do?

These answers will form the basis of your business plan – essential if you’re planning to apply for a business loan. In this, you’ll outline your market sector, target audience, and competition. You can also set out your prices, overhead costs, and marketing budget, allowing you to get a rough idea of your level of profit.

Don’t be inflexible, though. Think of your business plan as a roadmap. You know where you need to get to, but there may be detours and hold-ups along the way. Markets can change, and you’ll have to adapt – the Covid-19 pandemic is an extreme but topical example of this – but it’s also vital to stay organised and on track towards your goals.

A good business plan lets you prepare for opportunities. For example, how much turnover will you need before you start to expand? How much will the extra staff cost and what will that do to your profit margin?

You can also identify potential problems. If you already know the impact of existing competition on your business, what happens if a new competitor comes along? What happens if production costs increase, or your supply chain is interrupted?

The old adage is true: if you fail to prepare, then prepare to fail. But proper planning can, in the long term, help your start-up business to succeed where many struggle or fail.

Stage 4 – Do your homework

Research is key to your success. A start-up that has fully investigated its market, customers and competition has a far greater chance of achieving its goals.

You may need to use a market research expert for this stage, or you can tackle it yourself. If you do your own research, it’s important to remain objective. Talk to people you don’t know, to ensure unbiased answers – a small focus group that matches your target audience is ideal.

You might also use online surveys to capture the views of potential customers, or visit the sort of people you’d like to sell to, to gauge their level of interest and find out what they are looking for. First and foremost, is there a need or interest for what your business will provide? How are they meeting that need at the moment, and what could your business do to make it easier for them?

Don’t forget to study your competition, ideally as a customer. What was the service like? Was the cost fair? How would you improve things?

Use your research to find how your business can stand out. Is there a gap in the market you can exploit? What can you do that your rivals can’t? What makes you different?

Ultimately, the results of your research will affect the way your business is structured, the resources you need, the customers you target, and the prices you set – so it’s vital to get it right.

Stage 5 – Get into shape

So you’ve got the concept, the plan, and the company name. Now it’s time to register your business – but which structure is best for you?

Many start-ups register as sole traders. This is the easiest and cheapest way to launch a new business, and requires you to register with HM Revenue and Customs as soon as possible once your business has started.

However, if you plan to work with your spouse, a relative, or someone else you know very well, you may wish to create a formal partnership. In this arrangement, you and your partners share responsibility for the business, and must agree on the distribution of liability and profits.

This structure is different from a limited liability partnership, which combines a business partnership with a limited liability company. The tax situation is the same as it is for a business partnership, but – as with a limited liability company – you are only responsible for business debts up to the amount you have invested in the partnership.

Finally, you can set up as a limited company. This is a private company which is owned by its shareholders. It can project a more professional image to customers, and is easier to sell on at a later stage should you wish.

As the owner, you are only responsible for business debts up to the value of your shares – the company’s finances and your own remain separate. Liabilities (such as debts or legal penalties) are limited to the company, so you are protected against personal bankruptcy if the company fails.

Tax is more efficient for a limited company than it is for a sole trader, though you’ll have to submit full accounts and pay Corporation Tax annually. You can draw profits from the company as a salary or as dividends – this is subject to income tax.

Setting up a limited company requires more work than simpler business structures. Firstly, you will need to choose a name, and restrictions may apply – for example, it should not be too similar to existing company names.

Next, you must appoint at least one company officer. They are responsible for the business, ensuring it complies with its own Articles of Association and any legal requirements, including the completion of annual accounts, corporation tax returns and a yearly Companies House Confirmation statement. A Company Secretary is no longer required for smaller companies.

You can register the company yourself at Companies House, or Acconomy can do that for you. To register, you’ll need an office address and several other documents, including a Memorandum of Association containing the details of directors and shareholders. It’s important to have the share structure set up in the right way from the outset and Acconomy is happy to advise on this.

Registration is usually completed in 24 hours, after which you’ll be sent a certificate of corporation confirming the company’s existence. At this point you will be able to open a company bank account and register for VAT if required. 

Stage 6 – Get caught in the web

Alongside all these stages, remember to keep in mind that your business will most likely need to operate online. This means choosing a name that’s easy to remember (and to find on Google) and, if possible, registering the domain name at the same time.

Ideally, you want a domain that contains your company name, and ends in .com or .co.uk. You’ll also want to identify a reputable web hosting company. While free options exist, it’s worth paying a small monthly subscription when starting out, as a good host can help you grow in a modular, scalable way as business increases.

Don’t spend more than you need to on your website; you can always modernise or add functionality later on. As long as it compares well with competitor sites, and has the capabilities you need – for example to book orders – you’ll have enough to get you started.

Also, make sure you know the regulations – including The Consumer Rights Act 2015, the Supply of Goods and Services Act 1982 and the Consumer Contracts Regulations. More details about online regulations are available on the Gov.uk website.

If you’re taking payments or collecting data online, you’ll also need to ensure your security is sufficient to protect your customers. Compliance with the General Data Protection Regulation (GDPR) is also something you’ll need to consider.

Stage 7 – Stay in control of your finances

It’s easy to overspend when you’re starting a new business, so keep costs to a minimum. Only pay out for important things that will ultimately result in more sales.

Even if you keep a tight rein on your finances, many start-ups need funds to get them up and running at the beginning. If you’re a UK resident planning to start a business, and are not bankrupt or in debt, you are eligible to apply for a business loan through a bank. Your business plan is essential to securing this.

You can also raise finance through angel investors, though they often require a high-percentage return on their original investment.

Whether you’re seeking investment or deciding how to spend what you have, return to your business plan often to make sure you’re keeping your business on track and not over-extending yourself.

Stage 8 – Grab hold of a helping hand

Finally, remember that you’re not the first person to ever start a business. Plenty of people have gone through exactly the same thing, and their advice can be invaluable. Seek out those who can provide the guidance you need.

A wide range of help is available, including government schemes and business mentors who offer tailored advice that will match your business and market.

As an experienced accountancy practice, Acconomy is passionate about engaging with entrepreneurial businesses. In addition to shouldering the burden of many of your day-to-day administrative tasks, we can also focus our financial expertise on helping start-ups in the UK to succeed.

To see how we can help your new business take flight, get in touch at https://www.acconomy.co.uk/business-startup-scholarship-scheme