The Essential Guide on How to Start a Business

Introduction to setting up your business

For many people since the pandemic, the focus has been on creating a better work/life balance. For some this will be the thoughts, and perhaps dream of having their own business. But it's not as easy as it may seem, with many hidden hurdles and obstacles on the way.

As a start-up, it's easy?to come up with an idea, but to make it a profitable and viable business is not easy, especially to get close to your expectations. You need to have an execution plan ready from the start. This blog will tell you everything you need to know to set up your business, as well as taking the first steps to getting your first sale.

Choosing the products you want to sell

When choosing a business to get involved with, you should look at a few factors that will determine if the product you choose is something you'll enjoy doing full time. Questions you should ask yourself include the following:

Why are you starting this business??Planning clear realistic goals will help you on your business journey.

Do you have basic knowledge on the products??Having an understanding of the product will help your research.

What product experience do you have with the product category you're choosing??Perhaps as a hobby, will help you understand the components and workings of the product.

Is the product required??Selecting a product that can ideally solve people's pain points will help in marketing your chosen product.

Do you have passion in the product/category??Enjoying working with this product, will help in the long term to keep you motivated.

What market analysis do I have to research??This a whole chapter in itself and is covered below.?Understanding where and how your product is positioned in the marketplace will provide you with essential information. Use Google trends, Blog, Social page to gauge reaction.

Is the business scalable??The ability to scale your business with the products you choose will enable future growth.

Is the product I'm choosing a niche product??Finding a gap in the market is a difficult ask, however, if possible you should be aiming for a product that is not widely available.

Who can I share my idea with??Brainstorm your idea with trusted friends & family to get feedback and guage their reaction.

The importance of market research & defining your target market

This is the most important stage before deciding if the product is wanted and viable as a business. While researching, gather as much information about the product, suppliers & competitors. Take into account that research you do via friends and family will probably be positive to not offend you. Include the following aspects in your market research:

Define your target market

Who are your potential customers?

What is their demographic?

Where do they hang out?

How will you attract customers to your bricks & mortar or online shop?

What % are likely to buy your product?

Know your competitors

Who are your competitors?

How are they marketing their business?

What are their price points?

How to find suppliers

Online B2B platforms

Trade fairs & exhibitions

Trade Associations

Social networks

Where to sell your products

Online platforms

Own website

Social media

Trade fairs & events

Market stall/Boot fair

Marketing your business?

Social media

Website SEO

Google Adwords

Email marketing

Direct mail

Business directories

Network events

Influencers

Market research analysis

Is there an angle that can give you a competitive advantage?

How established is the product category?

How can I define my USP?

Can I solve a problem for potential customers?

Do I need to refine my business strategy?

Can you safeguard your business against a recession?

Choosing the best suppliers for your products

Based on your market research on potential suppliers, it's now time to determine who's the best supplier, or suppliers are for your product. Whether you decide to buy from a UK supplier or import your product, the process is similar, except for the importing process, which you'll find in a section further below. The process to follow will include the following:

Suppliers in the UK - Select 3 from a shortlist and compare the following.

Sample availability & cost

Product quality?

Product price

Trade terms

Supplier MOQ?

Product certification/compliance

Delivery time

Ability to brand

Warranty/Guarantee

Suppliers abroad - Select 3 from a shortlist and compare the following?

Follow the same process as suppliers in the UK, plus the following:

Incoterms quotation for production (EXW, FOB, C&F)?

Deposit & balance payment schedule for production

Currency payment (normally US$)

Competitors supplied

Exclusivity area

Supplier communication?

Research your competitors

Knowing who your competitors are, their selling techniques and product prices will allow you to position yourself, so you can have a competitive edge and provide an angle that will set you apart, whether this is on price, quality or service you offer your customers.

You should include the following in your competitor research.

Years established

Product range

Marketing methods

Selling platforms

Price points

product quality

Warranty offered

Areas covered

Discount structure

Will you be trading from a bricks & mortar shop, online platform(s), or both?

Whether you decide to start your business online or having a 'Bricks & Mortar' shop, there's plenty of research to do here, especially with regards to costs related to each type of trading platform.??Your research should include the options available as well as costs associated with each one.

Online options will include the following (a small selection):

Own website

Amazon

eBay

Shopify

Etsy

Social media

You may decide on using more than one of the above platforms. Checking monthly costs, charges and ease of use will determine which is best for you and your product.

Take into account that you may also need storage premises or a fulfillment company when your business grows.

Non-online options will include the following:

Bricks & Mortar shop

Market stall

Car boot fair

Local events & craft markets

Trade shows

You'll need to research costs associated with each option. For a bricks & mortar shop there will be a long list, including some of the following.

Type & length of lease

Rent & rent reviews

Refurbishment

Utility bills

Insurance

Business rates

Staff

Your business plan is your roadmap

Your business plan is fundamental to see the process required to develop your business. By following each stage, including timelines and costs, will give you approximate the timeframe you'll need to allow to get your business up and running. This will also give you estimated funding required to start your business. Start by making bullet points for each stage required, and add more details to each point as you progress with your research.

To help with your business plan, see the following link.

https://www.gov.uk/write-business-plan

Cashflow projection

A cashflow projection is important, as it will show you the funds you'll need for setting up your business as well as anticipated first year cashflow for each month based on your purchases & takings. Estimating your expenses & sales is often overestimated due to 'the unknown'. As a rule of thumb, you should double your expenses and halve your expected sales for at least the first year of your business to give you a safe buffer.

Knowing your set-up costs, weekly/monthly/yearly expenses and anticipated turnover is essential to understanding the finance you'll need each month, whether this is your own money, friends or family or a bank loan.

There are free spreadsheets online to help you with this. For more information on cashflow projection and a free cashflow download see the following link.

https://www.iwoca.co.uk/finance-explained/cash-flow/cash-flow-template/

Funding your business

Not having sufficient funds to run your business is the reason why most start-up businesses fail. Your cashflow projection should be used to ensure you have sufficient cash as and when you need it. If funding is required, it should be secured before starting your business venture. It may be best to start small and to stay within your budget.

Ways to fund your business will include the following:

Own savings

Friends & family

Bank loans

Business grants

Crowdfunding

Investors

Government small business grant

Government funding for new businesses

Prince's Trust

Business structure options

Choosing the legal structure for your business should be considered carefully, as this will affect your business registration requirements, how much you pay in taxes as well as your personal liability. It's best to get advice from an accountant to ensure your business is set up correctly. Legal structures to consider include the following:

Sole Trader - the most simple business structure, you are liable as an individual.

Limited Company - this is legally a separate entity to you as an individual.

Partnership - if you start a business with another partner.

For more details, see the following links:

https://www.gov.uk/set-up-business

https://www.gov.uk/online-and-distance-selling-for-businesses/online-selling

The importance of a good website domain & TLD

When you have chosen the name you want to trade with, then it's wise to try and secure a domain name which perhaps identifies your business or how you want to portray your business. The best 2 TLD's are .com & .co.uk

Google search will give you plenty of choices to register a domain, as well as costs.

Creating your own website

Whether you decide to have a Bricks & Mortar shop or selling on online platforms, such as eBay, Amazon, Shopify and others, It's wise to have your own website created, even if it's just a one page information site showing your product categories and ensuring it's mobile friendly. There are plenty of self-build websites to choose from including the following:

Shopify

Wix?

Squarespace?

GoDaddy Website Builder?

Zyro

Webflow

WordPress = Woocommerce (probably best for your business growth). See links below

https://wordpress.org/download/

https://woocommerce.com/

Hosting for your website

You will also need a hosting company to host your site. Check the following links to compare prices and services.

https://www.softwaretestinghelp.com/best-web-hosting-uk/

https://www.dreamhost.com/

Online selling regulations

If you have an online store it's important you familiarise yourself with the rules and regulations governing online and distance selling.

For more detailed information see the following government link:

https://www.gov.uk/online-and-distance-selling-for-businesses/online-selling

Get a professional email address

Having a business email address with your company name will show customers and suppliers that you are a professional business, rather than using a gmail address. When you register your website domain, you will be able to use that TLD as part of your email address, for example: [email protected]?

Choosing a business name

Your business or trading name can reflect your products and what your business does, but this is not essential. Try to keep it short and easy to remember.

Whether you decide to set up your business as a Sole Trader, Limited Company or Partnership, there are differences to the business name you can trade under.

For further information, see the following links:

https://www.gov.uk/limited-company-formation/choose-company-name

https://www.gov.uk/set-up-sole-trader

How to register your business

You need to legally register your business so you can begin trading. This will include any of the options you choose to trade, either Sole Trader, Limited Company or Partnership.

For details on how to register your business, see the following link:

https://www.gov.uk/set-up-business

Choosing a brand name for your products

Your brand name can be different to your business/trading name. Try to choose one that reflects your business or image you want your customers to identify with, again this is not essential as your marketing will be the main focus and how customers find you. Have the name you choose registered to protect others using it. Logos, font colours, text & images can all be used as part of your brand logo. Your brand on your product will help your products stand out from your competitors, are easily recognisable and provide trust with your customers.

For information on how to register your business name & logo, use the following link:

https://www.gov.uk/how-to-register-a-trade-mark

Marketing is critical for your business

This is probably the most important element of your business and how it's likely to progress. Marketing allows the public to know you exist, your products & prices, your ethos, sales channels and how to buy your products. In short it promotes your brand and business. Without marketing, your business will not get off the ground.

Marketing options include the following:

Google Adwords & other Google tools

Social media interaction

Email marketing

Website with SEO

Blogging

Word of mouth

Flyers

Trade events

Business directories

Create A Website

Video content

Affiliate links

Online marketplaces

Get on the phone

Comment on blogs

Facebook ads

Instagram

TikTok

Consider offering discounts or a loyalty programme

Pinterest

Targeting your customers

Understanding your target audience is the first step to decide the marketing channels you should use to engage with potential customers and how to get the best ROI for your ads. Remember that your target audience is not everyone! It's about narrowing your focus and expand your reach.

Some of the research should include the following:

What's the age group and gender who will be buying your products?

What's their ikely financial status?

What's their occupation?

What's their geographical location?

What social media platforms are they likely to hang out in?

What's their demographic? - try to be specific

Are they concerned about the environment?

Understand how your product will make your target customer's life better, easier, more interesting and potentially solves a problem they have.

Get assistance using the following help tools:

Google Analytics

SEMrush

Google Trends

SurveyMonkey ?

Google Keyword Tool

A/B testing to define your target audience

The value of social media for your business

Don't underestimate the value and your presence on social media platforms. Use some of the following methods to find information about your product and customers.

Social listening?- this allows you to find conversations about your product and business. Research and monitor specific keywords and?hashtags?and what people are saying about your products and competition. Add hashtags based on the information you find to extend your target customer reach.

Search streams?-??allows you to monitor keywords and hashtags and what your competitors are up to. I

There are multiple examples of companies offering the above tools, so search google for services and costs to choose what best suits your budget and business.

You can also use SurveyMonkey?for a social media audience research survey. They offer a free template to find out which social networks your audience preferences. You can link to your survey directly from a social post.

For more information use the following link:

https://www.surveymonkey.com/mp/uk/

Building your customer base and email addresses

Customer details, including email addresses should be started as soon as you have decided??on your target audience, which you can use in your email marketing and newsletters. When sending out marketing emails, remember to comply with GDPR regulations.

There are several ways to build an email list from your website, including the following:

Personalised CTA for each page.

A timed pop-up (for example, after 20 seconds)

Add value to your CTA by describing how the viewer will benefit.

Include links to your newsletters in your email signature.

Use social media to build your lists.

Create more content on your website to capture customer interest.

Quick sign-up messages which are relevant to that page.

VAT registration

The turnover threshold to register for VAT is currently ￡85,000. For updated information and whether you need to register, as well as different options for registration.

For more information on whether you need to register for VAT, see the following link:

https://www.gov.uk/register-for-vat/how-register-for-vat

Tax requirements

Running a business comes with legal and accounting responsibilities, so it’s important to understand what’s involved.?

Tax can be a minefield and it's best to get specialist account advice on your business set-up, expenses you can claim, employment taxes and generally the most efficient way to run your business for tax purposes. Not having an accountant, even a part time accountant for advice can be false economy.

See the links below on tax requirements for both sole trader and limited company businesses:

Sole trader??-??https://www.gov.uk/topic/business-tax/self-employed

Limited company??-??https://www.gov.uk/prepare-file-annual-accounts-for-limited-company

Bank account

If you set up your business as a sole trader, it's possible to use your current personal account, but try to keep your business receipts separate to your personal money for ease of accounting.

For a limited company set-up, you'll need a new bank account in your company name. This is normally easy to acquire, as long as you have all the correct documents.

You should use this account for every transaction associated with your business and not include any personal expenses, as this will make your tax preparation much simpler.

For more information on how to open a business account read the following link:

https://startups.co.uk/banking/how-to-open-a-business-bank-account/

Running a business from home

Starting a business from home is a viable option for some people and businesses. You may need permission from your local council and perhaps separate insurance to run a home business. You’ll also need to check if you have to pay business rates as well as informing your mortgage provider.

For more detialed information on running a business from home, see the following link:

https://www.gov.uk/run-business-from-home

Business insurance

When you've set up your business, it’s important to protect it just in case anything goes wrong and unforeseen risks.

There are different types of insurance to protect you, depending on whether you'll trade via a bricks & mortar shop or online. If you decide to trade via a bricks and mortar shop, you'll need public liability insurance as well as product liability insurance. This doesn't include building insurance or any other insurance you decide to safeguard your business. If you decide to employ staff, then you'll also need employers liability insurance.

Public liability insurance?- covers you for claims made against you for accidents, injuries or negligence by members of the public.

Product liability insurance?- covers you for claims made against you any if your product is unsafe and causes injury.

If you decide to have an online business you'll need product liability insurance as a minimum. There will also be other insurances you might consider.

For more information on insurance for small businesses, see the following link:

https://companieshouse.blog.gov.uk/2019/04/30/what-insurance-does-a-small-business-need/

Hiring staff

Employing staff should only be considered at the point you feel your business needs it. Keeping your expenses down, is paramount for any new start-up.

When you feel the time is ready and you know which positions need to be filled, take account of the following:

Salaries?- what are the salaries you'll need to offer for the position required?

Experience?- what level of experience will you require to fill the job?

Outsourcing?- can you outsource the work, for example using Freelance? (This may be a cheaper option)

Prioritise the position required based on your budget, take into account that Marketing is probably the most important.

Your legal requirements when employing staff

Employing staff comes with responsibility and legal requirements, which will include obtaining Employers Liability Insurance, as well as including the following:

A legal contract.

Minimum wage requirements.

Maximum hours that are allowed to be worked without breaks.

Holiday allowance.

Paying National Insurance & taxes.

Providing pensions.

Health & Safety

Running payroll.

Equal opportunities.

Right to work.

Sickness absence & pay

Job title

Hours of work

Notice period

For more detailed information on employing staff see the following link:

https://www.gov.uk/employing-staff

Conforming to GDPR compliance

Understanding who you can send your marketing emails is the first step to read on before sending out any emails.

For more information read the following link:

https://www.gov.uk/government/publications/guide-to-the-general-data-protection-regulation

Understanding your legal requirements for product safety & compliance

Depending on the product you will be selling, as well as the countries you'll be selling in, there may be safety and other regulations required in order to comply to safety and legal requirements.

For more information on UK compliance, read the following link:

https://www.gov.uk/guidance/product-safety-advice-for-businesses

Importing products from abroad

If you decide to import any products, your responsibilities for compliance will differ depending on your product category. If you need help importing from professionals, it's a good idea to use a?purchasing consultant?to help with the whole process, from sourcing your products,?quality control?to?shipping and delivery to your door.

See the following links to find out more:

https://myofficeinchina.com/service-packages/purchasing-consultant/

https://www.gov.uk/guidance/product-safety-law-compliance-advice-for-manufacturers-and-importers

EORI number?(If importing)

If you are importing any products you'll first need to register an EORI number. This is very simple and straightforward.

You can register using the following government link:

https://www.gov.uk/eori

Shipping options

If you are shipping from abroad, as well as selling to other countries, the shipping cost can burn in to your profits. There is always a wide range of prices as well as services, so it's important you get quotes and compare and choose the best option for your business.

For more information, please see the following link:

https://myofficeinchina.com/service-packages/shipping/

Import Duty & VAT

When shipping from abroad, you'll need to add all duty costs to your product price as well as shipping cost. Import Duty is calculated based on a tariff levied to your specific goods category. VAT is currently 20% on most consumer products.

For more information, please see the following links:

https://www.gov.uk/trade-tariff

https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

UK forwarding

If you decide to import your products using sea freight, you'll need a UK forwarder to clear UK Customs as well as delivering your shipment to your door.

For more information, please see the following links:

https://myofficeinchina.com/service-packages/shipping/

https://www.gov.uk/guidance/freight-forwarding-managing-risk

10 Frequently Asked Questions

1. Can I start a business without any experience?

You don't have to have experience in running a business, but it helps to have some knowledge of the products you're getting involved with. Market research is the key.

2. Can I start a business without any money?

No, you need to have funds to buy products, set-up your business and for marketing. If you don't have funds, then you need to raise funds.

3. What's the best way to choose a product to sell?

Market research the products you are thinking of selling. Having some knowledge, even as a hobby, will benefit your understanding of that product.

4. Do I need an accountant to help set-up a new business?

It's always beneficial to have the advice of an accountant to guide you through the legalities of setting up your business and in relation to your personal tax situation.

5. Should I form a limited company or set-up as a sole trader?

There are pros and cons to both business structures and personal to your situation. Get advice from an accountant to see what's best for you, based on your business set-up.

6. What's the most important aspect in setting up a business?

Market research your products, suppliers, customers, competitors, selling platforms. In short, as much as you can to have sufficient information to analyse each section.

7. What are the main attributes required to run a business?

Sufficient funds, good suppliers, quality products, marketing knowledge and patience would be amongst the top 5.

8. How long should it take to start making a profit?

Most new businesses take time to make a profit, sometimes between 1 - 2 years to see an overall profit. It will depend on the resources you devote to marketing.

9. Is it a good idea to go into business with a partner?

If each partner can bring something to the table and agree on all points within a legal framework, then it can be considered. Take into account what you decide now, may change in the future.

10. How should I get started?

Research everything!

For further advice on how to start importing products to start your business contact us or go to our website