Starting your own business in the UK can seem like a daunting task for some people. There are lots to take into consideration. To some individuals, the thought of starting their own new business can be so overwhelming that they never progress their plans beyond the initial idea. It need not be like this! Your new business could be simple to set up – if you know how!
Join us, and we will talk you through how to start your own business from scratch. If you’re prepared to put in a little hard work, we could have you on the path to success in no time.
Should I Start My Own Business?
Unfortunately, this is something that you can only answer for yourself. What we can do, however, is give you all the information you need to help you make that decision. Let’s take a closer look at some facts and figures about starting your own business and then take it from there. In the latter half of the article, we will talk about starting a business from home as well.
Some Small Business Statistics
At the beginning of 2018, small businesses made up about 99.3% of the private sector in the UK. Of this figure, 59% of them were sole traders, 7% were partnerships, and 34% were limited companies. The small business and private sector have also experienced sustained growth every year between 2010 and 2017. In 2018, however, this trend started to fall off.
Why? Experts believe that the small businesses established in the previous few years have expanded into larger firms capable of employing staff. There is evidence of this since there has been a rise in the number of businesses of employing other people. The UK government puts this figure at an increase of more than 2,000 businesses. Since small businesses tend to start with one sole trader and grow from there, this rise can be attributed to the growth and progression of these firms.
What Are My Chances of Success?
Lots of people get scared when they started their own businesses. This fear can be enough to put them off the matter entirely. While it is true that not every new business will succeed – that shouldn’t be a reason for you not to try. Even if your business idea has been done before; it hasn’t been done by you. Besides anything else: if you try and fail you can always get another day job.
It is estimated that in the UK roughly 60% of small businesses will fail within the first 5 years. Now, there are two ways of looking at this. You can go into business for yourself expecting that you will be one of that 60%; or you can go into business for yourself expecting that you’re going to be one of the 40%. Unfortunately, the economy and the market are two things which are not within your control. This is why proper research is vital to the success of any small business.
A Guide to Starting Your Own Small Business
Before you start your new business, you will need to do a lot of planning. Let’s dive in and do this as a step-by-step guide to setting up your own small business.
Step 1 – Developing Your Small Business Idea
Any good business starts with a great idea. This idea doesn’t have to be anything outside of the box; it doesn’t have to be a masterpiece, and it doesn’t need to be fool-proof. All it has to be is a way for you to make money for yourself by providing your skills. You can do anything you want to do but only the truly qualified can expect to succeed. If you need to retrain then do this before you go into operation.
Simply Business UK has a list of ideas for small business start-ups that are popular at the moment. Some of the best include setting up as a skilled labourer (an electrician, joiner or plumber), working online as a graphic designer, freelance writer, or consultant – and any other number of jobs that might suit your skills. You can also find inspiration for small business ideas from Experian and Profitable Venture.
Step 2 – Time to Research
Identifying the business that you would like to take up is the next stage of the process. This involves researching the market. It is only by having a solid understanding of the industry that you can hope to succeed. There are three main types of research that you should be focusing on:
- You need to research exactly what you must do in order to successfully start your small business. Since you have already landed on this page, we can assume that you’re already at this stage.
- You need to research who your customer and your target market are in great detail. The more you know about your customer, the higher the chances that you will sell your product or service.
- You need to research your competitors, their business models, and how they have achieved success. They already know how to gain traction in your market. If you can study this now you will save yourself a lot of time, effort, and money in the future.
When it comes to conducting research, the internet is your best friend. You can find all sorts of helpful information simply by typing a question into your search bar. If you are no good at using a computer, then we would recommend you sort out some IT lessons before you go any further. Digital Technology should make up a large part of any new small business at this day and age.
There are many ways you can conduct your research without the help of the internet. You can test the demand for your product or service by conducting surveys, questioning potential clients, and analysing the strengths and weaknesses of your chief competitors. If you happen to have any friends currently working in the industry you want to set up in, we would suggest that you contact them for advice.
There are also resources out there for potential small business owners which you can take advantage of. The UK government is very helpful for those that wish to register a new business and provide lots of information that you can find on their pages. The money advice service will also provide you with ample information to help you manage the financial side of becoming self-employed.
Step 3 – Choosing Your Business Structure
Earlier we mentioned that there are three main types of businesses in the UK. We have gone into detail and each of these business types below.
The Sole Trader
If you want to set up your own small business in the UK, then the chances are that you will register as a sole trader. A sole trader is one of the easiest ways to negotiate the world of business if you are new to it. Since sole traders make up nearly 60% of the private sector, we can confirm that this is the most popular method of starting your own business.
A sole trader operates a business entirely by themselves. Since it is likely that you will be the only member of your company when you start trading, operating as a sole trader is the easy answer. It is likely that you will be the only member of your company when you start. Operating as a sole trader is the easy answer. You will have full control of the company and you’ll be able to pay yourself from the profits of that company.
The only catch of becoming a sole trader is that if your company goes bankrupt, then so do you.
The Limited Company
The limited company was set up as a business structure to stop sole traders from having financial ties to companies. When you choose limited company as your business structure, you will not be financially liable in the same way should something go wrong. The system for setting up a limited company in the UK for your small business is a little more complex than that of setting up a business as a sole trader.
If your goal is to eventually be big enough to float on the stock market, then your business needs to be a limited company. If it isn’t a limited company, it won’t be able to sell shares. The difference between a Public Limited Company (PLC) and a Private Limited Company (Ltd.) is that the Private Limited Company is owned or operated by an individual. A Public Limited Company is a company owned by its shareholders.
The partnership business model is just as it sounds. You go into business with one or more individuals and all of you are financially responsible should things fail. It is important to note that (in business terms at least) one partner’s decision is legally binding to everyone else – so if you do go into partnership, make sure it’s with someone that you trust.
Step 4 – The Business Plan
Developing a good business plan is essential if you want to secure an investment for your new business. There are some key features that every good business plan should include, some of which are as follows:
- An Executive Statement summarising your skills and experience.
- A description of your businesses core directives inclusive of a SWOT analysis.
- A thorough examination of your target market and customer base.
- Projected forecasts for profit for the coming year and maybe more.
- An overview of your operational plans and the structure of your business. This should include details of your business model.
- An overview of your sales and marketing plans, inclusive of details on how you are going to source new customers.
You can find a free template for your business plan by following this link.
Step 5 – Insurances, Licenses, and Legal Stuff
Before your family is ready to start your own small business, you will need to make sure that you have the necessary insurances, licences, and legal protections in place for you to do so. These will vary depending on what industry you are working in. Some of the more common types of business insurance and licences are as follows:
- Small business insurance – this cover protects your business from financial liability caused by errors in your work.
- Premises License – This is needed if you want to sell alcohol from your establishment.
- Childminding and Nursery businesses must be licensed.
- If you intend to sell goods through markets then you may need a street trading licence.
These only represent a small selection. Research your business idea thoroughly for full awareness of legal operations.
Step 6 – Register With HMRC
Before you officially start trading you must notify the tax office of your intent to do so. It is a straightforward process that won’t take up much of your time. We suggest that you set up a separate business banking account to keep your finances separate from the business. This will be helpful come tax return time. You will also need to keep all of your receipts to help you file.
You can easily register your business with HMRC by following this link.
Step 7 – Securing Funding
Finding funding is one of the chief reasons that most new businesses fail. Without enough financial input a company does not get off to the same beneficial start as it might otherwise have done. Your own small business might not need funding to get started but for those that do, let’s examine some sources of finance.
You can apply for a start-up loan to help you on your way but you should exhaust all other avenues first. The government will provide grants to help certain businesses get started, so check into these first. There may also be new business schemes available from your local council offices, or big local businesses.
Once you have managed to secure funding, the business world awaits!
Step 8 – Start Trading!
If you have followed all the steps in our guide, then you should be ready to start trading. Remember to constantly research and work on upgrading your policies and skills. We hope that your new small business is a great success… and that you make it into that lucky forty per cent.
Starting A Business from Home
The modern world is a busy place. Every day, thousands of us engage in a commute which takes us away from our home lives and families. We then spend the majority of the day away from home working in a place where – frankly – most of us would prefer not to be. Yet the more we rush from one job to another job, the more we realise that life doesn’t have to be this way. Wouldn’t it be so much easier if we could just work from home?
Starting your own business from the comfort of your home might be the best idea for those who really want to get out of the rat race. Not so long ago, the dream of starting your own business from home was nothing more than that: a dream. In an increasingly digital age, however, the possibility of working from your very own living room has become less a dream – and more a reality.
Working from home is on the rise
If we forget for a moment that we’re starting our own business and pause to take a look at some of the statistics, we can clearly see that working from home (in general) is on the rise. The growth and use of digital technology have led to a promoted ability to telecommute. This means that more and more workers are able to complete their assigned tasks without having to actually leave the house.
In fact, recent statistics show that nowadays around 5% of all Americans work from home. Across the pond in the UK; flexitime working experienced a 12.35% rise between 2012 and 2016. Stats from the Office of National Statistics (ONS) in the UK show that nearly a quarter of a million people have changed to remote work in the last decade. The ONS estimate that almost half of the UK workforce will be working remotely by the year 2020. This is based on the trajectory produced by the current figures. You can read the full report here.
So, given that we are experiencing a rise in the use of digital technology, and given that this technology is able to facilitate communication between people that are working across the world to one another – then doesn’t it sort of make sense to start your own business from home? After all, there has never been a better time.
What Sort of Businesses Can I Start from Home?
Obviously, if you’re trained in a skill or ability to perform a particular service to an expert level, then you should focus on using these skills to build your home business. Unfortunately, not everyone is blessed with having such training or education. If this is the case for you then don’t worry! There are plenty of online business options you should be able to choose from. Many of them don’t require any formal training or expertise.
Let’s take a closer look at your options for starting your own business from home.
Dropshipping is an excellent way to make yourself some profit. What it entails is providing a link between the buyers and sellers within which you can mark up a small amount as profit. All you need in order to start dropshipping is your own online store. An online store is much easier to put together than you would think it is, and you can use sites like WordPress or Wix to create one for free. You can then use your online store to host products on behalf of manufacturers.
For example, AliExpress is one of the more popular dropshipping business models. In order to use AliExpress, you would set up your own webpage featuring an online store. You would then use sites (like Shopify) to find suppliers of goods. Once you find the suppliers, all you have to do is feature their product in your online store – not forgetting the mark-up attached for your own fee. Customers will then shop in your store and place an order for the product with you. You pass this order on to the supplier and the supplier ships the product directly to the customer.
The beauty of this model is that the customer gets what they want, the supplier gets what they want, and you’ll get a small profit in between. Dropshipping is an excellent small business idea for those that want to set up a career from home.
Become an Online Tutor
If you have certain knowledge or skill that you think the world would benefit from, then why not start your own business by becoming an online tutor? Online tutors make decent money which averages around the $20 mark for about 45 minutes work. Although you would be expected to create a lesson plan, this still presents a profitable way to start your own business from home… Especially if you are able to teach a subject such as the English language to areas where it is much desired.
Online tutors cover everything from learning how to speak a language to providing video tutorials on how to change an electric plug. If you’re particularly skilled in your area you may even be able to put together an online course which people would then pay you to take part in.
Online consultancy is another excellent way to make money by starting your own business from home. Most work can be done through the cloud or through video chats on Skype. Telecommunication by way of video chats allow you to be hundreds of miles away and still sitting in the comfort of your living room. Talks and conventions present ample business opportunities for you to gain brand recognition and establish a solid reputation as an expert in your field.
Online consultants are often sought out on sites such as Fiverr and PeoplePerHour. If you want to make money starting a consultancy business from home, then we would suggest that you pick up a few clients using these sites to start you off. Rates are likely to be low at first but once you have a few reviews you should find that the clients will come rolling in.
Courier Business – From Home!
We appreciate that you need to actually leave the house for this one but operating your own courier business is easy enough as long as you have a vehicle. Most of the big-name companies such as Amazon hire self-employed, independent couriers, to deliver a bulk of their packages every single day. Delivery drivers can make a tidy sum and you will still legally be self-employed. This means that you will have to do your own taxes. Dealing with big companies like Amazon, as you can imagine, will always provide you with a steady flow of work. Additionally, it means that you are your own boss and allows you to work your own hours.
Web design is another huge area of the market that is becoming almost entirely work-from-home-based. Obviously, this is because all you need in order to do web design are access to the internet and a functioning laptop. This means that loads of web designers are running businesses out of their own home – and are experiencing a high level of success.
If you happen to know anything about computers or anything about code, then we would highly recommend that you look into web design as a future career path – especially if the time has come for you to start your own online business.
Start Your Own Delivery Business
Delivery businesses aren’t quite the same as courier businesses. There are apps available online which will let you start your own delivery business provided you have a means of transport. If you live in a city that doesn’t necessarily mean you need to own your own car. Certain pizza places, for example, will let you become a deliverer even if you own a bicycle.
Tips for being a delivery driver are usually quite high and are seen as one of the perks of the job. Again, you can pick your own hours, but you will find that peak time such as dinner and lunch will pay more than the rest of the day.
Starting A Business from Home – The First Steps
Starting your own business? Then continue reading! You may find some of the suggestions, hints and tips below helpful.
Building an Online Presence
When starting a business from home, one of the first things you’re going to want to do is to establish an online presence for yourself. Modern times mean dealing with a modern customer base. These customers are younger, more likely to buy online, and are more likely to recognise your brand if you have a strong online presence.
Digital marketing is one way that you can start to publicise your business and some aspects of digital marketing won’t even cost you a dime. Building a social media following, for example, is one of the best ways you can spread brand awareness. Recognition and awareness are the best ways to build up a loyal customer base without ever having a bricks-and-mortar establishment.
Building A Customer Profile
Your customer profile is the most accurate working representation you have of your client. A fully formed customer profile will have accurate insights into the interests, activities and life of the people you are trying to sell to. Almost all businesses will have a customer profile and the more accurate yours is, the more likely you are to be able to sell.
To start building an accurate customer profile for your home business, you should focus on your customer demographics. Ask yourself questions, what age is your customer? Are they male, female, or are they transgender? What other hobbies and interests do they have? Hobbies and interests are particularly important if you have a niche or speciality site. The more questions you can answer about your customer, the better your customer profile will be.
The Business Plan
Whether you’re starting a business from home or whether you’re starting a business that has its own premises; you will still need a business plan. It doesn’t have to be long and it doesn’t have to be incredibly detailed – but it does have to record key information about your firm. The content of a good business plan is discussed above.
You might not formally expect to need a business plan, but it is handy to have one if you ever need to secure funding. It is also a good document to complete to make yourself aware of areas of the business you perhaps hadn’t considered before. This can lead to growth, money-making, and profit-potential in the future.
Register for Tax
If you are running a business which is going to make extra money, you need to make your local tax office aware of this. If you are in the US, then you will need to get in touch with the IRS and inform them of what you’re doing, In the UK, the governing body for this is HMRC.
It is fairly easy to register for self-employment in the UK. The government website can actually talk you through all the different options you have, including whether or not you want to work as a sole trader, a partnership, or as a limited company. If you want to start your own business from home and you’re doing so alone, the best option is to start your business as a sole trader.
Sole traders are required to self-assess taxes and complete taxes at the end of every fiscal year. You may also have to pay corporation tax or VAT but this will depend on how much you can make working from home. You can view the thresholds for these by visiting this page.
If you want to start your own business from home and you happen to live in the USA, you will have to make sure that your business complies with federal, state, and local law. You can read more about this by visiting this website.
If you are determined to start your own business from home, then there are some sources that you will find useful. We have provided some of these below.
- Business News Daily gives a step-by-step guide on starting up.
- The Balance Small Business is an infinite resource for all things.
- Entrepreneur is a treasure trove of information.
- Simply Business is a more UK-oriented firm.
This article was written on behalf of The Brand Perceptionist by Alexander Ffrost. Alex is a serial entrepreneur with a passion for small business, and the creation of new stuff that no-one else has made or that beats the heck out of anything previously created. He loves starting and growing new companies in challenging sectors. Preferably with zero prior experience of the market or industry. In his spare time, Alex starts new brands and dreams of one day being Sir Alex. Or, alternatively, just designing another shirt with a “touch of Ffrost”. To learn more about Alex and his awesome inventions, visit his website at www.alexffrost.com.