Learning Blog
How to Start a Small Business
Written by Lizzie Learn
On 4th Aug 2022
D
o you want to start a small business? Are you keen to become an entrepreneur? If you’re keen to strike out on your own, here's how to start.
Step 1 – Getting Started
If you already have a skill like social media management, IT or online teaching, then you have a ready-to-go service to develop into a business. If you plan to create a product range and you've never done it before, then you need to do some market research.
There's no such thing as a completely original idea, but your product must have unique selling points like quality, usefulness or the fascinating story behind its development. These unique selling points will put you ahead of your competitors. It's not a good idea to copy an already popular brand. You need to give your new product or service a unique slant.
You can use advice from friends or family to steer you in the right direction or, if you have the available funds, you can hire a business coach or market researcher.
Step 2 - Assess Your Competition
You need to see what you can do that's more innovative and original than what your competitors are doing. Start-up businesses can create a niche even in an established field. You just need to think smart when planning your product or service. You can be adventurous but try not to misjudge the demand for your new product. Make sure you do that market research and ensure you get your company brand out there before anyone else does.
Step 3 - Choose A Name for Your Business and Establish Its Legal Structure
Choosing a name can be challenging because you want it to be memorable, significant and unique to you. Ask friends and family to help you but remember you don't need to be too quirky. A name that describes what you do like, 'Tessa West's Financial Services’ will do just as well as a name that is witty and full of puns but does not describe your business particularly well.
Choose the structure of your business from the below four options. This is vital for legal and tax purposes.
Sole Trader - As a sole trader you keep all profits but are liable for all losses if things go wrong. It's easy to set up and is cost-effective. All that's required by the government is self-assessment for HMRC and registering for VAT if your turnover is above the threshold.
Partnership - This is similar to being a sole trader, but two or more people run the business and share risks and profits. The main problem here is when things don't go well, and partners fall out.
Limited Company - Starting a private limited company protects your finances by keeping your business as a legally separate entity. This protects you from personal risk and gives your business a professional image. It also creates business confidence to help you attract corporate clients.
Limited Liability Partnership - If you're going into business with partners, this is a way to do it. You have designated members who can register for personal and company self-assessment, keep proper accounting records and send your annual financial accounts to Companies House.
Step 4 - Secure Funding
You will have start-up costs like premises, employees, marketing, production costs and utilities. Even if you start with just a laptop and mobile phone, you'll still need a website and a social media profile.
If you don't have money in the bank, you can approach the government website for advice on start-up loans or venture capital schemes. Or you can approach a financial institution like a commercial bank. Just watch the cost of borrowing to ensure that you can repay your loans and keep your credit rating intact.
Finally, you could borrow from family or friends, but remember that businesses can go through lean months, and you don't want to damage personal relationships. Insist on a watertight contract to keep the relationship professional.
Step 5 - Build Your Brand
Build your brand by choosing a relevant eye-catching logo and setting up all your marketing ducks in a row - website, social media and email marketing. There are online marketing tools to help you and, if your budget rises to it, you can employ a proper marketing company.
Key pointers include an effective mobile-friendly website. Remember to buy a website domain and email address. Email marketing is always a good way to get your new brand out there.
Make sure all your data collection complies with General Data Protection Regulations.
Step 6 – Launch Your Business
Time for that launch party or, at least, get people talking about you online. Get friends and former colleagues to share your posts. LinkedIn is a great forum for this. You will need a core of trusted suppliers and customers, especially during the early stages, so networking is very important.
In Conclusion
Finally - your business is launched. And now all you need to do is keep your finger on dozens of pulses, watch your expenditure, watch your cash flow, remember your marketing, keep in touch with your customers, and keep your costs down and your turnover up.
It's an exhilarating rollercoaster ride, but when you bank your first profits or invest them in growth, you'll feel a sense of pride and achievement that are unbeatable in any other line of work.
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