How to start a business: an 11 step guide to success

Setting up a business is a huge milestone, one that could quite literally change your life, but it requires a lot of planning, work and time to be a success. 

In this guide, we’ll talk you through the factors you need to consider when starting a business – from coming up with your initial business idea to drawing up a business plan, building your team and growing your business. 

Need an idea? Check out our business ideas page where you’ll find hundreds of ideas spanning industries and niches. 

Step 1. Be clear on your idea

Every business starts with an idea. If you’re already wondering how to start a business then chances are you already have some sort of idea.

Now you need to refine it. 

The key to coming up with and refining a great business idea is to be clear on your “why”. Why are you launching this business? And why should people care? 

You also need to find your niche. What can you offer that nobody else can?

Be clear on who you are creating this business for. The best businesses have a clear target audience in mind, targeting specific ages, genders, demographics and locations.

Think carefully about the value you will provide to your target customers and what you can offer them that isn’t already on the market.

Step 2. Do your research

Research is an essential step in learning how to start a business. 

Research allows you to see if your idea is worth pursuing and what kind of market you’ll be entering. 

There are various types of research you’ll need to undertake when starting a business in the UK.

Market research

Market research allows you to get a strong understanding of the market you want to enter and your competition.

Start by doing a simple online search to see what businesses are already operating in your niche, otherwise known as your competition. 

Look at what options customers already have available to them and determine what works for these businesses and what you think you can do better. 

It’s also a good idea to read market reports and data on the industry you want to enter – it’s never a bad idea to read these regularly. Finding out how your chosen industry is currently performing will ensure you can be as clued up as possible and that your business will be a solid financial investment.

Audience research

This gives you the chance to speak directly with your intended market, gaining invaluable insight into what they want and how they shop.

Usually, audience research will take the form of a physical or online survey and will ask questions that provide insight into their shopping habits, online habits and favourite brands.

Business research

While we all like to believe we’re experts at everything, that’s not always the case. When looking to get a business off the ground,  you should endeavour to learn as much as you can about the particular sector.

From starting to running and growing a business, there’s a lot to learn. Immersing yourself in educational resources such as videos, podcasts, interviews and of course, articles on startups.co.uk is a good way to begin

Step 3. Creating a business plan

Once you are sure of your business idea, it’s time to write a business plan.

A business plan lays out exactly what you envision your business to look like, who it will serve, its purpose, and its end goal. 

A business plan is a roadmap for your business and should be able to be used by various stakeholders. If you want to attract investment for your business (more on that later) then a solid business plan allows potential investors to understand what your business is about and where it’s headed – and where they can ultimately fit in and contribute

Your business plan should include:

• The business’ mission statement and its goals.
• Market and competitor research.
• Products and services.
• Marketing and growth plans.
• Any financial plans and projections.

A business plan can also be a great way of identifying weaknesses in your business idea. Finding them now allows you to act on them before you launch and enables you to iron out any stumbling blocks before you “go live”. 

Ready to get started with your business plan? Take a look at our free business plan template to help you out.

Step 4. Review your finances

Unless your name is Jeff Bezos and your business idea is “Amazon” then chances are you don’t have an unlimited pot of money for starting a business.

Starting a business comes at a cost so you need to have a plan in place for how you plan to cover those costs.

There are a variety of ways you can finance your startup:

• Business loans: a business loan is a popular choice for funding startups and is where you borrow a sum of money from an organisation, usually a bank, to fund your business. Business loans allow you to borrow up to £25,000 at a fixed interest rate of 6%. You will then repay the loan over a one- to five-year period.
• Small business grants: small business grants are non-repayable sums of money issued by organisations or the government. There are various grants set up for specific purposes and business types such as grants for women and minority groups. 
• Angel investors: an “angel investor” is a single individual who provides upfront capital in return for a stake or equity in the business. 
• Venture capital: a venture capital fund is a fund made up of contributions from individuals and companies. Venture capital funds are then usually invested in startups in return for equity.
• Equity crowdfunding: equity crowdfunding allows you to attract funds from a diverse range of investors in return for equity. 

Step 5. Choose a structure

Before officially launching your business you’ll need to decide exactly what type of business it is and choose your company structure.

There are three common options:

• Sole trader
• Partnership
• Limited company

All three options come with different responsibilities, tax rules and considerations. 

Sole trader

As a sole trader, you’ll own the business entirely and be entitled to all the profits, but you’ll also be responsible for any and all liabilities.

Register as a sole trader if you are:

• Not sure how profitable your business will be
• Prefer simplicity
• Don’t want lots of admin to sort

Find out how to register as a sole trader in the UK.

Partnership

A partnership is similar to a sole trader but you split all profits and liabilities between multiple founders.

Register as a partnership if you are:

• Setting up your business with multiple founders
• Want to avoid sole responsibility
• Want to retain all of your profits

Limited company

A limited company is a private company where your liability is only tied to the amount you have invested.

Register as a limited company if you:

• Sure your business will be profitable
• Sure you will grow quickly
• Are wanting to work with agencies

Remember, you can change your business structure further down the line, but it’s an important decision that requires careful consideration. Consider speaking with an expert if you’re unsure.

Find out how to set up a limited company in the UK.

Step 6. Do your admin

Yes, we know it sounds boring, but unfortunately, there’s a lot of admin to do when setting up a business in the UK.

You’ll need to register as self employed, trademark your company name and set up your business email amongst other things.

How to register your business name

To register your company name, make an account on the Companies House website and use the company name availability checker to make sure your chosen name isn’t taken, or too similar to an existing company’s name.

Once that’s confirmed, you’ll need to input some basic information, like a business address and director names.

How to register for corporation tax

An important part of registering a limited company is signing up to pay corporation tax. This must be done within three months of trading or you will receive a penalty from HMRC. Sole traders do not need to register for corporation tax.

How to trademark your business name

Many entrepreneurs incorrectly assume that registering a business on Companies House means that their brand is protected. In reality, without a trademark, it is easy for another business to come along and claim your name or logo.

Make sure you apply for a trademark to ensure you protect your brand. 

Remember, there are costs for registering your business and trademark so be sure to account for that in your budgeting. You can find all the relevant up-to-date companies house fees here.

Step 7. Set up shop

Next, you need to set up shop, either literally or figuratively. 

If you plan to operate online then you’ll need an engaging and user-friendly website. If you have the skills you can build it yourself, or you can hire a professional web designer to do it for you.

Remember, your website is your online storefront and should be a professional and engaging reflection of your brand.

Take a look at our how much does a website cost guide to give you an idea of how much budget you will need to set aside. 

If you plan to operate at an in-person premises then it’s time to get property hunting!

When finding a property to either rent or buy, there are things you need to consider such as:

• Where are your customers based? 
• Do you need to be in a specific location?
• Where are your competitors based? 
• Do you want to be close by or do you want to open in a new location to have exclusivity?
• How close do you need to be to your suppliers?
• What type of property are you looking for?

Think about the size you need and the layout you want to look for. Consider if you’re willing to make changes to the property (with planning permission) or if you are looking for something ready to go.

Step 8. Choose your suppliers

Most businesses will need to find a supplier of some sort to launch.

While those intending to sell products will need to find a supplier to source the items from, those offering a service will need to find a supplier to purchase tools and equipment. 

For example, a nail artist may not be selling specific items but will need a good and reliable supplier for things such as nail polish and acetone. 

A reliable supplier is crucial if you want your business to be a success. You need to be sure that your supplier will be on time and up to scratch. If they let you down it’s your customers who will suffer, impacting your business reputation.

It’s not just product and equipment suppliers you need to find either. If you’re selling items online you’ll also need to choose a reliable shipping company to deliver your parcels. 

Some startups choose to fulfil their orders in-house, while others opt to use a fulfilment centre to save time and space. 

Below we’ve listed some of the things you need to consider when choosing a supplier, whether it’s for fulfilment, shipping or products:

• Cost: be sure to look for the best deal to keep your outgoings as low as possible.
• Quality: the quality level you opt for will impact how much you can charge customers.
• Reliability: ask for references for your chosen supplier, you need one that you can rely on. 
• Location: if you can opt for a local supplier, you’ll be able to reduce shipping costs and your carbon footprint.
• Ethics: ensure your supplier is ethical and is a business you want to enter into a long-term partnership with.

Step 9. Branding and marketing 

To launch a successful business you’re going to need customers. Whether you’re selling products or offering a service, you need an engaged audience who will turn into return customers.

Your business needs to be out there for everyone to find.

Branding refers to everything to do with the identity of your business. Think about everything from your logo and brand colours to the tone of voice you use in your communications. 

The best and most successful businesses have a memorable brand identity that stands out from the crowd and is easily recognisable. 

Once you’ve created your brand and your business is ready to go, you can start advertising it.

“Advertising” and “marketing” are broad terms, and you’ll need to determine which areas you want to invest in. Think about your business and what you offer and most importantly, your target audience.

For example, if you want to attract a local audience to your new shop then advertising in the local press could work perfectly. 

Meanwhile, if you want to target a specific demographic, consider opting for targeted ads on social media.

Step 10. Grow your business

Once you understand how to start a business, it’s time to keep the momentum going and grow your business.

Not everyone has ambitions to take over the world, but we bet you want your startup to do well and turn a profit at least.

Growing a business takes time but be sure to be on the lookout for growth opportunities.

Some of the most common growth opportunities include:

• Return customers: by offering an excellent service, you encourage customers to return to you time and time again. Not only this but word of mouth and real-life recommendations can help to spread your business far and wide.
• Networking: building connections with relevant industry experts and potential stakeholders is a great way to gain more knowledge and insight into your market and open your business up to new opportunities.
• Innovation: developing new products or diversifying your offering can be the perfect way to open your business up to a whole new audience.

How much does it cost to start a business?

How much it costs to start a business in the UK will depend on a variety of factors including your business type, if you plan to have a premises and if you need to purchase stock.

The average startup costs £5,000 to launch, according to research, but of course, you’ll also need funds to see you through at least your first year.

Some of the things you may need to factor into your budgeting are:

• Registration fees such as Companies House and trademarks.
• Professional fees such as hiring a legal expert or an expert to help you draft a business plan.
• Marketing and branding fees such as web design, logo creation and social media management.
• Recruitment and salary if you intend to hire staff.
• Property fees and rent
• Stock and supplies.

How to start a business with no money 

If you’re wondering how to start a business with no money, then your first question is probably, can it be done?

While the short answer is yes, we can’t promise that it’ll be easy. 

To keep costs as low as possible there are some things you can do:

• Keep your day job: launching a business as a “side hustle” may take longer and result in next to no social life, but it will allow you to continue bringing in a monthly wage until you turn a profit.
• Opt for something with no upfront cost: not every business idea requires an initial outlay. Business ideas that can be started for free include freelance writing and tutoring. 
• Dropshipping: if you want to sell products, then a dropshipping model, where you don’t purchase the stock until a customer places an order, is a great way to keep expenses to a minimum. 

Final thoughts

So there we have it, an in-depth guide on how to set up a business with actionable steps for you to implement.

From honing your business idea and conducting research, to registering with HMRC and choosing your suppliers, we’ve covered everything you need to get started.

The most important piece of advice though is to get stuck in, keep learning and be ready to make mistakes – it’s all a learning curve, and every stumbling block is an opportunity to learn a lesson!

We know it can be daunting, but with these tips to guide you, you’re ready to go!

If you’re still short on ideas, don’t forget to check out our business ideas page for inspiration and practical tips to help kickstart your entrepreneurial journey.