Everything you need to know about building a business from scratch in 2020 and beyond, in just 11 simple steps
So you want to start a business, eh? You’re in good company – there are currently around 5.9 million SMEs (small and medium-sized enterprises) in the UK. That number is continuing to balloon, too – as we enter an exciting new decade for our country’s commerce, about 70 new businesses are being formed here every hour.
Britain has always been a fertile land for budding, business-minded brains – we’ve produced Branson, Bannatyne, and the Beckhams, and lay claim to BP, Burberry, and the brilliant Brompton Bicycle.
You or I may not harbour ambitions of owning the next big multinational oil corporation (and it’s unlikely we’ll ever be trading on the same scale as Virgin Media) but most of us have, at some stage or other, considered the question:
“What if I started my own business?”
Starting a business is an exciting idea, filled with possibilities, potential, and (hopefully) profits. But the road towards setting up your business won’t be an easy one. It’ll be paved with late nights, peppered with pitfalls, and lined throughout with the red tape of government bureaucracy.
Our goal is to help you navigate that road. In just 11 steps, we’ll take you through everything you need to build your business from the ground up – from the delicate seed of a long-cherished idea to the sweet, blossoming fruits of your hard work and dedication.
So, just how do you start a business? Let’s find out.
The four pillars of success: have you got what it takes?
Sadly, six out of ten businesses in the UK go bust within three years of establishment. So, if you’re entertaining the notion that entrepreneurship will be easy, abandon it now.
To start a business (and make it successful), you’ll need to grit your teeth, dig deep, and ride the wave – even if, at times, that same current is threatening to pull you under.
You can have the best idea in the world, and be the cleverest, most forward-thinking entrepreneur – but without a healthy mixture of the following four elements, you won’t succeed. So, we’ll ask again – have you got what it takes to start your own business?
Starting a business can be a lonely journey, and has the potential to severely test your personal relationships. You’re putting not only your career on the line, but your money, your livelihood, and your reputation, too. You’ll need courage to persevere, even when you don’t feel like it – even when mustering that courage feels harder than it ever has before.
Unless you’ve already received big investment (or have friends in high places), then let’s face it – your business is unlikely to be an instant success. You’ll need to develop a strong plan and execute it professionally. And, above all, you’ll need to stay committed to your idea, and remain steadfast in its ability to change the world.
Starting a business without a bit of capital behind you is like trying to climb a tree with one arm tied behind your back – difficult, if not impossible. Like most people, you’ll need to spend some money before you can start making it. Jump to Chapter 8 of this guide to discover the right funding option for you.
It’s a harsh, but true, fact of life – some businesses fail not because of a lack of drive, cash, or ingenuity, but simply because they were unlucky. Ride your luck when it comes, and have the courage, commitment, and frugality to weather the storm of the inevitable patches of bad luck you’ll encounter along the way.
Starting a business in the UK: is it right for you?
Regardless of whether you were born here or lured from overseas by the bright lights of London, the UK remains an excellent place to do business. Even away from the black cabs and beefeaters of the capital, cities such as Bristol, Leeds, and Oxford are emerging as other strong contenders in which to begin your business.
That said, the last couple of years have seen a couple of notable spanners thrown into the works of the normally resolute British economy. So, let’s ask the question:
What challenges come with starting a business in the UK?
We’ll start with the obvious…
The UK’s decision to leave the European Union has just about made it’s slow, laboured process into actuality – yet still, for the next year or so, the only certainty for UK businesses is, well… uncertainty.
What we do know, though, is that Brexit is likely to bring with it a few challenges for those looking to start a business in the UK:
Cost of preparation: So far, UK-based businesses have spent an average of around £2,000 preparing for Brexit. For small businesses that import and export, this has risen to sit closer to £3,000. Steep!
Recruitment: Though employees that have been UK residents for five or more years can apply for ‘settled status’, Brexit means that young companies may struggle to attract top European talent from abroad.
Tariffs: It comes as no surprise that those in the import/export business stand to suffer most in the event of a bad Brexit deal. Such companies could face delays at the border, additional customs paperwork, increased trade tariffs, and the need to prove that their products are locally sourced.
Access to finance: Decreased investor confidence, cash flow issues, and a yoyoing exchange rate have all combined to stymie British businesses’ access to finance since the 2016 referendum.
So, if you’re going to be heavily reliant on finance – or if the business you have a burning desire to start is an import/export one – then the current British climate may not be the most forgiving for you right now…
…but don’t write it off just yet.
Why should you start a business in Britain?
Aside from PG Tips, Yorkie Bars, and good old-fashioned patriotism, there are plenty of excellent reasons to set up shop in the UK:
1. It’s easy to do business
The first? It’s just very easy to do business in the UK. The World Bank currently rates it as the 8th best country in the world to do business in overall, and the 18th best to start a company in.
2. Optimism is (mostly) still in the air
Though the shadow of a no-deal Brexit looms large over our entrepreneurial landscape, it’s actually not all doom and gloom. In fact, it’s the opposite – in a recent survey, 57% of respondents indicated that they’re remaining optimistic about the UK’s economic performance in the coming year.
3. Access to a skilled workforce
At 30 million people, the UK’s pool of skilled employees is the second largest workforce in the European Union (for now). On top of this, the UK’s overall cost of labour is lower than many of our neighbours’, including Ireland, France, and the Netherlands.
4. A forgiving taxation system
The UK has a relatively low corporate tax rate, and a taxation system that is, largely, quite straightforward. Better still, VAT is payable on the majority of goods and services supplied in the UK, adding another layer of incentive for businesses to hunker down, set out their stall, and ride out the uncertainty of Brexit.
How to start a business in the UK: our 11 steps to success
So, you’ve vowed to be courageous. You’re committed to seeing your idea through into a fully-fledged business, you’ve got some money to do it with, and you’re ready to embrace each opportunity to innovate that comes your way.
Furthermore, you’ve thrown your lot in with the challenges posed by starting a business in the UK, as well as the unique plethora of possibilities it presents.
In other words, you’re ready to start your business. Here’s how:
Chapter 1: Do your research
Look before you leap – because first, you’ll need to plot out…
…the who, why, where, and when of your business. What do we mean? Read on…
So, you’ve got an idea for a business, you’ve shared it with your friends and family, and they’re full of vehement praise for it. That’s great… but are they really an impartial audience? Do they love your idea, or just you?
More importantly, do they constitute the demographic you’re planning to sell to?
Before you start, don’t just listen out for what you want to hear – seek a wide range of opinions. Gather feedback from the age range you’re planning to target, and those who share interests with your ideal ‘lead’, or customer.
You can do this by running focus group sessions, or conducting surveys online. You can set one up cheaply with Survey Monkey or Typeform, and then place an ad online or in the paper asking for participants. You may have to incentivise people to take part, sure – but the data you’ll get will outweigh any initial monetary costs.
You’ll also want to take a look at other companies that are already in the space you’re keen to enter. Who’s doing it well, and who could be doing it far better? Where are the gaps in the market for a healthy dollop of innovation? Once you’re in business, these companies will be your competitors – so it pays to know them inside out, even before you begin.
Studying your competitors also gives you a chance to think about the ‘why’ of your business. What consumer needs will it satisfy that other businesses don’t? And if they do, how will yours do it better? In other words, why does the world need the business you want to bring into it?
You’ll also need to look within – what do you want your company to stand for? A company’s core values are crucial to how its audience perceives, relates to, and engages with the brand.
75% of customers will start shopping with a company they believe shares their values – so it’s important that the ethos you wish to embody is one that will resonate with your customers.
Millennials, for instance, currently account for around 27% of the world’s population, and have already proven to be particularly discerning value-based buyers. To sell to them, first sell them your why – but you’ll need to know what that ‘why’ is first.
Are you a one-(wo)man band working from home or a cafe, or will you need something more permanent? If so, are you happy to rely on a coworking space, or would you prefer your own office? And do you have the funds (and the desire) to buy that space, or will renting suffice?
When it comes to starting a business, timing is everything. The untimely entrance of Brexit, for example, has already disrupted the best-laid plans of many a budding business. Conversely, though, launching a business at the right time can make all the difference.
To do this, try to capitalise on the contemporary. Are there any topical gripes or trends floating around on social media that your business can tap into? Any big stories you could use in your advertising to grow awareness of your business’ purpose and brand?
On the other hand, are there any recent events that might have reduced the need for (or popularity of) your product or service? Sometimes it’s better to cool your heels and wait a few months, to ensure you’re launching your business at just the right time.
To demonstrate the importance of timing, we chatted to Tom Dewhurst, founder of Ordoo, a popular food mobile ordering app:
Since then, big corporates like Wetherspoons, Starbucks, and McDonald’s all released similar apps, meaning that the customer demand changed – and Ordoo is best placed to take advantage of this. When it comes to timing, you need to research what’s going on in the industry thoroughly, and don’t forget to speak with potential customers to see if they want your solution. At the end of the day, it comes down to a gut feeling.”
To kickstart your market research, fill in our form with a few details about your business. We’ll ask a couple of questions about the methods and type of market research you want to conduct, and then provide you with tailored quotes from leading UK-based agencies. It takes less than a minute, and is completely free.
Chapter 2: Make a plan
Where good ideas become great plans
You’ve done the research, and you’re confident that your idea has the niche, the legs, and the timing to succeed. Now it’s time to make a business plan.
A business plan is where you take that idea that’s been gestating in your head, and turn it into something concrete. It’s a document that lays out what you plan to achieve, and how you’re going to do it. So how do you make one?
Well, simply download a free business plan template, and… start filling it in! Here are some of the things your business plan should include:
1. Executive summary: this should go at the top of your business plan, and sometimes is all a potential investor will read before deciding to take another look, or toss it in the bin.
What is an executive summary?
This is an introduction to your business plan. It needs to include what your business is, what problem it solves, and what market you’re planning to target. It’s also a place for your ‘elevator’ pitch – a super quick introduction to what makes your business special.
As well as this, your executive summary should contain key financial details. Here’s your chance to crunch the numbers, outlining your expected sales forecast goals and margins for the future (usually the next three years).
You’ll also need to provide other critical details – do you or your co-founders boast USPs (unique selling points) that might lure in investors? Have you secured a prestigious scholarship or government grant?
Your executive summary should also state its purpose. Are you using it to try and get a bank loan, or a round of investment?
2. Your background (qualifications and work experience)
3. A description of the products and/or services you intend to sell
4. Your typical customer: who are they?
5. Findings from any market research you conducted
6. Your marketing strategy: what are you going to do, and how much will it cost?
7. An analysis of your competitors
8. Operations and logistics: payment methods, deliveries, transport, equipment, and suppliers
9. Costs, pricing strategy, and financial forecasts
10. Your exit strategy: when it’s time to sell up and ship out, how will you do it? How will you eventually reduce your stake in the business, and make a profit while doing so?
It might take weeks to months to complete, but getting your plan done is crucial. Not only can it serve as a simple, shareable summary of your business with which you can wow investors, but it acts as your business’ central doctrine – your rock, your lighthouse, your go-to in times of wavering willpower or stuttering self-doubt.
All finished? Excellent. Now, it’s time to get registered.
Chapter 3: Choose a legal status for your business
When a great plan turns into a legally recognised entity
Here’s where you make things official, formally registering your business with the UK government. You have three options – registering as a sole trader, as a limited company, or as a partnership. What’s it going to be?
Registering as a sole trader means you’ll be legally self-employed – you’ll work for yourself, and keep all profits your business makes (after tax, of course). It’s also a popular choice – 60% of UK small businesses are sole traders. However, you’ll also be personally responsible for any losses your business incurs.
Registering as a limited company is a bit more complicated – there are a few more management and reporting requirements. Importantly, though, your limited company’s finances will remain separate from your own, and will be a different legal entity.
If your business is less of a sole venture and more of a double act, you have the option to register your business as a partnership. The British government describes it as “the simplest way for two or more people to run a business together”. You and your partner will personally share the responsibilities of the business, including its losses and any equipment costs incurred.
Chapter 4: Register your business’ name and premises
Limited company? Unlimited paperwork…
If you’ve decided to start your business as a limited company, you’ll need to register with a name and address, while also providing details about your company’s share structure and persons of significant interest.
Name to fame
If you’ve decided to start your business as a limited company, you’ll need a name. It’s a legal requirement, but common sense quickly tells us that the importance of a name goes far beyond the law – businesses without names tend not to survive.
So what’s in a name?
Well, it’s your customer’s first touchpoint with your services. It’s an integral part of your brand, your shop front. It’s how you communicate with your audience in that split-second window of opportunity in which they discover you.
There’s no set formula for picking the perfect business name, but we do have a couple of quick do’s and don’ts:
- Make your name catchy (fun to say, easy to remember, and simple to pronounce)
- Use a name that conveys some meaning – you don’t want people to have to work too hard to figure out what you do
- Include unusual spelling or strange punctuation
- Give your business a name that could limit it as it grows (names of cities or specific products are out!)
But above all, what you name your company is entirely up to you. The only thing the government asks is that it’s original – if it’s too close to the name of a business that already exists, you will be legally obliged to change it.
Check if your name is taken with Companies House’s free name eligibility checker.
Location, location, location
When registering a limited company, you’ll also need to record an official address. This is where any communications addressed to your business go. The only rules are that it has to be located in the same country your business is registered in, and be… well, a real address!
That said, if you’re an ecommerce business, you may not have a business premises. And, since your registered address will display publicly online, you probably don’t want to use your home address. In this case, you can register the address of the company that handles your tax and accounts, or hire a company to forward your mail from a desirable location.
It’s here where you’ll also need to start thinking about where you’re going to be working from. Your front room might be fine when you’re just starting out, but is it really the headquarters of an ambitious business looking to scale?
Probably not. So, sooner rather than later, you’re going to want to look at renting a space to work in. Here’s a broad overview of your office space options:
Renting an office space
- Coworking/flexible working space: Perfect for freelancers or sole traders, a desk in a flexible space, surrounded by like-minded individuals, could be exactly what you need to get inspired.
- Virtual office space: A digital nomad’s dream, a virtual office space gives you access to meeting rooms, post collection, and call answering services. Oh, and it counts as your registered address, too!
- Serviced office space: Great for small, multi-person businesses, these spaces come with everything you need to start working straight away, and can be rented for as little as a month at a time.
- Managed office space: An ideal long-term solution for more established businesses, a managed office space provider works with you to build a place that feels your own.
Right now it’s likely you’ll just want a flexible or virtual office space. But, as you grow your business, you’ll want to explore what a managed office space can bring to the culture and aesthetics of your workplace. Here’s where we can help.
Simply provide a bit of information telling us what you want from your office space. We’ll do the rest, putting you in touch with the best office space management companies in your area. They’ll be able to provide you with bespoke quotes, and help you design your perfect flexible working experience.
Share-ing is caring
You’re nearly all done registering as a limited company – nice! There are just a few more details you’ll need to provide to the UK government:
- An SIC (standard industrial classification) code: a series of dropdown lists, where you’ll declare what your business does
- The name(s) of the director(s): the people legally responsible for the business
- Your company share structure: a statement of capital – a detailed description of the number and value of the shares making up your company’s total worth
- The name(s) of the shareholder(s): details about who owns shares in your business
All this will cost you a nominal fee – it’s £12 to register a limited company online with Companies House.
Chapter 5: Understand your tax obligations
As the old Benjamin Franklin quote goes…
…there are two certainties in life – taxes and, well… more taxes! And, now you’re a registered business owner, it’s your responsibility to understand them. Let’s take a look at some of the business taxes applicable to UK enterprises:
VAT (Value Added Tax)
VAT is a charge of 20% that you’re required to apply to any goods or services that you’re selling. It’s applicable to businesses that have a VAT taxable turnover of more than £85,000 per year. You can register for VAT via the government’s website.
If you’ve chosen to become a limited company, you’ll need to register for corporation tax within three months of beginning trading. It’s a flat rate tax, and what you’ll pay will depend on the value of your profits.
Despite its slightly dubious-sounding moniker, ‘business rates’ is essentially a government tax levied on your business’ premises. It’s charged annually, and applies to offices, shops, bars, factories, and warehouses – basically, anywhere business is done. You won’t pay business rates if you’re running your business from home.
Your tax obligations
Along with understanding, registering for (and, sadly, paying) the above taxes, you’ll also have a few other responsibilities to take care of in the eyes of the law:
Keeping accurate records
It’s good practice to document all your business’ financial transactions. Outgoings, incomings, statements… by keeping up to date records, you’ll make things easier for yourself (and your accountant) when the end of the financial year rolls around.
Submitting annual accounts
Every year, you’ll need to submit an official record of your business’s financial state of affairs. This includes a summary of your revenue, expenses, and all other financial transactions you’ve made in the year. If you’re registered as a limited company, this is a mandatory requirement.
On top of this, you’ll need to file an annual confirmation assessment. This is the government’s way of confirming that the details they have on file about you and your business are all correct. You can do it here – it’ll cost £13 to do online, or £40 via the post.
Registering for self-assessment
Self-assessment is a set of basic accounts you’ll need to file every year, telling the government how much money you made. It’s how they’ll calculate your tax going forward, so set aside the time to get it just right.
Self-assessment is compulsory for profit-based enterprises, no matter whether you’re running a limited company or are registered as a sole trader. Not-for-profits are excused.
Chapter 6: Obtain the licences
In other words, it’s more paperwork…
…but when you’re done, you’ll be a fully fledged business. So, what do we mean by licences?
From driving a car to watching TV, licences are one of the bare, boring necessities of life. And, a little irritatingly, those looking to start a business aren’t excused.
If the business you’re starting is a pub, you’ll need a liquor licence, and permission to sell food. And if you rely on outside software to drive sales and marketing, you’ll need a licence for that, too. Oh, and if you thought you could carry a few bags of rubbish around without a licence, well, then… think again!
Whatever your business does, you’ll probably need a licence for it. And it makes sense to get it sorted sooner, rather than risking fines further down the line.
Enjoying the read? You're over halfway there!
Here's what you've got to look forward to:
Or, if you'd like to head back up to the top and revisit the first six chapters, just click here.
Chapter 7: Open your accounts
It’s almost time to start selling!
In the next chapter, we’ll take a look at a few ways your business can go about securing funding. But before obtaining the money you need to start your business, you’ll need somewhere to put it all. First, you’ll need to open a:
Business bank account
When it comes to receiving funding, making deposits, and paying suppliers, a business bank account is an absolute necessity. Much like your personal bank account, you can make withdrawals and deposits, use a debit card, and benefit from an overdraft to help maintain cash flow.
Unlike with your personal account, though, most banks will charge you for business transactions, such as setting up direct debits, depositing cash, and making a transfer. It’s likely you’ll also have to pay a monthly or yearly fee to maintain the account.
You can set up a business account with a traditional high street bank, or with a challenger bank, such as Tide or Revolut. Fees will vary based on the provider you choose, so do your research first. Many banks tend to waive account fees for new businesses for as long as the first 24 months, so ask carefully about what deal your chosen provider is offering.
If you plan to take card payments from customers – whether online, over the phone, or face-to-face – you’ll need to open a merchant account.
Merchant accounts enable you to accept credit, debit, and contactless cards, plus mobile wallets such as Apple Pay and Android Pay. A merchant account acts as a kind of holding pen, where your customer’s funds go to be authenticated and settled by the bank, before being deposited into your business bank account (see above).
Merchant accounts also come with the hardware and software you’ll need for taking payments from your customers. If you’re a retailer planning to take payments at the point of sale (i.e. from a physical store), your merchant account provider will supply you with a card machine. If you want to take payments over the phone, you’ll receive a virtual terminal, while ecommerce businesses will need a payment gateway.
Merchant accounts are provided either by banks (such as Barclays or Santander), or by a range of third party companies (such as takepayments or Handepay). It’s easy to apply for one, and there are multiple options for those with bad credit.
Chapter 8: Secure your financing
Time to strap on your boots, meet your guardian angel, and find your X factor
Phew! You’ve done your research, nailed your business plan, registered your company, chosen your name, opened your accounts, and have all the licences you need to start trading. Congratulations – you’re an official business owner.
Guess you’re all done, right?
Wrong! There’s no rest for the wicked, and you’re just getting started. Plus, whether it comes from your own savings, the government, or a halo-topped investor, you’re not getting anywhere without a little cash in your pocket.
So, where’s it going to come from? Let’s take a look.
First and foremost, you could consider bootstrapping your business. This approach involves no finance whatsoever – just your hard-earned personal savings, and probably a hefty dose of luck, too.
Bootstrapping has its obvious benefits: you won’t have to pay anything back, don’t have to risk your credit score applying for loans, and get to keep your company’s future where it belongs – in your own hands.
Yet bootstrapping doesn’t work quite as well as a long-term solution. You’ll have to re-invest all of your profits back into your business to help it grow, meaning payouts for you, initially at least, will be few and far between. Relying solely on your own savings may also mean you’re not able to scale as quickly as a business with financial backing.
Bootstrapping is tough, sure. But remember – it’s eminently possible.
Start Up Loan
As a first port of call, we recommend taking a look at what a government-backed Start Up Loan might offer. As well as a loan of between £500 and £25,000, you’ll also receive assistance with writing your business plan, and up to a year’s worth of free mentoring.
You can apply for it here.
When it comes to securing affordable, transparent, and understandable business loans, high street banks are still king. With predictable monthly payments, fixed interest rates, and the chance to build up good business credit, bank loans are a wise option for UK businesses.
However, getting accepted isn’t a given – you’ll need a strong credit score, and will potentially have to put some of your assets on the line to get accepted. You may also have to provide a personal guarantee accepting responsibility for the loan if you’re unable to pay. For that reason, bank loans are not always the best choice for those starting a business.
Click into the list below to find out more.
Business grant scheme
At this stage of your business’ journey, it’s also worth applying for a government grant scheme. Funding from a government grant is usually a direct grant (a lump sum to help grow your business), a ‘soft’ loan, or equity finance, but can also take the form of free equipment, or reduced costs.
Business grants are most commonly offered within specific local authorities, for certain sectors, or for particular business types and functions (for instance supporting the environment, or creating jobs). These schemes are also generally available only to businesses with fewer than 250 employees, or with a turnover of less than £45,000.
Grants are the jackpot of small business finance – in many cases, you won’t be charged interest, be required to give away equity, or even have to pay it back at all. But, like most jackpots, business grants are highly competitive, and can be very difficult to attain.
That said, you have to be ‘in it to win it’, so why not give it a go? Head to the government’s business finance support page to browse a range of official grant schemes. Simply select ‘Grant’ in the ‘Type of support’ field at the left hand side of the page to begin hunting for your business’ ideal grant scheme.
When there, you’ll also be able to filter results by your business’ stage (not yet trading, startup, or established), industry, number of employees, and region.
Alternative finance providers
Banks, grants, and government-backed loans aren’t the only way to secure funding for the business you’re starting, though – far from it.
Actually, it’s an increasingly large and diverse plethora of alternative finance providers that look set to define how businesses borrow money in 2020. Here are a few examples of alternative finance:
Peer-to-peer (P2P) lending
Peer-to-peer lending is the largest alternative finance model in the UK – and the fastest-growing, too.
P2P lending platforms aim to connect investors with small businesses that are seeking finance. If you choose this route, your funding won’t come from a single person or company, but rather a collection of individual investors, each of whom will provide a portion of the amount your business needs.
P2P lending’s benefits include low interest rates and flexibility. As P2P platforms go, we recommend Funding Circle – it’s globally-recognised, trusted by more than 52,000 UK businesses, and comes with lengthy repayment terms, too.
If you’ve ever tuned into an episode of Dragons’ Den, you’ll have seen first-hand the electrifying effect one or two wealthy individuals can have on the growth of a small business. And, though high-profile angel investors like James Caan and Deborah Meaden can be intimidating characters, there are plenty of benefits to this approach.
Firstly, it’s lucrative – £1.5 billion is invested by angels every year. Secondly, the money you’ll receive isn’t a loan – an angel investor provides you with the lump sum your business needs to grow, but in exchange for a part of your company. If things don’t work out for your business, you won’t be expected to pay back the investment.
While not having to pay back the funds you receive is handy, you’ll still need to be careful – you’re signing away partial ownership of your company, after all. Accepting a relatively small amount of investment now might mean you won’t be able to claim much larger amounts of your net profits in the future.
Plus, angel investors can be demanding, and may expect up to ten times their initial investment back after a certain time period.
All that said, angel investors can be an excellent finance lifeline if you’re starting a business from scratch. They usually come with experience and unparalleled business acumen, and can help you steer your business in the direction of success.
To register to seek angel investment online, head to the UK’s Angel Investment Network.
When you’re starting out in business, there’s arguably no bigger obstacle to staying afloat than a lack of cash flow. In fact, cash flow woes are responsible for 90% of business failures in the UK alone. So, how do you keep the cash flow, ah… flowing?
With invoice factoring, that’s how. This form of alternative, asset-based finance essentially involves selling your unpaid invoices to a third-party company, commonly known as the ‘factor’. They’ll release around 85 to 90% of your invoice’s value upfront, usually straight away. The factor then assumes responsibility for chasing your customer for payment.
When the invoice is paid, you’ll receive the remaining value of it, minus the factor’s fees. Simple!
Invoice factoring is a highly effective way of mitigating the damaging effects of those long waits for payment. Using an invoice factoring company can also fuel your business’ growth, while improving that all-important cash flow.
For more information about what an invoice factoring facility can do for you, complete our brief webform with some details about your plans. We’ll then put you in touch with a range of UK invoice finance providers, who’ll be able to offer you bespoke quotes.
Crowdfunding is another great way of securing finance for your new business. You’ll post details of how much you’re looking to raise – along with some information about you and your business – on a crowdfunding website, like Kickstarter, or the aptly-named Crowdfunder.
People can view your business, cause, or project on the site, and then choose to invest in it. In return, you can offer them shares in the company, or a reward based on the goods or services you provide. You could also just ask for a donation, but this might be a tough sell for potential investors – particularly if you’re not a charitable cause.
Crowdfunding is typically most effective for financing creative projects or businesses. For example, a budding filmmaker might crowdfund to raise cash for their next big picture. Without any shares on offer, investors might be promised a small role in the film as an extra, a mention in the credits, or some memorabilia from the film’s set.
And, if you’re ready to receive business loan quotes from the UK’s leading finance providers, look no further. Simply provide us with a few details about your business, and we’ll match you with the loan providers that best suit your needs. They’ll provide you with tailored quotes, and you can take it from there.
Chapter 9: Design your website
It’s your virtual shop window…
…so don’t skimp on making it look beautiful! It’s 2020, and that means that your business needs a website. But if coding and programming isn’t your language, don’t fret – there are plenty of easier ways to craft a simple, good-looking website, in the time it takes to cook a meal.
Let’s find out how.
Use a website builder
Website builders such as Wix and Squarespace are the quickest, simplest, and most effective ways to create your own website. With mouth-watering templates and an intuitive drag-and-drop builder, you can (quite literally) create an amazing website in just a few clicks.
Better still, a website builder puts everything in one place. From a single dashboard, you can connect a domain name, optimise for the best rankings in search engines, and link a Google Analytics account to measure site performance. And, for a few extra pounds, you can establish an email address linked to your site’s domain name, for that added layer of professionalism.
Website builders usually include web hosting as well – so that’s one less thing to worry about when starting a business. Oh, and if we haven’t mentioned costs yet, that’s because there doesn’t have to be any – website builders are completely free.
There is, however, a catch.
Creating a website on a free plan will leave it branded with ugly advertising, which marrs your site’s aesthetics, and looks unprofessional. You’ll also be left with a domain name tarnished with that of the website builder. It’s… not good.
That’s why paid plans are your friend.
Paid plans are available for between £3 and £18 per month, and many also include a custom domain name connected to your site. You’ll also be eligible for help with your website’s SEO (search engine optimisation), and unlock more functionality.
All told, website builders represent the easiest, most direct way to create a beautiful website in moments – but you’ll need a paid plan to get the get the most out of them.
▶ Read more: Top 5 Website Builders 2020
Code it yourself
Your other option for creating a website is more of a DIY job – you can code it all yourself.
Coding your own website affords you ultimate creative control over the whole process and end result. You can cut some costs by choosing the cheapest web hosting provider, and selecting a shopping cart integration that best serves the needs of your ecommerce site. Put simply, it’s the most customisable, dynamic, unique, and functional website you could build – and it’s all yours.
The only thing is, you’ll need to know how to do it. At the very least, you’ll require knowledge of HTML and CSS to give your website its structure and design, and probably a decent dose of patience, too – not to mention time, precious time.
Hire an expert
If you don’t have that time and just want your website done quickly and expertly, you can bring in a professional to do it for you. Hiring a web development agency is the quickest, most direct route to getting your website made for you.
Employing web design experts will also make sure you’re covered when it comes to the acronyms. They’ll ensure your web pages are all SEO-friendly, and that the site’s UX (user experience) is on point. They’ll also help you implement stunning visual CTAs (calls to action), which will coax your website’s users into wanting to know more about your services, or making a purchase.
A web design agency can also assist you in developing your brand, and hammering out a killer content and advertising strategy going forward.
Oh, and the best part? It’s probably more affordable than you’d think.
To compare quotes, and explore which web design agencies are the best fit for your business, take a moment to complete our 30-second webform. We’ll ask about your website’s goals, and the timeframe you need it completed in. Then, you’ll receive bespoke offers for web design services, from leading UK web design agencies.
Chapter 10: Build your network
It’s not about what you know…
…it is, of course, about who you know. Forgive us the use of an old cliché, but it’s true – if you don’t put in the work to build up a wide network of contacts and clients, you’re missing out on a whole world of opportunities. So, what can you do about it?
Attend networking events
Going to a relevant networking event is the most important thing you can do for your business this year. A simple Google search should turn up a few results for events suitable for your industry.
It could be some kind of expo, where you can learn about new products or services your business could benefit from. It could also be something like an awards ceremony, or a meal where people who are looking to start a business can sit down together and share their experiences.
Whether you’re just starting out in business or have been in the game for a while, The Business Show in London is a great place to start. It’s free to attend, and happens every November at the ExCel building.
If you don’t already know about LinkedIn, you need to. And, if you haven’t already done so, register for an account and start making connections! You’ll be in good company – the popular business-oriented social media platform already has 575 million users, with 40% of these using it on a daily basis.
On LinkedIn, you can find the most influential people in your industry, and reach out to start up a conversation. If you’ve been to a networking event, but didn’t get a chance to chat with the person that inspires you, LinkedIn provides a second bite at the cherry:
LinkedIn is also an excellent place for viewing and sharing relevant business-related content. Do you have a win you’d like to share with your connections, or an update on a recent project you’re proud of? LinkedIn is the perfect platform for it.
And, like most social media content, LinkedIn posts have the opportunity to go viral. Through shares, likes, and comments, your update could attain a reach further than you’d ever dreamt of, and attract the eyes of potential partners, customers, and investors.
Participate in online forums
While LinkedIn is ideal for content and connections, it’s also excellent in that it facilitates a number of ‘groups’. These are essentially communities of people with shared business interests or endeavours, where you can post comments and discuss topics relevant to you with like-minded people.
London Startups, for instance, is a LinkedIn group for those starting a business in the big city, and has well over 6,000 members. On Startups – The Community for Entrepreneurs has more than 630,000 participants to network with and learn from.
That doesn’t mean you just need to observe from the sidelines, though – get involved! Start a conversation by posting a link to an interesting article, or bring up a topic that’s been on your mind recently. It can be a great way to get your name out there, without having to resort to too much shameless self-promotion.
Start your LinkedIn odyssey today by joining a group that excites you. You’ll have to request to join, but the group administrators are usually quick to accept.
Chapter 11: Drive sales and marketing
Also known as: promote, promote, promote!
So, you’ve made it to the final stage. You constructed a plan and executed it to the letter, all while navigating the red tape of registration and licencing. You’ve secured finance, assembled an incredible website, found yourself some space to work in, and are already flexing your networking muscles online.
Well, now it’s time to get some customers. Sadly, new business doesn’t just fall out of the sky – you’ve got to work to build up a client base you can depend on, and keep working to ensure they remain satisfied. But… how? What do you need to do to boss your sales and marketing efforts, and hit the startup scene with a bang?
Here are our top three tips.
1) Digitise your marketing
These days, marketing has got to be digital. Postpone any grandiose dreams of your brand on big, inner-city billboards, or gracing the front page of the newspaper. Print is basically dead – plus, you’re just starting out, so you’ve got to work with the budget you’ve got. And that’s where digital marketing comes in.
PPC (pay-per-click) is NTK (need-to-know) information. It’s a form of marketing where you ‘bid’ on keywords your potential customers are searching for on Google. You place an ad, and every time someone searches for your target keywords, that ad will appear at the top (or near the top) of the Google search results.
You’ll then pay an agreed amount for every ‘click’ – essentially, every time someone clicks through to your ad. The amount you’ll pay per click varies, and will depend on how much competition there is for the keywords you’re interested in. PPC is expensive, but it’s an excellent, direct way of reaching customers who are already searching for your services.
Also known as banner advertising, this marketing strategy involves placing ads online (popular websites and content such as articles, how-to guides, and blogs all work well) that encourage users to visit your website and make a purchase. It’s a passable way of getting your brand name out there, but be warned – if you don’t have expert help in the form of a digital marketing agency, your clickthrough rate will be low (as in, lower than 1%).
Know your SEO
SEO (search engine optimisation) refers to the tactics and techniques involved in making sure your website ranks highly in Google’s SERPs (search engine results pages). SEO is the process of ensuring your website is accessible, informative, and easy to understand for Google’s algorithms (and, by proxy, your users).
A big part of SEO is researching keywords you’d like your business to be ‘ranking’ for in Google’s search results. By cleverly incorporating these keywords into your website and content, you’re helping Google elevate your business to the apex of its results pages – for the exact terms your audience is searching for.
Why is it important? Well, think back to the last time you searched for something on Google. We’re guessing that you didn’t scroll any further down than the top three search results… right?
Right. And the data backs it up, too. The top spot in Google’s search results gets a click-through rate of almost 30%; the third position gets about 10%. Oh, and the ninth and tenth? Just 2%. Huh.
Get wise, localise
Now, think back to the last time you were out walking the streets of an area you weren’t overly familiar with. Feeling peckish. You took out your phone, and Googled ‘restaurants near me’… right? Maybe you were just at a loose end in West London, so you typed in ‘things to do in Notting Hill’. Remember?
If not, you’re in the minority. Because, according to Google, a huge 46% of searches have a ‘local intent’, meaning the customer is searching for a particular product or service in the area they’re currently in. These searches are invariably backed by some kind of ‘commercial intent’. Whether it’s a haircut or a Chinese takeaway, that means that the person making the search is looking to buy, buy, buy – usually immediately, too!
Local SEO, then, is making sure your business is one of those appearing in the SERPS when a relevant enquiry comes along. Consider the following, probably pretty familiar, sight from a basic Google search:
Let’s say you’re a restaurant owner in Camden, London. Google’s just provided me, your potential customer, with the names, type of cuisine, and basic price range for several of the restaurants I could be spending my hard-earned pocket money at, right now.
There’s also a featured picture to help lure me in, and a menu to set my taste buds tingling. Best of all? It’s easy to click through to each and every one of these eateries’ websites, in an instant.
In other words, you want your business to be here. So, what’s the trick?
Well, first you need to register for Google My Business. It’s free, and lets you display your business’ name, type, and location online, while showcasing a few photos of your beautiful products, services, or building’s exterior. If a listing already exists for your business, you can claim it, and begin personalising it to your liking.
There are a whole bunch of other cool features available from your Google My Business dashboard, too. You can message potential customers in real time, manage appointments and take bookings, and post regular updates relevant to your business and industry.
Then, you’ll need to work at it. One of the ways in which Google will prioritise your business over your competitors’ is in the strength of your reviews. See above – none of the restaurants that made the cut registered any less than a solid four stars out of five.
So, you’ll need not only to make sure you’re dishing out four star plus service, but also that you’re incentivising your customers to leave a glowing review when they walk out of your door. Because it’ll be crucial in ensuring that they walk back through that door the next time they’re in your neck of the woods.
Plus, what’s great about SEO is that it’s largely completely free to do. Why not start now? To get the ball rolling, check out our top 8 tips for promoting your business online, and start growing your business on the web.
These agencies, such as Yell, can help you expand your online reach, while managing your business’ online reputation through gathering good reviews… and dealing tactfully with the bad ones.
And for the easiest way to begin learning about what an agency like Yell could do for you, simply complete our 30-second webform. We’ll ask about five questions, and use the info you give us to put you in touch with world-class, UK-based digital marketing agencies, who’ll send you tailored quotes.
2) Get to grips with CRM software
CRM stands for Customer Relationship Management. It’s a type of software that does exactly what it says on the tin – it helps you manage your relationships with your customers. But it also does so much more, and can provide a huge boost to how you manage deals, engage leads, and construct targeted email marketing campaigns.
Build your customer database
CRM software acts as a central hub for all your client information. Name, company, contact details… the lot. It also stores information about your communication with those prospects or leads, collating any details of telephone calls, emails, or their engagement with you on social media.
All this data is stored in the cloud, so there’s no need to waste time downloading information from a server, or juggling details of complex customer interactions from a spreadsheet or notebook. You (along with any staff you employ) will have access to everything you need, wherever there’s an internet connection – all from your phone, laptop, or tablet.
That’s great, we hear you say – buy how will all this help you with your sales and marketing efforts?
Boss your email marketing
Well, you can use all that customer data to inform targeted, more cost-effective marketing campaigns. CRM software comes with clever lead segmentation features, allowing you to separate out customers with an active interest in your product. That way, you won’t spend precious time and money marketing to the wrong people.
On top of this, a CRM system can store the purchase histories of your customers, giving you a better idea of what they like. Through this, you can market to them with deals and discounts tailored to their specific interests. The result? A customer that stays engaged with your brand and services, and who keeps coming back for more.
3) Supercharge your social media
87% of respondents to a recent survey said that social media has increased their exposure to businesses. It stands to reason, then, that the effectiveness of your social media strategy will go a long way in determining your business’ overall success.
Curate and create content
Content is king. What better way to invite your online audience to connect with your brand than publishing informative, interesting, and engaging content on social media?
Writing articles relevant to your business’ audience is a great way to build trust, while developing your brand’s viewpoints on important issues. By establishing a consistent tone of voice through your communications with the public, you’re capitalising on a valuable chance to align yourself with the thoughts, feelings, and values of your customers.
Facebook is still an excellent platform for sharing original or curated social content, while LinkedIn is the best emerging option for business-related articles and ideas. If you’re a creative enterprise, Instagram should be your first port of call, while Twitter is the go-to for publishing short, staccato snippets of content.
Spread the word on social media
Social media is the perfect platform for posting content that can be seen and read by a wide audience, all for free. But to expand that audience, you’ll want to have a think about splashing the cash on a social media advertising campaign.
Facebook, Instagram, and Twitter all provide tools for targeting specific demographics of its users, allowing you to reach your products and services out to the groups you’re most interested in. Each social media site offers unique features to help you smash your marketing goals:
Instagram is the perfect place to engage ‘influencers’ – well-known bloggers and models with lots of followers, who can plug your brand and services for cash.
Twitter allows you to solve any customer issues in the public eye, as soon as they arise – helping you build trust, and develop your brand’s personality while you’re at it.
For a complete rundown of the do’s and don’ts of social media advertising, check out our cracking guide to using social media for business, with top tips and tricks for using the big platforms.
Get your ear to the ground
You’ve set up an advertising campaign, and have got to grips with how to talk to your audience on social media. Now, it’s time to start listening.
Social listening (also known as social media monitoring) is a way of tapping into conversations on social media to glean insights into what people are saying about your business. With the right social listening tool, you can set up alerts for any mentions of your industry and brand, or simply for any keywords that mean something to you.
Social listening is about more than just understanding your customers and industry – it’s about leveraging these insights to stay on top of the competition, and identifying the emerging trends your business can capitalise on. Knowing what your audience is saying about your business also allows you to instantly respond to customer complaints, and defuse potential customer service crises in real-time.
2020 and beyond
Congratulations – you made it! 9,000 words and eleven steps later, you’re entering a new decade with all the knowledge you need to start a successful business. Let’s recap the journey we’ve been on together:
How to start a business in the UK: our 11 key takeaways
1) Do your research: Nail the who, why, where, and when of your business. Ask yourself the tough questions – is now the right time, do I have access to the right resources, and am I the person to make this idea a success? Conduct market research, and gather a wide range of opinions to shape your approach.
2) Make a plan: Write a detailed business plan demonstrating to yourself (and to any potential investors) just how you’re going to make your idea a reality. Include expected financial returns and forecasts, competitor analysis, and a breakdown of your marketing strategy.
3) Choose a legal status for your business: Register your fledgling business with the government; either as a limited company, a partnership, or (if it’s just you) as a sole trader.
4) Register your business’ name and premises: If you need to, rent or purchase an office space as your base of operations. You’ll then have to choose and register your business’ name (and location), and provide key details, such as stakeholders, company share structure, and industrial classification (what your business does).
5) Understand your tax obligations: Register for VAT and corporation tax, and brush up on what business rates mean for your premises. You’ll also need to register for self-assessment, keep accurate records, and submit annual reports about your business’ dealings.
6) Obtain the licences: Find out if you’re required to have any licences to operate, and take steps to acquire them if so.
7) Open your accounts: Select the right business bank account for you, and – if you’re planning to take payments online, or from your physical store – obtain a merchant account, too.
8) Secure your financing: Here’s where you can begin to consider which funding option is best for your new business.
9) Design your website: Use a website builder to quickly create a professional and visually compelling website, or engage a web development agency to do it for you.
10) Build your network: Use LinkedIn to make connections in your industry, and make your voice heard via participation in online groups and forums related to your field. Attend networking events to put faces to names, and to learn from idols and competitors alike.
11) Drive sales and marketing: Use a combination of social media, CRM software, and digital marketing to turbo-boost sales, and scale quickly.
That’s it from us, then – the rest is up to you. It’s time to finally take that idea you’ve nursed for so long and turn it into a business. It’s time to negotiate Brexit, to prove the doubters wrong, and to brush aside the competition. And, most importantly, it’s time to start making some money.