How to set up a business

• Aug 11, 2022
• |
• BestBizFinder

Get your business idea right

Business ideas can be based on completely new products and services, or offering a service or product that is cheaper or better than competitors. Not every business idea suddenly shocks you, so if you are struggling with a good concept to build your new business, start by brainstorming a lot of ideas.

Almost all businesses have some form of online presence, so when you think about how to set up your own company, this should be at the forefront of your mind. In 2015, 77% of UK internet users made a purchase online, so you should think about this from the start. Online businesses are easily scalable and can be tested before making a full commitment on your own.

Rate your status

Think carefully about whether you have the time and flexibility to start a business. Is starting a business commensurate with family and other obligations? Will you run it full time or part time along with another job? Answering these questions will help you choose the type of business that is right for you.

Launching and growing a startup takes time, hard work, and flexibility, so it's important to be realistic about your situation. If you're running a part-time business, for example, you may want to consider hiring employees to help you out when you're busy or to take on less demanding jobs.

Plan your business

Create a detailed plan for the first five years of your business, including your strategy and marketing plan. Planning your business allows you to understand the business assumptions - how many customers you will need, how much you need to collect, and how much the business will grow. These assumptions can be tested when researching the market for water content.

In your business plan, describe your market and target audience, and identify your competitors. Plan pricing, production costs, marketing and advertising spend so you can roughly anticipate your earnings. Learn more about market research for small businesses.

Don't think of the business plan as a rigid document - markets can change and you'll need to be flexible - but it's a good way to keep your business organized and on the track. You can predict where and when you want your business to go, or indeed if you will need to scale operations. For example, you may need to hire employees in the future or rent an office space.

Search the market

Research is the vital when it comes to understanding your target market, your competitors, and your industry. Your search results will shape your business structure, resources, customer demographics, and pricing.

Interview your target audience to test whether your product or business idea is interesting. It's best to ask people you don't know, because personal contact can hurt the answers. Focus groups are a good way to get feedback about your product and service: select a small group of people based on certain attributes — such as age, occupation, gender — that you think matches your target audience. Instead, ask potential customers to fill out an online survey or visit potential customers to find out what they would like to see from your product or service.

Choose a business structure

Once you have defined your business concept and business name, you will need to register your business. There are different business structures you can use - from incorporating as a sole trader to registering as a limited company. They all have their pros and cons, so it pays to make sure that you are choosing the best structure for your business.

·       Incorporation as a Sole Trader - Most startups is registered as Sole Traders because it is the easiest and cheapest way to start a new business. You must register with the HM Revenue and Customs as soon as possible after starting your business. Learn how to setup and register as a sole trader.

·       Incorporating as a Partnership - If you plan to work alongside people you know well, for example with your spouse or a relative, you may want to establish a formal partnership. With this business structure, you share the responsibility for your business with your partners and must agree on how to share responsibility and profits. A business partnership is unlimited and so it differs from a limited liability partnership.

·       Create a Limited Liability Partnership - This is basically a business partnership associated with an LLC. This means, like an LLC, that you are liable for business debts up to the amount you have invested in the partnership. However, your tax situation is the same as with a business partnership.

·       Incorporation as a Limited Company - A limited company is a private company owned by its shareholders, in which you as the owner are liable for business debts up to the value of your shares. The limited company's finances are separate from your own, and taxes are more efficient for a limited company than for a sole trader. You will have to submit complete accounts and pay corporate tax each year. Profits from a limited company can be taken as a salary or as a dividend, and you will have to pay income tax on this as well.

Rate your money

Starting a business can be expensive, so it's important not to overspend. Aim to minimize costs and only spend on the important things that are likely to lead to more sales.

Many new businesses require financing when first starting out. To apply for a business loan through a bank, you must be a resident of the UK, plan to start a business and not be bankrupt or in debt. Angel investors are another great way to rise funding, and they've helped companies including Google and Yahoo. However, they usually require around 25% return on their investment. Alternatively, you can source from Start Up Loans Company.