10 Steps To Starting a Business
Starting and growing a successful businesses is one of the smartest ways to grow your personal wealth Looking to start a business but not sure on the steps to take? Accountantcosts.co.uk have outlined 10 steps to starting a business.
At the start of 2019 within the UK, there were 5.82 million small businesses in the UK (with 0-49 employees), 99.3% of the total market in the country. In terms of the business population (5.9 million) SMEs account for 99.9%, as stated by the Federation of Small Businesses. Every single owner will have a different story on what motivated them to start their own business, yet they all have one thing in common, and that is the fact that they will do whatever it takes to make their business a success.
Unfortunately, no matter how good the business idea is, the business is statistically more likely to fail than succeed. The most crucial factor between the two possibilities is preparation because if you don't have a plan to put into action before you start your business that thorough research went into you could already be at a massive disadvantage before you have even begun. According to the Telegraph, 660,000 new companies are registered every year in the UK, which is an average of 70 every hour. Less talked about is the fact that 60% of that 660,000 will go out of business within three years, and 20% will close their doors within 12 months.
These ten steps will go a long way to ensuring your business gets off on the right foot.
Step 1: Conduct Research to ensure there is demand for your product / service
Assuming that you've come up with a business idea, the first step towards starting a new business is to see if it is viable and can succeed.
For a small busines to be a success, it must either fulfil a need, solve a problem or offer the market something it wants but isn't currently receiving.
Several methods exist to recognise this requirement, such as focus groups as well as surveys. Or if you're savvy with search engine optimisation, some simple keyword research can reveal how many people are searching for your solution.
Your research should clarify:
- Do consumers want the product/service you're offering?
- Who will need it?
- Is there space for your business in the market?
- How do competitors operate?
- Do they offer a similar product/service to you?
Step 2: Formulate a business plan
After conducting the research and analysing the data, the next step is to create a business plan. In the first few months of operating through the start-up phase, things may get tough, which is why it is a good idea to have a business plan to refer back to when needed to keep you on track and focussed.
Your business idea will list important factors such as the idea, how you will make money and key financial documents such as a financial forecast and example profit and loss accounts.
If you plan to fund your business yourself through savings or with help from family and friends, then your business plan can be used as a tool to secure this funding. It can give you more certainty about what you want to achieve and how you hope to do it and can be improved as time goes on.
If you mean to solicit monetary assistance from an investor or financial organisation, a more thorough business plan will likely be needed. This type of business plan has much more detail and sections that potential investors will want to look through to determine whether your idea is a viable investment.
Having a plan in writing is imperative when starting a new business.
Step 3: Choose and Register Your Business Name
One of the most influential, choices when starting a new business is choosing a name, a lot of research should go into this, because as crazy as it may seem your businesses name could make or break you.
The name you pick for your business is critical as it is the point of contact, the initial appeal and the first point of entry. Once you have chosen one, then you will need to check if it is trademarked or currently in use, if it isn't you can go ahead and register it.
Once you've registered your business name, register your domain name too.
Step 4: Organise Your finances
Starting a small business does not always involve a lot of money. What is required is a predetermined amount of initial investment as well as enough capital to cover ongoing expenses that the business will incur until it can turn a profit. A spreadsheet is a great tool, for estimating all the one-off starting costs as well as ongoing expenses for up to 12 months.
Those two numbers added together will be your initial investment.
There are many different options for financing your business, such as:
- A small business loan
- A small business grant
The right selection will depend on what you want to accomplish.
Step 5: Determine Your Business Structure
The next step is to choose your business structure. Your small business can be sole trader, a partnership, a limited liability partnership (LLP) or a limited company. The decision you make will impact many factors such as your business name, your liability and your method of filing taxes.
In the future, after your business has grown and matured, the business entity you started as may not suffice anymore. In which case you can change it to meet your current needs.
Step 6: Obtain Licenses/Permits
Depending on the location you want to start your business, and what you plan to do there you will need to research what licenses/permits you may need to acquire to be able to operate lawfully to avoid fines/penalties or even prosecution.
Step 7: Decide on an Accounting System
An essential system, when running a business is an accounting system, this will influence all areas of your business such as budget, price, stock purchases and taxes.
You can set up the accounting system yourself, by purchasing software online or you can hire a local accountant or search for an accountant freelancer for the level of work you require. If you elect to run it yourself, you must take the time to learn to use the software to make sure there are no mistakes. Otherwise you can search for accountant quotes here.
Step 8: Set Up Your Business Location
Next is deciding where you want to set up your business. You could work from home, share an office or have your own, or you could rent/buy a commercial property if relevant for your business idea.
You will need to think carefully about your location, what equipment you will need and your overall set up.
Step 9: Hiring Employees/Working Alone
If the business idea you have chosen involves having to hire employees, then it is pivotal to begin the hiring process as soon as possible. You will need to take the time to create job applications outlining the position, duties and remuneration. Then these can be posted on your website and job boards such as Indeed. With the introductions of employees, this can also raise queries on how payroll will be handled. It is always a good idea to weigh up outsourced payroll costs against handling payroll in house.
If you decide to begin alone without hiring any employees, then it is nevertheless necessary to have friends and family to support you. A business mentor can also be a great help when things get tough.
Step 10: Marketing Your Business
Now that your business is up and running. It's time to begin devising a marketing plan to promote your business and attract customers.
When creating a marketing plan, digital marketing should be one of the main focal points as it is one of the most cost-effective and powerful tools at your disposal to get your brand out there and seen by as many people as possible online.
Following the steps outlined above will help you start your business but what will help your business truly thrive is regularly adapting and staying on top of trends to be ready for any problems that may come your way.
Bonus Tip: Make your first pound (or dollar). Many businesses fail because they prepare so much that they forget this key point: A business is a numbers game. It's money in vs money out. Securing that first client is actually the most important step of all!