For most UK-based start-ups setting up a business is quick, cheap and easy. In fact it’s just about possible to set up a business in a day! If you know what line of business you want to start, you’ve been thinking about it for ages, you’ve read the books, done the courses… then maybe now is the time to ‘do’ it? This article is about the practicalities of how to set up a business. Follow these 7 simple steps and you could be up and running in no time:
Step 1. Let HMRC Know You’re Becoming Self-employed
Get the right starter pack for you. You can do this all online, or by phone, and it will get you started as a sole-trader (for other legal structures see ‘part two’ below). We’d also recommend completing HMRC’s free online training which will give you straightforward practical advice on record-keeping, filling in and filing your tax return – and what to do if you take someone on.
Step 2. Sort Out Insurance Cover
Insurance can protect you and your business against risks including accidents, sickness, theft and legal fees. The cover you need will depend on the nature of the business and how you run it. The Axa business insurance quote wizard is a good start. It will tell you which insurances you need and which you should consider. Specialist brokers can be great for niche businesses and Trade Associations often arrange big discounts for their members. If you have dependants then make sure you get life insurance in place too.
Step 3. Choose a Business Name
Search Google and Companies House to see if the name you want is available. If you can’t decide, go with your own name for now – eg. Jane Blogs Cakes – but don’t invest in printing and brand materials until you’re sure. Buy the website domain name as soon as you’re fixed.
Step 4. Set-up a Business Bank Account
You need a business bank account if you set up a company, as it is a separate legal entity to you. It’s not strictly required if you are a sole trader (though it’s usually recommended) – but you must keep very clear accounts.
Step 5. Get Compliant
Make sure that you satisfy all regulatory issues eg. health & safety, licensing, data protection. Gov.uk has some great tools to take you through this. This only takes a few minutes and is straightforward for most start-ups.
Step 6. Start Accounting for Everything
Appoint an accountant or set-up your own simple book-keeping system. As a minimum keep records of all sales and costs. An online accounting package could save you a lot of time and effort, while keeping your records up-to-date and in great order.
Step 7. Sort Out Your Work Space
Your Local Authority/ Council should be able to provide information about business premises and rates in your area. If working from home, make sure you understand:
- how to include a percentage of household bills as business costs
- possible Capital Gains tax implications if you are using one particular room/area in the house for business (best avoided by using parts of rooms)
- planning permission – if you expect regular business visitors or to employ someone who’ll be working from your home, ask your local authority planning department for advice
- if you rent, check your lease to see that home-working is allowed.
If you work online or using a laptop most of the time, you might want to check out co-working opportunities in your area, where you can rent a desk for a few hours or full-time. Co-working can be a great way of over-coming isolation and instilling routine and discipline when you’re starting out.
Maybe a little bit of a push, but you could certainly do most and maybe even all of that, in one day.
Part Two – Starting with Firm Foundations
So getting formally set up isn’t all that difficult and needn’t take long at all. But, of course, you are much more likely to be successful if you start with firm foundations:
Step 8. Decide on the Best Legal Structure for Your Business
For most this is a choice between being a sole trader and a limited company. However if you are setting up a social enterprise there’s more to consider.
Step 9. Write a Business Plan
This should include a marketing and sales strategy and financials. A business plan is vital if you need to raise finance. It’s important regardless and should be a living document, regularly reviewed and updated.
Step 10. Manage Your Cash Flow
Start a cashflow forecast and update it with actual achievements very regularly. A simple spreadsheet is usually adequate. Even if you need a book-keeper or an accountant to do this, do make sure that you personally understand it and review it very regularly.
Step 11. Keep Costs as Low as Possible
Until your business model is established and you are making good sales, keep your spending as tight as you possibly can. There’s a lot you can do with very little money. If you do need a loan to get started, check-out the government-backed Start-up loans company. Those loans are unsecured, with very reasonable interest rates and you will be supported by an adviser and mentor.
Step 12. Get Your Business Kit in Order
Beg, borrow and shop around for IT equipment, office furniture and transport.
Step 13. Get Your Business Image in Order
Develop a brand identity that reflects your values and the way you want to be perceived by your target customers. Get a logo designed and use a consistent colour scheme and fonts across all your materials. Set-up a website and order business cards and stationery.
Step 14. Organise Communications
Make sure customers can find you by phone, email and on relevant social networks. Start with the social networks where your customers hang out. If you don’t know, then ask them! Your brand identity should be consistent across all the social networks, with the same icon and strapline – you want to be instantly recognisable. If you need to do a lot of social media marketing, use a tool like Crowdfire to schedule and manage your accounts.
Step 15. Get Your Support in Order
Assess your own skills and identify how you’ll fill the gaps. Don’t employ others until you really must. Lots of small businesses start by sub-contracting or collaborating with other freelancers or small businesses. That’s easier than ever using freelancer platforms like fiverr, where you get slices of help with marketing, design, administration and much more.
Most importantly, make sure you have someone you can talk to regularly about your business. There will be high days and also days when things go wrong and your motivation slumps. So find a good mentor, a business adviser, or others in the same position as you, who you can share those successes and challenges with.