11 tips on how to start a business

A new business doesn’t always need a new idea and successful ones can grow from existing ventures. Watch our short film about one small business that came about in exactly that way – Urban Trenches London – and learn the practical steps they took to get a fully up-and-running business.

1. What’s the big idea?

Just having a brilliant idea isn’t enough to start a business – your idea also needs to be viable.

In other words, your business should deliver a product or service the market wants – and that customers are prepared to pay for. Simply ploughing ahead and hoping for the best without knowing what you’re getting into is a sure-fire way to lose money, so some basic research is crucial.

It doesn’t matter whether you’re filling a genuine need with something new, or aiming to compete against existing businesses with something better or cheaper – understanding your market and the potential barriers you’ll face can help you avoid the common pitfalls that can cause a business to fail.

• Is your idea unique? Read our guide on protecting intellectual property

2. Planning for success

A business plan is just what it sounds like – a document that describes your business and how you’re going to get it off the ground.

The plan sets out your idea, lists the challenges your business may face, states your goals and explains how you’re going to measure your progress.

While writing a business plan isn’t essential to start a business, putting your thoughts on paper is a great way to make an idea feel more concrete. It also gives you a chance to pause and really think about what you want to achieve and how, before you’re fully occupied with getting your business off the ground.

If you need funding to help start your business, however, then a well-thought-out business plan is a must. Banks and potential investors aren’t likely to be interested without one.

Once written, a business plan isn’t set in stone. Circumstances can change as your business develops, and your business plan should always reflect reality as closely as possible.

• Read our guide to writing a successful business plan
• Our business plan template [PDF, 6.2MB] shows what a business plan should include

3. What kind of business are you?

How you set up your business depends on the legal structure you choose. Each has its pros and cons, particularly when it comes to the admin required for paying tax, salaries and so on. 

• Companies House has lots of useful information about each
• Smallbusiness.co.uk explains why choosing the right business structure is important, as well as other useful tips on how to start a small business 

4. Do you need a business bank account?

Whether you’re a sole trader, partnership or limited company, opening a business bank account to receive payments from customers and make payments to your suppliers is a sensible option.

Keeping money for the business separate to money in a personal account makes keeping track of what belongs to who much, much easier. Mix ups with personal and business money can have serious financial and legal repercussions, so it’s not worth taking any chances.

A business account can also make it easier to secure finance, because most lenders won’t consider you without one.

Opening a business bank account can take a few days, so waiting until you need to make or receive a payment could create problems. Opening an account early also helps build a credit history for your business, which could help make it easier to get a business loan later on.

Finally, don’t leave opening a business bank account until you need one to receive or make a payment. Take the time to find an account that best suits your needs and remember that there’s more to look for than basic payment features.

• Read more about the importance of having a business bank account
• Open a start-up business account with us, and you’ll get help and support for your new business, as well as easy everyday banking

5. Do you need cash to start – or to carry on?

All businesses need money to get off the ground – for buying equipment, hiring staff and renting premises. Many businesses also need short-term help with cashflow until sales pick up, or to see them through difficult times. And if you’re quitting your job to start your business, you’ll need money to live off until things get going.

If your business does need funding, a sound business plan is critical to secure it, but your chances will also increase if you make an effective pitch. Lenders want more than just a filled-in application form. They need evidence that you have the knowledge and ability to make your business a success.

If cashflow is a serious concern, then the most important thing to remember is to get help sooner rather than later. There are practical steps you can take to ease cashflow problems that don’t involve additional finance, and any good business bank will be able to support you long before a loan becomes necessary.

• Read our guide on finance options to grow your business
• Here are our tips for making a successful funding pitch
• Start Up Loans can tell you if your business qualifies for its government-backed financial assistance
• We have lots of guidance about staying on top of cashflow

6. Taking care of tax

Every business needs to pay tax, but how much depends largely on the business structure. If you have a good head for figures and a sole trader or partnership, then tax admin can be relatively straightforward. Just don’t forget that it takes time, and you may not have much of that in the early days.

There’s no legal requirement to use an accountant or tax adviser for any kind of business, but it can make life much easier – particularly when it comes to the hefty additional admin requirements for a limited company.

• GOV.UK has lots of advice about tax
• Don’t forget VAT – it’s compulsory once a business exceeds a certain turnover

7. Starting with marketing

There’s no snappy summary for how best to market your business – much depends on your product, your market, its customers and even your location.

Your business plan should be the foundation of your marketing strategy, but a few basic considerations apply to all businesses.

• What makes your business unique? This goes beyond your business name and logo, and it’s not just about what you’re selling – it’s as much about how you sell it and how you interact with your customers
• Speaking of customers – who are they? The smaller your business, the narrower your niche is likely to be, but identifying your target market is crucial for businesses of all sizes. Knowing who you want to sell to will help you tailor your marketing to get the attention of the right people
• How will your customers find you? Effective marketing will attract customers, but what about those who hear about you through other ways? Even the smallest sole trader will benefit from a website with contact details. You can create one yourself for very little, or pay a professional to build something more complex. Social media also offers an easy way to let people know about your business
• Don’t confuse marketing with advertising – marketing is the ‘what’, while advertising is a ‘how’ (there are many other ways to promote a business, too). And remember, you won’t make any sales until your customers know your business exists – and without sales, there’s no business

• Brush up on the digital skills you can use to make your business a success
• Read the SmallBusiness.co.uk guide to small business marketing

8. Where will you work?

Not every new business needs a dedicated workplace – some of the biggest have started in a spare room or at a kitchen table. But if you do need more space as your business grows, you’ll need to think about moving into your own premises.

Your location and how you sell are key considerations here. An artisan chocolate maker may not be best suited to an industrial estate off the motorway, for example, while a business that needs a warehouse for selling online doesn’t need to be on the high street.

If desks, phones and computers are all you need, though, don’t rush to start renting your own office. Other less expensive options may suit you better.

• Co-working spaces can be a cost-effective way to get your own office space and are a good option for start-ups
  
• Shared business spaces, such as Barclays Eagle Labs, can be a great way to connect and collaborate with other business owners
• Startuploans.co.uk has advice on choosing office space
• Read up about the responsibilities you’ll have with your own business premises

9. Taking care of talent

Finding the right talent is vital to help fulfil your business ambitions, but you’ll have some specific responsibilities if you hire staff and become an employer.

As well as paying wages, you also need to collect and pay income tax and National Insurance, and you might need to set up a company pension scheme. This is where an accountant becomes invaluable, as they can steer you through the complex requirements – but there’s also a host of guidance online.

• Read how four successful entrepreneurs approached hiring staff to grow their business
• GOV.UK has comprehensive advice on getting your business ready to employ staff and how to protect against discrimination

10. Cutting through red tape

There’s no shortage of bureaucracy when you’re running a business, and getting to grips with the various financial and legal requirements can be a job in itself.

Your requirements will depend on the nature of your business, but you’ll typically need to consider such things as data protection, insurance and liability, protecting intellectual property, health and safety, licenses and permits.

If you open a business bank account, your bank may be able to advise on at least some of these areas, as will an accountant, but you can also get a basic grounding with these excellent online resources.

• The GOV.UK set up a business page is useful if you’re starting your first business
• Smallbusiness.co.uk provides an essential guide to the insurance you might need – compulsory insurance, liability insurance, property protection and so on
• The Health and Safety Executive has information on how to protect your staff
• The British Library has guidance on how you can protect your intellectual property using trademarks, patents and copyright

11. Doing business abroad

Some businesses plan for international expansion, while others seize a sudden opportunity abroad. Wherever you’re planning to do business, you don’t have to be well-established before thinking about trading abroad.

• Read how you can plan for export success early on
• When you bank with us, you can talk to our international business managers – no matter how long you’ve been in business

Unless you’re a serial entrepreneur, running your own business will almost certainly be a learning experience – so treat it like one. 

You’ll certainly need to know about more than just your core product, so that could mean you need to brush up on your writing or presentation skills, or just watch a few videos about managing your website.

Whatever the case, don’t be afraid to ask for help and take every opportunity to benefit from the wisdom of others – and learn from their mistakes. Whether it’s family and friends, or other business owners (networking is another skill worth sharpening), you may be pleasantly surprised by their willingness to lend a hand.

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