What business networking groups are available?

There are many different networking groups in the UK for businesses. Here are some of the main organisers:

There is an abundance of different networking groups available to join for businesses in all sectors and locations. Some groups set specific joining criteria to ensure they take members with similar approaches or requirements, such as size of company or professional background.

It is possible to establish connections through a variety of different channels, including:

Trade – for development opportunities, you can find trade associations at the Trade Association Forum website.

Employers’ federations – business support and best practice on employment issues can be found at organisations such as the Federation of Small Businesses, the Forum of Private Business and the British Chambers of Commerce, as well as the Confederation of British Industry.

Regional / local organisations – your local Chambers of Commerce can provide valuable advice and support as well as up-to-date local news. The British Chambers of Commerce website gives details of individual regional organisations.

Community organisations – these are action groups that represent local, social or ethnic interests. The Business in the Community website offers information about community organisations.

Education and research organisations – the Higher Education Academy website gives details on which organisations participate in networking. These organisations aim to explore development initiatives and provide access to research into markets, products and best practice.

Learning networks – these offer training and development events for managers and employees to keep them up-to-date with current theories and to hear from key speakers and researchers. To access these networks, approach trade bodies that are relevant to your particular industry and / or location.

These are some of the UK’s major business networking organisers:

British Chambers of Commerce (BCC) – this is a national business network of accredited chambers of commerce across the UK. It helps British businesses thrive by working with the government to shape business policy and also by offering services and advice for businesses. Members can benefit from its services online and can meet other businesses by attending BCC-hosted events.

The Federation of Small Businesses (FSB) – this is the UK’s largest campaigning pressure group promoting and protecting the interests of small businesses, by lobbying the government and organising conferences for its members, as well as offering online discussion forums.

The Forum of Private Business (FPB) – this organisation provides business support and protection to small and medium sized businesses across the UK. It offers free breakfast networking events to members, where they can meet other small business owners as well as getting practical business advice from expert speakers. 

The Confederation of British Industry (CBI) – as ‘the voice of business’, this is a lobbying organisation for UK businesses on national and international issues. The group runs conferences, events and meetings for its members on both regional and national levels. 

The Institute of Directors (IoD) – this is Europe’s largest membership organisation for business leaders. One-day conferences and free seminars are on offer to members which provide great networking opportunities while bringing key industry information up-to-date.

The Met Club – this is a relaxed and informal members club where business people can meet and socialise and discuss all things business-related.

The British Council – as the UK’s international cultural relations body, it provides businesses with introductions to high-quality professionals in key industry sectors from international markets.

Business Networking International (BNI) – is the largest business network in the world, where members can share ideas and contacts.

NRG Business Networks – organises facilitated business networking events for its members, who are mainly independent professionals that are either self-employed or working for small or medium sized businesses.

The Business Network – 17-years since its launch, this group offers monthly lunchtime events to senior decision-makers where they can develop a support network of business contacts.

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How to become a nutritionist

Learn how to start a successful nutrition business with this step-by-step guide. Discover expert tips for launching and growing your brand in the health and wellness industry.

If you know your antioxidants from your additives, or your macros from your micros, you might be thinking about starting a nutrition business.

Whether you’re an expert health coach or a meal prep pro, starting a business could be the perfect way to turn your nutrition knowledge into income.

But before you get started there’s a lot to consider. We’ll take you through everything you need to know to start a thriving business in this detailed guide – from legalities and logistics to branding and budgeting.

Should you start a nutrition business now?

The health and wellness industry is booming, with the specialised nutrition market expected to grow by at least 6.3% between 2025 and 2030. It’s a great time to get in on the action.

Whether it’s personalised meal plans, plant-based nutrition, or gut health supplements, there’s a huge demand for expert guidance – and consumers are willing to put their money where their mouth is to pay for their health.

There are also new wellness trends, such as fermented foods, sea moss and a focus on brain-boosting ingredients, popping up on a regular basis, meaning you’re bound to find one that aligns with your own skills and passion.

But, like with any industry, getting into the health and wellness space doesn’t come without its hurdles. Regulations around nutrition can be complex, it’s a heavily regulated industry, and you’ll need to make sure you meet the necessary requirements around the Food Safety Act and UK nutrition laws.

Competition is also fierce, you won’t be the only nutrition business out there, but with the right branding and business plan (more on that later), you can stand out from the crowd and make your nutrition business a success.

How to start a nutrition business in 5 steps

If you’re ready to start a nutrition business then this step-by-step will help you get your idea off the ground.

1. Create a business plan

To get started with any business you need to create a business plan.

This is a strategic document that outlines every aspect of your business, including your niche, target audience, budgets, projections, and funding sources. This will be your guide as you build your startup. As well, it’s a great resource to showcase your business in detail to potential investors.

One of the most important decisions you’ll make within your business plan is your niche. You’ll need to use your own skills and knowledge to inform what type of nutrition business you want to run.

Some ideas of nutrition business niches are:

  • Personalised nutrition plans for specific groups, such as athletes, runners, or pregnant women
  • Healthy eating workshops for businesses
  • Family meal planning/cooking classes
  • Vegan meal delivery service 
  • Supplements for specific groups, such as post-natal women or marathon runners

Your business plan should also detail how you intend to finance your nutrition business, which can come from personal savings, loans, small business grants, or crowdfunding.

2. Handle the legal stuff

When starting a nutrition business, you’ll need to comply with various legal regulations.

It’s a good idea to get ahead and handle the legal stuff at the start so you know you’re fully compliant, and won’t get any nasty surprises – such as fines or even an order to shut down your business – further down the line.

To make sure your nutrition business is legally compliant, you’ll need to:

  • Register your business and decide whether to operate as a sole trader or a limited company
  • Make sure you have the correct certifications and qualifications. If you plan to offer meal plans, you should have a nutrition degree and be registered with the UKVRN (UK Voluntary Register of Nutritionists)
  • Take out public liability insurance (public liability insurance covers you if a member of the public is injured as a result of your business operations)
  • Understand food labelling laws – and if you plan to prepare and/or sell food, you’ll need a food standards and hygiene certificate
  • Ensure you are GDPR compliant with any customer data you collect

A major pitfall to avoid is making misleading health claims. Be careful with your wording and don’t make promises that aren’t backed up with science. Making false claims about your products or services can ruin your reputation and make it hard for customers to trust you, not to mention you might find yourself in trouble with the law too!

3. Find your suppliers

The next step is to source or create the products or services you wish to sell through your nutrition business.

How you go about this will depend on the business model that you choose. For example, if you’re offering a digital product or service, such as meal plans or online consultations, you’ll need to choose a software use and the branding style of your business.

For those who want to sell physical products, this step will likely take a little longer. You’ll need to build a strong supplier network in order to source your products (or the ingredients and tools you need to create them yourself).

When choosing a supplier make sure to answer these questions:

  • Do they meet all of the relevant health and safety standards? Familiarise yourself with the UK Food Standards Agency regulations to be sure.
  • Can they handle large bulk orders – and is there potential to scale as your business grows?
  • Are they cost-effective without sacrificing quality?
  • Do they offer a sustainable solution to sourcing and creating the relevant items?
  • Can they provide third-party testing and results?

4. Build an online presence

In today’s digital world, one of the best ways to grow a business is to build an online presence.

Leveraging digital platforms is a great way to attract clients, build credibility and trust, and ultimately grow and scale your business.

Some of the key ways you can build an online presence for your nutrition business are:

  • Build a professional website – it should be mobile-optimised and include all of the information a customer needs about your business. Add ecommerce functionality to sell your products online, and remember to add detailed product descriptions and ingredients lists. Clearly display your qualifications and certifications on your website too to build trust
  • Leverage social media marketing – platforms like TikTok, Instagram, and YouTube will attract a wider audience to your brand. Create engaging and informative content that positions you as an expert they can trust
  • Build an email list for lead generation – get customers to sign up to your email marketing and deliver content straight to their inbox. Focus on informative and quality content that is unique to your subscribers

Take a look at our guide to target marketing for all the tips on how to connect with your target audience.

5. Scale and grow

Once your nutrition business is up and running, the next step is to think about scaling it.

In order to achieve long-term success and growth you’ll need to take a strategic approach and keep a close eye on what works and what doesn’t.

Some of our top tips for scaling your nutrition business are:

  • Diversify your services – Expand your offering to attract more customers and drive revenue. Ideas include offering a subscription model for supplements or meal prep and offering online consultations for those who are not in your local area.
  • Make the most of technology – Technology can be your best friend when trying to scale, setting up an automated booking system to reduce your admin hours and using CRM software to track client progress and feedback are just two ideas.
  • Analyse and optimise You need to understand what’s working and what isn’t. Keep a close eye on performance and track key metrics, like sales or return customers, over set periods of time.

What do you need to set up a nutrition business?

Now that you know how to set up your nutrition business, here’s what you need to actually do it:

  • The right qualifications – Make sure you have obtained all of the relevant qualifications and licences such as registering with the Food Standards Agency.
  • Products or services – Source your products or build your services to be the best on the market. You may need to partner with wholesalers to provide what you need where you may find the cost of ingredients to be cheaper.
  • An online presence – You’ll need to build a website and create social media accounts for your business.
  • Payment systems – Make sure you set up a reliable payment system, such as Stripe or PayPal, to take customer payments.

How much can you expect to pay?

The cost of starting a nutrition business can range from £1,000 – £20,000 depending on the business model you opt for and the products/services that you offer. However, below we’ve listed a rough breakdown based on some of the most popular nutrition business models:

Online consulting

If you plan to offer online nutrition services, such as coaching and meal plans then you should budget between £1,000-£5,000. This will cover the cost of any certifications and qualifications, a website, and your marketing.

Supplements

For a supplement business you should budget between £5,000 – £20,000. This is a big range but that’s because it all depends on the ingredients and suppliers you wish to use. You’ll also need to pay for your ecommerce site, marketing, branding, packaging, and fulfillment.

Meal prep services

Meal delivery services will likely need aound £10,000 to get started. This will cover the licenses you need, equipment, ingredients, marketing, and delivery.

There are various ways you can save money when starting a nutrition business. We recommend starting online to grow your audience before investing in a physical location, making use of free marketing options such as social media before investing in paid ads and partnering with local influencers in your niche to further your reach.

Conclusion

Starting a nutrition business can – and should be – an exciting and rewarding venture that allows you to help others improve their health while building a successful career for yourself.

By obtaining the right qualifications, creating a solid business plan and investing in the right marketing strategies, you can build a credible and thriving business that customers trust.

Whether you’re focusing on one-to-one coaching, selling meal plans or creating snazzy new supplements, the key to success is to stay informed, adapt to industry trends and build a strong relationship with your customers.

Lucy Nixon profile
Lucy Nixon - content writer

With 10 years experience in the digital marketing industry, Lucy is a content writer specialising in ecommerce, website building and all things small business. Her passion is breaking down tricky topics into digestible and engaging content for readers. She's also committed to uncovering the best platforms, tools, and strategies, researching meticulously to providing hand-on tips and advice.

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Cameron reveals plans to support 40,000 new enterprises

Government overhaul of business support to start-ups

The prime minister David Cameron will today unveil plans to support the creation of 40,000 new businesses over the next two years by offering loans and grants to budding entrepreneurs.

First launched in October, the New Enterprise Allowance was originally expected to assist half that number of start-up firms, however the new target forms part of a significant overhaul of the way the government supports new businesses. The scheme will be launched in Merseyside this month, with a national rollout expected by autumn.

Under the scheme, unemployed people who can prove they have a robust business plan will receive allowances of £1,275 over six months. They will also be connected to volunteer mentors from local business communities who can assist with business planning and if their plans are strong enough, they may then receive a loan of up to £1,000 from Jobcentre Plus to cover start-up costs.

Mr Cameron is expected to say: “It is vital that we ensure businesses, and those people who find themselves out of work but have the drive and desire to set up their own business, have all the advice, support and mentoring they need. Together we can make the years ahead some of the most dynamic and entrepreneurial in our history.”

Other measures introduced by the government to boost business support includes the closure of regional Business Link advice centres by November 25, which will be replaced by a combined website and contact centre to support general business enquiries.

Business minister Mark Prisk also announced the re-launch of the Business Link website in April which will contain new features and a searchable database of central government contracts.

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The role of a chairman

What should your chairman do for your business? Experienced CEO, chairman and director David Soskin dissects the role – and examines the key attributes needed for success

Startups.co.uk is reader supported – we may earn a commission from our recommendations, at no extra cost to you and without impacting our editorial impartiality.

What should your chairman do for your business? Experienced CEO, chairman and director David Soskin dissects the role – and examines the key attributes needed for success.

Few stories about corporate Britain have caused as much uproar in recent years as Sir Stuart Rose’s move to make himself chairman as well as CEO of Marks & Spencer in 2008. As soon as the appointment was announced, a major shareholder revolt developed.

One of the core principles of good corporate governance – embodied in the so-called ‘Combined Code’ – is that quoted companies should split the chairman and chief executive roles. Britain is poor at a number of things: World Cup football, getting trains to run on time and predictable weather. But it is generally acknowledged that in matters of corporate governance Britain is a world leader.

The independent chairman role is fundamental to this as a counterweight to strong-willed CEOs. The former’s role is to represent the interest of all shareholders. As such it is as helpful to private companies as it is to public ones – providing the appointment is the right one.

What might you expect from a good chairman? Here are some highlights drawn from my own experience as a board chairman, a company director and a CEO. The chairman should: Act as a buffer between the CEO and other board members as well as investors. For this reason, it is important that the chairman is truly independent and not a crony of the CEO. Investors should be alert to the dangers of a board packed with the CEO’s appointees. In venture-backed businesses there are often stresses between investors and executives. The chairman’s role is to resolve such differences in the most constructive way. Be neutral. I once sat on a board with a chairman who tried to persuade the company (unsuccessfully) to merge with another venture in which he was involved. He seemed oblivious to the conflict of interest.

Understand the business. On one new media board on which I sat there was (briefly) a chairman from outside the digital industry. I am sure he was very good at his previous job. But, as chairman of a fast-growing online business he simply lacked the necessary experience. That is not to say the chairman should constantly second-guess the CEO or try to run the company; that is the CEO’s job. But a good chairman can help create the strategic vision and be a sounding board for the CEO.

Ensure that board meetings take place regularly and that the views of all board members are properly aired. That means being a good listener as well as something of a diplomat if the going gets rough. A good chairman keeps board meetings short, sweet and to the point. They should not be long drawn-out affairs which waste time and sap energy. Short meetings with a focus on key strategic and governance issues are the ones which work best.

Insist that proper governance standards are met. For instance, proper management accounts should be produced regularly. This is not easy in early-stage companies with slim resources, but crucial for the health of the business. When I worked at FTSE 100 company Redland the chairman sent out the board papers a week ahead of the meeting. Any papers missing the deadline had to wait until the next meeting. This is good practice: board members are prepared and are not bamboozled by a plethora of last minute information. It makes for more effective discussion.

Be well connected and able to help companies access customers, the right advisers and possible business partners. There is a perception that chairmen are a ‘nice to have’ but not essential component of a well-run business. Nothing could be further from the truth.

Startups.co.uk is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps Startups.co.uk to provide free reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews.

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How to register as self-employed

So you've decided to take the leap to becoming self-employed – congratulations! Here's what you need to know about registering with HMRC.

As of August 2024, there were over 4.2 million self-employed people in the UK. Starting a business in this way can offer greater flexibility, and means you can pick and choose the jobs you’d like to take on – but it also means that you are responsible for handling your own tax, National Insurance and student loan payments, plus keeping track of your expenses.

If you’re considering making the switch to self-employment, it’s important to understand how this works with HMRC, and what will be expected from you.

In this article, we’ll  explore how to register a self-employed business, when to do so and what to do if you’ve gone down the limited company route (and incorporation with Companies House), and what to do once your registration is complete. Don’t worry – it’s not too tricky…and best of all, you’ll only have to do it once!

Do I need to register as self-employed?

You will need to register as self-employed if you earn over £1,000 in a tax year. This is a low threshold, so it’s probably best to register as self-employed as soon as you begin earning money – you don’t have to, but it’s better to  before your business really kicks off and you have less time for the all-important admin jobs.

You’re likely to be classed as self-employed if:

  • You run your business operations and plan the overall strategies 
  • You have customers that pay you for your services
  • You decide how often and when you work

When do I need to register as self-employed?

You’ll need to register as self-employed as soon as you decide that’s the direction you want to go in. The next step will then be to submit your working status to HMRC, the UK’s tax authority ready for self-assessment.

Self-assessment refers to HMRC’s system of collecting income tax – you should register for self assessment and Class 2 National Insurance payments by no later than the 5th October in the second tax year of your business operating. 

For example, if you started working as self-employed on 1st February 2025, you would need to register as self-employed with HMRC by 5th October 2026. If you don’t, you could be fined – and of course, that’s not ideal.

How do I register as self-employed?

Registering as being self-employed with HMRC can feel a scary and overwhelming step, but it’s really quite easy. Follow the below steps and you’ll be ready to go in no time.

Step 1: make a Government Gateway account

On the gov.uk website, set yourself up with a Government Gateway account – this will become your login details for your self-assessment. You’ll need to then enter your email address, and then you’ll be sent a user ID so you can complete the next steps.

Step 2: complete your registration

Once you receive your user ID, sign in and complete the form to register as self-employed. You will need to add personal details and know key business details to do this, like , the date you started trading, and the type of work you’ll be doing. 

Step 3: get your UTR number

Once the form has been completed, you’ll just  need to wait to receive a letter in the post from HMRC. This letter will have your 10-digit Unique Taxpayer Reference (UTR) number. Keep this safe and jot it down in a few places for safe keeping – you’ll need it to complete yourself-assessment tax returns. 

Congratulations – you’re officially self-employed!

Other ways to register

If registering as self-employed online isn’t convenient for you, you can also do this via post and phone:

  • To register via phone, call HMRC’s self-employed helpline on 0300 200 3310 and be ready with personal details like your business name and address, National Insurance number and previous tax information.
  • To register via post, download a SA1 form from HMRC’s website. Complete it and post it to the address detailed on the form.

Financial requirements as a self-employed business

Once registered as self-employed, it’s important to keep track of all the invoices you’ve issued to customers, as well as any business-related expenses. This  information is crucial to completing your self-assessment tax returns accurately.

The deadline for sending a self-assessment tax return online is 31st January  every year. When the form mentions ‘payments on account’, these are payments that are made towards your next tax bill and help spread the cost of your tax by making payments in two instalments – each payment is half of the tax you owed last year. These payments are due by midnight on 31st January and 31st July.

If you struggle to make the payment owed in one lump sum, you can contact HMRC directly to set up a payment plan.

Check out the below video from HMRC for tips on how to fill out your self-assessment tax return

Do I need an accountant?

How you complete your tax return is totally up to you – you can either choose to do it yourself with, or without, the help of accounting software, or you can hire an accountant to fill it out on your behalf. Either way, it’s important to keep a detailed spreadsheet of your expenses, invoice dates and fees as these are essential for self-assessment tax returns.

Sole trader, in a partnership or limited company?

When becoming self-employed, you should consider whether you want to operate as a sole trader, in a partnership or as a limited company. Let’s look at what each of these mean.

Sole trader

A sole trader is what it says on the tin – they’re the sole owner of the business and don’t have any employees. This is the most simple type of self-employment and is easy to set up, but also has unlimited liability as sole traders aren’t viewed as a separate entity by UK law. This means that if the business gets into debt, the business owner is personally liable.

In a partnership

Being self-employed as a partnership is the description given to two or more people agreeing to join in a business venture together with a view to making a profit. In most cases, all partners own the business equally and are responsible for any profits or liabilities on an equal basis.

This structure means that the owners don’t have the traditional director and shareholder roles in the same way that limited companies do. However, every partner is liable for the partnership debts.

Limited company

A limited company is a type of self-employed business structure with its own legal identity.  Separate from its owners (shareholders) and managers (directors), it is governed by UK company law. A limited company has limited liability, meaning that unlike sole traders and partnerships, it is a legal entity separate from both its shareholders and directors.

Such businesses are more complicated to set up and run, often requiring specialist advice from external parties like solicitors – and one major downside is that this can be expensive. Limited companies must be incorporated at Companies House, the public registry, and must file their accounts annually.

Not sure whether being a sole trader or limited company is better for you?

Head to our handy guide on choosing the right company structure and which may work best for you and your business plans. 

Taking the leap

Becoming self-employed is a huge, yet exciting, step in a person’s career. Having a clear understanding of what is involved and the expectations from HMRC is important, but once you know this, it’s a simple process to become registered. 

Remember, you must file a tax return every January and be sure to keep an accurate log of all invoices and expenses to help you fill this out – although time consuming, it’s much easier to do this throughout the year than to dig out all of your bank statements and fill them out in one go.

For more advice on being self-employed, check out our guide to essential workers’ rights contractors and the self-employed should know.

Mid shot of Kirstie Pickering freelance journalist.
Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, UKTN and Maddyness UK. She also works closely with agencies to develop content for their startup and scaleup clients.

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Small business rates relief

Find out if your startup qualifies for tax breaks, and what COVID-19 means for your business rates

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Under previously announced legislation, hospitality, leisure and retail companies can get 66% business rates relief until the end of the 2021-2022 tax year (5 April 2022).

Nurseries are also entitled to the same discount. To be eligible, your business must be on Ofsted’s Early Years Register, provide care and education for children up to five years old (the early years foundation stage), and not be a local authority-run nursery.

If these new business rates relief measures apply to your business, you do not need to take any action. Your local council will apply your discount automatically, which may involve re-issuing your bill.

If you’re a small business owner then you might be eligible for business rates relief through the government’s Small Business Rates Relief scheme (SBRR).

This relief cuts the amount of business rates you have to pay, lowering your overheads and freeing up cash for investing in growth.

In some cases you are exempt from paying anything, but many business owners are unaware of the rates relief on offer to them.

Wondering whether you’re eligible? And how much it will actually save you? And how you can even get it?

In England, you can get small business rate relief if you only occupy one property with a rateable value of less than £15,000.

To find out your rateable value visit our guide on how to calculate your business rates.

If your property has a rateable value of £12,000 or less you will get 100% relief from business rates. This rate will gradually decrease from 100% for properties with a rateable value between £12,001 to £15,000.

For example:

  • A property with a rateable value of £13,500 will net you 50% off your bill
  • One with a rateable value of £14,000 will give you 33% off

But what if you have a second property?

If you have a second property you can keep relief on your main property for a year and beyond as long as:

  • None of your other properties have a rateable value of above £2,899 and…
  • The total rateable value of all your properties is less than £20,000 or £28,000 in London

The rateable values of the properties are added together and the relief applied to the main property.

You can find out if you qualify for small business rates relief by contacting your local council.

How to calculate your business rates

Your property’s rateable value is its open market value on 1 April 2015, based on the Valuation Office Agency’s estimation.

To calculate your business rates, multiply the rateable value by the correct ‘multiplier’ (see table below). This will tell you how much to pay in business rates before relief is deducted.

If your property is worth £51,000 or more, use the standard multiplier. If it is worth less than £51,000, use the small business multiplier. However, if paying business rates for before 2017 to 2018, use the small business multiplier if your rateable value is below £18,000 (£25,500 in Greater London).

YearStandard MultiplierSmall Business Multiplier
2026 to 202748p43.2p
2025 to 202655.5p49.9p
2024 to 202554.6p49.9p
2023 to 202451.2p49.9p
2022 to 202351.2p49.9p
2021 to 202251.2p49.9p
2020 to 202151.2p49.9p
2019 to 202050.4p49.1p
2018 to 201949.3p48.0p
2017 to 201847.9p46.6p

Charitable rate relief

Charities and small community sports clubs are entitled to get their business rates bills reduced by 80%.

Other non-profit organisations can apply for up to 100% ‘discretionary relief’, which is decided by local councils.

Rural relief

If your business is in a rural area, you may be able to claim rural rate relief of between 50% and 100% off your business rates.

This includes a village shop with a rateable value below £8,500, a pub or petrol station with a rateable value of up to £12,500, or any other rural retail businesses with a rateable value of up to £16,500.

To qualify for rural rate relief, your business must be based in area that features in the rural settlement list for a defined settlement where less than 3,000 people live.

If you’re finding it difficult to pay, you may be able to get hardship relief, although this is usually available only to businesses that are significant to the local community.

Again, local councils can decide whether to top up the relief from 50% to 100%.

Enterprise Zone relief

If you’re starting a business within an enterprise zone or relocating to an enterprise zone then you qualify for enterprise zone relief and access up to £55,000 a year for over five years.

Enterprise zones that are included within this relief are listed here and to find out how to apply for the relief you need to contact your enterprise zone area.

Buildings exempt from business rates

The following types of buildings may be exempt from paying business rates:

  • Agricultural land and buildings, including fish farms
  • Buildings used for training or welfare of disabled people
  • Buildings registered for public religious worship or church halls

You also do not have to pay business rates on empty buildings for three months. After this, you will have to pay full business rates.

Useful resources

Read our guide on how to calculate your business rates for more information on business rates payable. You can also read our latest update on recent government changes. 

Gov.uk – www.gov.uk/calculate-your-business-rates

Valuation Office Agency –  http://www.voa.gov.uk/

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What are business rates? Calculator and Small Business Rate Relief explained

Calculate your business rates, including rateable value and multipliers, and find out whether your business is eligible for business rates relief or exemption.
Autumn Budget 2025: business rate reforms

Following the 2025 Autumn Budget, the UK Government will introduce permanent lower tax rates from April 2026 for both standard and retail, hospitality, and leisure (RHL) properties in England with rateable values below £500K — setting the small business RHL rate at 38.2p, and the standard rate at 43p.

The Small Business Rates Relief (SBRR) grace period will also be extended from one to three years, meaning businesses will remain eligible for SBRR on their first property for three years after expanding into a new property.

Additionally, the Government is introducing a redesigned transitional relief scheme that caps bill increases for larger properties, alongside an expanded small business scheme that limits rises for the smallest firms and supports RHL businesses as they move to permanently lower rates.

Business rates are a type of tax charged to businesses occupying non-domestic or commercial properties, such as offices, shops, or warehouses.

Business rates are charged by local authorities to finance public services, similar to how you pay council tax. They can represent a significant fixed cost for businesses, making understanding which rates your business is subject to, and what reliefs you’re eligible for, important.

In this article, we’ll guide you through everything you need to know about business rates, including the latest rates, how to calculate them, how to pay them, and any relief or exemption you may be entitled to.

💡Key takeaways

  • The amount of tax your business will have to pay is based on your property’s “rateable value” (RV).
  • In order to calculate your business rates you need to multiply your property’s RV by the correct “multiplier”, which is set by the government.
  • You can determine your business rates bill using the government’s online calculator.
  • Your property’s RV is determined by the Valuation Office Agency (VOA): it’s an estimate of its annual market rent, and typically reviewed every three years.
  • Paying your rates is a critical responsibility for businesses occupying commercial properties.
  • Business rate relief schemes are available to help businesses under specific circumstances.

What are business rates?

Business rates are a tax levied on most non-domestic properties collected by local authorities to help fund public services in the area. The amount of tax each business pays is based on the property’s “rateable value”, which is an estimate of its annual rental value.  

Non-domestic or commercial properties include businesses like shops, offices, bars, warehouses, and rental properties. Even if you only use part of a building for non-domestic purposes (for example, a shop with a residential flat above it), you’ll still need to pay business rates on the area that’s used for business. 

Glossary of business rate terms

Don’t know your ratable value from your revaluation? To help you demystify the jargon, here are some important business rate terms explained. 

  • Multiplier – The number of pence per pound of rateable value that you’ll have to pay in business rates before any relief or discounts are deducted. These are reviewed every year by the government in line with inflation.
  • Rateable value – The estimated value given to a premises, based on its probable annual market rent. These values are reviewed every three years, and take the size of the property and its usage into consideration.
  • VOA (Valuation Office Agency) – The governmental body whose role is to assess and set the rateable value for all non-domestic or commercial properties in England and Wales.

How to calculate business rates

To calculate your business rates, you need to multiply the rateable value for your business by the “multiplier” (also known as the “poundage”) set by the government.

Here is the equation you should follow: 

Rateable Value (in £) x Multiplier (in £/£) = Your annual business rates bill (before any reliefs)

Rateable values are set by the VOA and are regularly revalued to reflect changes in the property market, whereas multipliers are set by the central government and are annually reviewed.

You can also determine your business rates bill using the government’s online calculator.

As of April 2025, the standard multiplier in England has seen a slight increase of 54.6p to 55.5p for properties with a rateable value of over £51,000.

However, as part of the government’s support package for 2026-27, business rates multipliers are set to be lowered to help ease costs and support business growth.

Current business rates multiplier values

YearStandard MultiplierSmall Business Multiplier
2026 to 202748p43.2p
2025 to 202655.5p49.9p
2024 to 202554.6p49.9p
2023 to 202451.2p49.9p
2022 to 202351.2p49.9p
2021 to 202251.2p49.9p
2020 to 202151.2p49.9p
2019 to 202050.4p49.1p
2018 to 201949.3p48.0p
2017 to 201847.9p46.6p

*Updated November 2025

Pro tip

We recommend getting an estimate of what your business rates bill is likely to be this year through the Find A Business Valuation service on the government website.

If you haven’t already, we also recommend setting up a Business Rates Valuation Account. This can be used to inform the VOA about any changes to your property details, such as floor area sizes and parking. It can also be used to appeal a new rateable value if you think it has been set too high.

It’s worth knowing how to calculate your business rates yourself to ensure you’re paying the right amount, and to plan your financial year. To do this, simply:

  • Search for a property’s rateable value by postcode
  • Find the correct multiplier for the size of your business and location
  • Multiply your rateble value by the correct multiplier

Example calculation

Here’s a quick example to see how the calculation works in practice:

Jaya has a business in East Anglia. The rateable value of her business is £8,000. Currently, she should use the 2025-26 business multiplier (49.9p) to estimate her business rates as follows:

£8,000 (rateable value) x £0.499 (multiplier) = £3,992 (basic business rates)

However, from 2026, the new business multiplier will be 43.2p, meaning she will have to calculate the following:

£8,000 (rateable value) x £0.432 (multiplier) = £3,456 (basic business rates)

As Jaya’s rateable value is less than £12,000, she’ll be eligible for small business rate relief (SBRR) on a tapered basis from 100% to zero.

Small Business Rates Relief (SBRR)

Small business rate relief (SBBR) is a national discount scheme administered by local councils on behalf of the UK government.

In England, you can get SBRR if your property has a rateable value of £15,000 or less. SBBR is handled differently if your property is in Scotland, Wales or Northern Ireland.

The cost of living crisis has put significant cost pressures on startups and small businesses. As of April 2025, inflation in the UK was reported to be at 3.5%. The SBRR scheme was designed to mitigate some of this impact on small, single-property businesses.

How is SBRR calculated?

SBRR is awarded on a sliding scale, depending on the size of your Rateable Value (RV).

Tier of ReliefRateable Value (RV) of PropertySBRR AppliedExamples
Tier 1: Full Exemption£12,000 or less100% reliefIf your business's RV is £11,000, your business rates bill will be £0
Tier 2: Tapered ReliefBetween £12,005 and £15,000Gradually decreases from 100% to 0%If your business’s RV is £13,500, your business rates bill will be 50%
Tier 3: Multiplier BenefitBetween £15,005 and £50,9990% reliefIf your business's RV is £40,000, you aren’t eligible for SBRR

What if I own multiple properties?

This relief typically applies to businesses occupying a single property. However, if you run a business with more than one property, such as a cafe, retail store, or restaurant with multiple locations, or car cleaning or gardening business with mobile locations, you can get SBRR as long as:

  • None of your other properties has a rateable value of over £2,899
  • The combined rateable value of all your properties is less than £20,000 (or £28,000 if they’re in London)

From there, the rateable values of the properties are added together, and relief is applied to the main property. You can find out if you qualify for SBRR by contacting your local council.

There’s also a grace period, which applies when a business that already receives SBRR takes on a second property. During this period, the business can keep its SBRR on the original property even though it now has more than one location.

Following the Government’s latest Autumn Budget announcement, the grace period will be extended from one year to three years from April 2026.

What if I don’t qualify for SBRR?

In England, even if you don’t qualify for SBRR, you can still receive a discount on business rates as long as your property has a rateable value below £51,000.

In this scenario, your bill will be calculated using the small business multiplier, which is lower than the standard one (49.9p as opposed to 51.2p).

For example, if you run a cafe in England with a rateable value of £30,000, you won’t be eligible for the SBRR, but your local council will automatically apply the Small Business Multiplier, instead of the Standard Multiplier, to calculate your bill. Therefore, your business rates bill would be £14,960 instead of £15,650, saving you a total of £690.

Can SBRR be backdated?

Yes, SBRR can sometimes be backdated, but strict limits apply. Most councils in the UK typically allow backdated claims up to six years from April 1st of the current year.

To qualify, your business must have met all SBRR eligibility criteria for the period for which you’re claiming, including having a rateable value within the SBRR threshold during that time. You’ll also need to provide evidence proving that you met the eligibility criteria, such as proof of occupancy and rateable value.

Retail, Hospitality, and Leisure Relief

You can also receive relief if you run a hospitality, retail, or leisure business, thanks to the Retail, Hospitality, and Leisure Relief (RHLR) Scheme. The RHLR is a business rates discount rolled out by the UK government to support businesses within these sectors.

The scheme gives all eligible firms 40% off their business rates bills – capped at £110,000 per business. This percentage recently decreased from 70% following the government’s 2024 Autumn Budget.

As an example, a high street shop has a rateable value of £21,500 and a basic bill of £10,728. Thanks to RHL relief, it receives a discount of £4.291.40 (£10,728 x 0.40), bringing the final bill down to £6,437.10.

If a car wash occupied more than one property, it would be entitled to relief for each of its eligible properties, up to a total value of £110,000.

Nurseries are also entitled to the same discount. To be eligible, your business must be on Ofsted’s Early Years Register, provide care and education for children up to five years old (the early years foundation stage), and not be a local authority-run nursery.

If these new business rate relief measures apply to your business, you do not need to take any action. Your local council will apply your discount automatically, which may involve re-issuing your bill.

Changes to RHLR in 2026

The current RHLR scheme is due to come to an end entirely in April 2026, and the Government announced in the 2025 Autumn Budget that temporary RHL relief will be replaced by a permanent system of lower tax rates for the sector.

This doesn’t mean that the government will stop supporting retail, hospitality, and leisure businesses with their rates. A new permanent system means eligible RHL properties with an RV below the threshold (£500K) will be charged permanently lower business rates multipliers — all part of the plan to revitalise the high street with reformed business rates.

What other business rate reliefs are there?

Business rate relief schemes provide support to businesses by reducing or eliminating their business rates under specific circumstances. These are designed to ease the burden and help sustain your business.

Enterprise Zone relief

  • You must be located within a designated enterprise zone
  • You must be a newly occupied property, or one that has recently relocated to an eligible zone

If you’re starting a business within an enterprise zone, or relocating to an enterprise zone, then you qualify for enterprise zone relief and access up to £55,000 a year for up to five years.

Enterprise zones that are included within this relief are listed here. To find out how to apply for the relief you need to contact your enterprise zone area.

Charitable rate relief

  • You must be a charity, or the trustees of a charity
  • Or, a community or amateur sports club (CASC)

Charities and small community sports clubs are entitled to get their business rates bills reduced by 80% with the charitable rate relief. Other non-profit organisations can apply for up to 100% ‘discretionary relief’, which is decided by local councils.

Rural rate relief

  • You must be the only village general store, food stop, or post office with a rateable value of up to £8,500
  • Or, the only public house or petrol station, with a rateable value of up to £12,500

Businesses based in rural areas won’t have to pay business rates if they’re eligible for rural rate relief.

To qualify for rural rate relief, your business must be located in a designated area of rural settlement listed in the rural settlement register, with a population of fewer than 3,000 residents.

Hardship relief

  • You must have financial difficulties without it
  • It must be in the best interests of local people

If your business is eligible for hardship relief, your local council can reduce or scrap your business rates. To get this relief, the council must agree that your business will be in financial difficulties without it, and that relief would be in the interest of your local community.

However, you may be asked for proof of your financial situation or how your business benefits the community.

Low-carbon heat network relief

  • You must take your energy from a low-carbon source
  • You must supply heating and cooling to other properties in your area

For properties that are wholly or mainly used as a heat network, and that meet specific low-carbon criteria, the low-carbon heat network relief provides a 100% exemption for business rates. The aim of the relief is to lower operational costs for these properties, to help the UK reach its net-zero targets.

You can find out more about additional relief schemes on the government website.

Regional differences in business rates

While the core concept of business rates is similar across all four UK nations, the specific rules, relief schemes, and multipliers can vary between countries.

Being aware of these differences is important in order to manage your rates effectively and make the best savings possible.

How are business rates calculated in England?

In England, the current standard multiplier is set at 55.5p, and the small business multiplier is 49.9p. The appeal structure follows the “Check, Challenge, Appeal” process via the VOA online portal, which we explain later on in the article. The key relief schemes in England are as follows:

  • Small Business Rate Relief (SBRR)
  • Retail, Hospitality, and Leisure (RHL) Relief
  • Rural Rate Relief
  • Charitable Rate Relief
  • Enterprise Zone Relief
  • Low-Carbon Heat Network Relief

Learn more about the English GOV.UK Business Rates here.

How are business rates calculated in Wales?

Wales’s rate multipliers align with England’s, with the standard multiplier being 55.5p, and the small business multiplier 49.9p. Businesses can also appeal their valuation in a similar way, using the “Check, Challenge, Appeal” process. Key relief schemes include:

  • Small Business Rate Relief (SBRR)
  • Retail, Hospitality, and Leisure (RHL) Relief
  • Council-related reliefs
  • New development reliefs

Check out the Welsh government’s Business Rates guide for more information.

How are business rates calculated in Scotland?

Scotland’s multiplier rates operate slightly differently.

The country uses a tiered system. The Basic Property Rate (up to £51,000 RV) is 49.8p, the Intermediate Property Rate (£51,001 to £100,000 RV) is 55.4p, and the Higher Property Rate (over £100,000 RV) is 56.8p.

Scotland’s appeal structure is set by independent assessors in Scotland, and appeals are then made to the local Valuation Appeal Committee.

Its business rates relief schemes differ from those in England, too. The main relief options available are:

  • Small Business Bonus Scheme (SBBS)
  • Business Growth Accelerator
  • Transitional Reliefs
  • New Heat Networks Relief

Visit mygov.scot for guidance on Paying non-domestic rates for more information about business rates in Scotland.

How are business rates calculated in Northern Ireland?

Multiplier rates in Northern Ireland are made up of both regional and district rates, set by each of the 11 local district councils.

The regional rate for non-domestic properties has been set at 29.89 pence in the pound, and the district rate will vary based on which council area a property is located in. Therefore, the business rate for non-domestic property will be 29.89p plus the rate in their district council.

Valuations in the region are orchestrated by the Land & Property Services (LPS), and the appeal process is managed by the Commissioner of Valuation for Northern Ireland.

Key relief schemes in Northern Ireland include:

  • Small Business Rate Relief Scheme (SBRR)
  • Back in Business Scheme
  • Industrial Re-rating
  • Rural ATM Exemption

To learn more about business rates in Northern Ireland, check out this guide by nibusinessinfo.

What businesses are exempt from business rates?

Certain businesses do not have to pay business rates. These include:

  • Farm buildings and land (excluding buildings being used as offices for business activities)
  • Buildings used for the training or welfare of disabled people
  • Fish farms
  • Places of public religious worship

Businesses that own an empty property are exempt from business rates for the first three months that it’s unoccupied, while industrial and warehouse buildings are exempt for the first six months. Once these periods are over, businesses will have to pay business rates as normal.

How to avoid paying business rates

While most non-domestic properties are liable for business rates, people using serviced offices or coworking spaces don’t receive a direct bill. This is because the rates for the building are usually included in part of your membership fee or rental agreement.

Due to their low business rates compared to traditional office leases, many SME’s have started searching for coworking spaces as a practical way to decrease overheads.

If you’re considering switching out your office space for a communal solution, we’ve rounded up some cheap coworking spaces in London that won’t break the bank.

How to pay your business rates

Paying your rates is a crucial responsibility for businesses occupying commercial properties. Here’s how the process works, from when bills arrive to the final payments.

When bills arrive

Your local council will normally send you your business rates bill in March and April. This bill will cover the upcoming financial year, giving you time to review the bill and prepare for the payments.

Changing your address can sometimes impact your business rates bill as well. Be sure to tell your local council if you start a new business or if you move premises, so they can charge you the right amount.

How to pay

Most local councils offer a variety of ways to pay your business rates, with payments typically spread over 10 monthly instalments from April to January. Many councils give you the option to pay over 12 monthly instalments, from April to March, to help ease cash flow burdens.

You’ll be able to make these payments via direct debit, online payment portals, telephone payments, or by post, depending on your preference.

What to do if you’re struggling

If you’re having cash flow problems and finding it difficult to pay the bill, make sure you contact your local council for help. Don’t wait until you’ve missed a payment, as this could result in reminder letters, a summons to court, and potential financial penalties.

How to appeal your business rates valuation

If you think your business rates valuation is incorrect, there are steps you can take to try and challenge it.

  1. Sign in to your GOV.UK business rates valuation account, or set one up if you haven’t already. To do this, you’ll need a Government Gateway ID.
  2. Add your property to your account, and provide evidence of your connection to it, e.g. by submitting evidence of paying bills.
  3. Submit a ‘Check’ case, where you confirm your property details are correct. You can also report factual errors with your property at this stage.
  4. Submit a ‘Challenge’ case if you still disagree with the RV after the Check stage. Here, you must clearly state why you think the valuation is wrong and provide evidence such as property details, lease details, or trading information. You should also state what you think the correct RV should be.

If you disagree with the VOA’s decision on your challenge, you can also appeal to the independent Valuation Tribunal for England (VTE). However, you will typically have to pay a fee at this stage.

What’s next?

Now you’re up to speed on business rates, here’s a round-up of the actions you should take to manage them effectively: 

  • Find your rateable value
  • Calculate your estimated bill
  • Check relief eligibility
  • Contact your local council
  • Appeal if necessary

Want to avoid paying business rates? Find out more about how to find cheap coworking spaces for 2026.

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How to start a driving school

Thinking of starting a driving school? Our guide will set you on the road to success

Wondering how to start a business running a driving school. Here are the key steps:

  • Training and qualification needed to run a driving school business
  • The instructor test
  • How much does it cost to start a driving business
  • How much can I earn as an instructor?

What is a driving school and who is it suited to?

Everyone who has learnt to drive or taken driving lessons remembers their driving instructor. They are the ones who set you on your first steps to getting on the open road. But have you ever wondered what it would be like to actually become a driving instructor?

Well, thousands of people have and thousands more are keen to get their hands on the steering wheel. With more than 1.6 million driving tests held each year, the demand for new instructors is there – so if you have the time, patience, skill and concentration, and are competent enough to teach other people to learn to drive, then perhaps you should consider this as a career.


Before you get started, it may be worth comparing quotes for:

Click either option to get quotes today!


What is it?

Becoming a driving instructor is not all it seems. You can’t simply get into a car and drive off into the sunset. There is a lot that must happen behind the scenes before you can start taking pupils out on the road and teaching them all they need to know.

To become an advanced driving instructor, or ADI,you have to pass a three-stage exam, take in a lot of literature, undertake lots of hard work and tough decisions, and part with a significant amount of cash.

To start earning money, there are two routes you can go down, so to speak. You can choose to start out on your own, or you can train with and sign up to a pre-established franchise that already has a register of pupils, contacts and trainers. In both cases you are self-employed, but with varying degrees of individuality and support.

A franchise-based company will offer training; however, it will charge a fee (usually a percentage of the lessons they have booked on your behalf or a fixed sum). Heading out on you own, on the other hand, can be a lonely business – but also one that you control

Your choice will probably depend on whether this a career change or career start, as well as your individual personality and business acumen.

Who is it suited to?

In addition to the training and qualification requirements, you have to bear in mind issues of character and outlook – the personal qualities needed to become a driving instructor are just as important as the technical ones.

This profession is open to all, but often lends itself to fresh starters and more practically minded workers. Nick Zapettis, of Driving Instructor Services, sees various kinds of people enter the profession, but has noticed a few common threads.

“Because of the requirement to have held a full driving licence for at least four years before you can register as an instructor, this is not a job that is suitable to school leavers. It is more appropriate for those people who fancy a change of direction. For example, ex members of the armed forces, retired police force personnel, people who have been made redundant or perhaps bus or lorry drivers who are tired of going away from home and want a more permanent business.”

However, as much as it is open to all, there are several characteristics that are crucial to the job. You have to be willing to work hard during exams and training, and you must apply your skills and knowledge via carefully constructed lessons, in an approachable and amicable manner.

Zapettis believes interpersonal and communication skills far outweigh the more technical areas. “The examinations and technical issues are important but are not really the issue; it is the ability to empathise and get on with your pupils and create a lasting relationship that is of vital importance. For example, you can have a technically brilliant person but one who is not a people person or well liked by the pupil.

A healthy sense of humour, patience and product knowledge are also vital as each pupil has a different character and personality, so there will be a new challenge on a daily basis. One lesson may be with a slower learner ,but the next may be with a 17-year old who is eager to get some wheels and hit the road.


Training and qualification needed to run a driving school business

To become an ADI there are various qualifications, compulsory skills and documents you will need to acquire to enter the Official Register of Driving Instructor Training (ORDIT), the one-stop directory of qualified instructors held by the Driving Standards Agency (DSA). This register contains around 50 suitably qualified and inspected training establishments in the UK, which should be your first port of call when choosing a training course and/or franchise-based company.

To be included in the register, and become a qualified ADI, there are certain criteria that you must adhere to. You must:

  • Have held a full UK or European Union (EU)/European Economic Area (EEA) car driving licence for four years
  • Be able to read a number plate from a minimum distance of 20 metres.
  • Be a fit and proper person to have your name entered in the Register. All convictions including motoring offences, still in force (not spent under the Rehabilitation of Offenders Act 1974) will be taken into account when Register suitability is assessed
  • Pass the Register qualifying examinations and apply within 12 months of doing so
  • Pass the three-part ADI exam

In addition, you are not permitted to accompany a driver unless you have held a full UK or EU/EEA driving licence for three years, and you must be aged 21 or more.

Where do I go for training?

Choosing your training school is a crucial decision, and, after having passed your exams, will decide whether you work strictly for yourself or on a self-employed/franchise basis.

Your first task should be to read the guidance on becoming an ADI. This will give you up to date information on requirements and advise you on best practice. GOV.UK offers an excellent guide, and you can get more vital information from the following link.

Then, once this has been digested, you will need to train for the three-part exam with an organisation that offers the skills and development you need. This can be done in three main ways. Firstly, you can try regular driving schools which offer instructor training via a franchise-based operation. This means you train to become an instructor, but at the same time the company in question has a vested interest in employing you as one of its members.

You can also enquire about driving instructor courses with the Automobile Association (AA) which runs both a training and a franchise operation. The AA charges £2,600 for the course, which lasts between six to 18 months. If you wish to join the AA as a franchisee once the training is complete, you will also receive a £1500 discount if you’ve completed the course through them.

Finally come the training/driving establishments such as Driving Instructor College, which help train potential instructors but who offer no jobs at the end of the course. Zapettis, a trained instructor, gives a warning to potential instructors who go down this route.

“The training establishment is geared to separating the trainee from their money with the promise of earnings they might earn once they qualify, while the trading driving school is concerned with providing training to potential instructors for whom they will ultimately be responsible for providing work.

“Generally speaking, the trading driving school will be far more realistic about the trainee’s likelihood of success within the industry because of its knowledge of the market than a training establishment, who might simply be churning out trainee instructors whether or not the market can support them.”

So, choose what you feel is right for you and above all phone around several courses and schools in your local area, or if you have a car go slightly further afield.

Is a franchise a good idea?

Major driver training establishments, such as the British School of Motoring, allow you to join their network as a franchisee; a number of smaller driving schools also offer you the chance to affiliate with them.

If you wish to join an existing school as a franchisee, you’ll have to pay a fee; in the case of British School of Motoring (BSM), fee packages start from £200 a week. You’ll also have to work under their branding – which could be a drawback if you prefer to work on your own.

However, you will always have a regular flow of new pupils as well as those you bring to the school yourself, and you will receive good support such as unlimited use of a car (if you don’t have your own) that is regularly replaced and maintained, as well as various types of insurance and back-up in case anything goes wrong.

The instructor test

The test

If you pass the three-part exam, then you are home and dry – but it isn’t as easy as you may think. Nick Zapettis of Driving Instructor Services of Swansea agrees: “There is a very high drop out rate, [particularly] at part one of the exam. This is the written section and requires a lot of reading and learning, and they don’t realise how much time and effort it takes. And that’s before they start preparing for the driving test and test of instructional ability.”

Part one

Part one or the ADI theory test is a written exam and consists of 100 multiple choice questions that are divided into four sections of 25. You are then required to get a minimum of 85 out of the 100 questions overall via a touch screen-based examination. This can be taken as many times as you wish.

This will demand a high standard of knowledge and include questions on general road safety, driving techniques, the theory and practice of learning, teaching and assessing, pupil-instructor interaction as well as basic Highway Code questions. Most courses will supply you with a pack including workbooks, manuals and mock papers that will guide you through the process. They will also provide you with some classroom training and support.

Part two

If you can get past this stage then you will move onto part two – the test of driving ability – which is held at a number of centres across the country. Training centres will give you varying amounts of time before you sit the exam depending on the course you have and the needs you require. However, if you fail part two, or three, three times then you will have to start all over again at part one of the exam.

Section two is similar to the normal driving test except that it is longer (60 minutes), there is a higher standard of competence required (you are only allowed six minor faults and no serious or dangerous faults), and you must satisfy the examiner on the following points:

  • Expert handling of the controls
  • Use of correct road procedure
  • Anticipation of other road users and the taking of appropriate action
  • Sound judgement of distance, speed and timing
  • Consideration of the convenience and safety of other road users

You’ll also have to answer a series of safety questions, describing to the assessor how to check the safety of three components of the vehicle, and performing an actual safety check on a further two components.

After you pass part two you will become eligible for a training licence, provided you join a trading driving school. This will allow you to charge for lessons for six months while studying for part three, and is similar to work experience. It also allows you to earn as you train and is an excellent way to gain early confidence.

Part three

The final element of the three-pronged exam is ‘the test of ability to instruct’. This involves a series of role-plays with the examiner playing the part of a learner. There are various levels of difficulty.

The test is split into two parts, each half an hour long and you will be asked to demonstrate your knowledge by giving practical instructions to the examiner. This will almost certainly cover safety precautions and how to make an emergency stop for example.

Once again, the amount of in-car training will vary depending on what course you choose, but will usually be slightly longer than part two.

How much does it cost to start a driving business

If you have your own car, costs are fairly minimal. If you don’t have your own vehicle, not you will either have to invest in a car with dual controls, which could set you back, or request one from the franchise you work under. The AA, for example, will supply you with a Ford Focus 1.6L, as well as insurance, road tax and repairs with the only cost being petrol.

You will spend a large amount on fuel each week, so it may be worth holding an account with a petrol station. Some will allow this service, so ask around. However the major expenses lie in training, the three-part exam and the on-going franchise fee; with a larger driving school, this may take up a high percentage of the work they give you.

A small majority of potential instructors, who undertake training, pay for the course themselves – either from a previous profession or from savings. However, a large slice also choose to take out a Professional and Career Development Loan (CDL), which can provide between £300 and £10,000.

Drivers to success – The key costs

ExamsCost
Part One (The ADI Theory Test)£90
Part Two (The Test of Driving Ability)£111
Part Three (The Test of Ability to Instruct)£111
Training licence£140
Entry to the ADI register£300
Reading material (approx)£50
Training costsAround £2,500 for parts one, two and three (if in doubt ask for a break down in cost)

How much can I earn as an instructor?

This depends on several factors. These include the location you are in and whether you work on your own, have repeat customers and boast a good reputation.

The amount you make will also hinge on how much you charge per lesson per hour or whether you take block bookings; how many lessons you carry out within a week; and, if you do represent a franchise, how much they charge as part of their fee.

Nick Zapettis, of Driving Instructor Services, gives a rough indication of what you can expect to earn. “If you charge between £20 and £25 an hour, which is the going rate in different parts of the UK, and take between 25 and 35 lessons per week including weekends and evenings and take into account the cost of renting and running a car, then you could be earning a net salary of roughly between £18,000 and £36,000 per year.”

Other elements that will almost certainly affect your income include seasonal conditions, particularly if you are working for yourself. Some periods of the year will be busier than others, with the Christmas season and mid-summer being quieter than the rest of the year. Bad weather will also play its part in decreasing your annual salary by discouraging leaner drivers to head out onto the road, and if you do start out on your own, it might take time to establish your reputation, so expect things to be a bit slower at the beginning.

Costs versus earnings

Costs

Lesson prices throughout the UK are usually around £20-25 an hour, so you should budget:

Between £40 and £60 per week for a car hire purchase repayment (depending on age and type of car and amount of deposit available)
£5 per week for tax and insurance
Between £5 and £10 per week for maintenance depending on age, type and condition of car
Between £2 and £3 per lesson for petrol
From about £40 to nearly £300 per week for the franchise fee (if joining a driving school can be fixed or hourly) or the cost to the instructor of arranging their own advertising

Earning

No of hoursNet earnings per weekNet annual earnings
10 - 20 hours£150 to £300£7800 to £25,600
20 - 30 hours£300 to £450£15,600 to £23,400
40 - 50 hours per week £450 to £600£31,200 to £39,000
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How to become a tutor

Learn how to start a tutoring business with this step-by-step guide. Discover tips on finding students, creating a strong marketing plan, and avoiding common pitfalls to ensure your tutoring business thrives.

Launching a tutoring business is an exciting way to turn your knowledge into a profitable and flexible career. Whether you’re a math genius, a language expert, or a science enthusiast, there’s always someone out there who needs your help.

The best part? You get to be your own boss, set your own schedule, and watch your students thrive!

But before you dive in, you’ll need a solid plan to attract clients and build your reputation.

If you’re ready to take the leap and start a business that makes a real impact, this guide breaks down everything you need to know.

💡Key takeaways

  • You don’t need formal qualifications to be a tutor, but having the right qualifications can help build trust and credibility.
  • It can cost £100 to £2,000 to get started as a tutor.
  • You’ll need to budget for tech equipment, learning materials, marketing, and business registration and insurance.
  • Essentials include a reliable laptop, good internet, and scheduling and payment systems.
  • While not legally required, obtaining a DBS check is highly recommended to build trust with clients, especially when working with children.

Should you start a tutoring business now?

Today, starting a tutoring business is a smart move. There’s currently a large audience waiting to be tapped into, with 41% of young people in London alone expected to receive some form of private tutoring during their academic career.

Parents and students alike are willing to invest in extra help, especially in high-demand subjects such as maths and science.

Hourly tutoring rates reach almost £40 in some areas of the UK, making tutoring a clever way to make money for those with knowledge to share.

Of course, every industry comes with its challenges – and tutoring is no different. Competition is fierce (it’s thought there are around 100,000 private tutors in the UK), and to stand out, you’ll need to offer the very best knowledge and lessons.

The demand is definitely there though, you just need to be willing to put in the time and effort to get your tutoring business off the ground.

How to start a tutoring business in 5 steps

Let’s take a look at the steps you need to start your own tutoring business.

1. Decide on your niche

First, you’ll need to decide what subjects and levels you’ll tutor. Specialising in a specific area makes it easier to market yourself and attract students. 

Don’t make the mistake of trying to tutor everything. Having a niche makes you stand out from the crowd, and often means you can charge more if you’re truly an expert in your field.

To decide on your niche, you’ll need to opt for something you have a genuine knowledge of. There’s no point tutoring students in a subject you don’t know inside out yourself, so make sure you pick something you’re already familiar with.

Some other niche ideas for your tutoring business include:

  • Language lessons, for those wanting to learn a second language
  • Test prep for specific exams, such as A-Levels and GCSEs
  • Maths or English for adults returning to education
  • Lessons for students who don’t thrive in traditional education setting

Of course, going broad is also an option. We recommend choosing high-demand subjects, such as Maths and English at GCSE or A-Level. These are two qualifications that most people need to apply for jobs, so they’ll give you the largest target market.

2. Write a business plan

Before starting any organisation, you need to make a business plan.

This is a strategic document that can keep you focused and help make informed decisions when you are starting and growing your tutoring business. A good business plan should include:

  • A breakdown of your services
  • An overview of your target audience
  • Your pricing structure (per hour, package deals etc)
  • Your marketing plan
  • Market research and competitor analysis – who is your main competition?

Writing a business plan doesn’t need to be overcomplicated. In fact, we have a free business plan template you can use to help you put yours together.

3. Get the right qualifications and legal requirements

You don’t legally need formal teaching qualifications to become a tutor in the UK. But having relevant qualifications can help to boost your credibility.

Some of the recommended qualifications you should consider include:

  • A degree in your chosen subject
  • Teaching qualifications, such as a Postgraduate Certificate in Education (PCGE) or Qualified Teacher Status (QTS)

It’s also a good idea to get a Disclosure and Barring Service (DBS) check too, especially if you plan to work with children.

A DBS check examines your criminal history to ensure you are suitable to work with children and vulnerable adults. This will help clients and parents to trust you, and costs around £21.50 for the basic option from the Government.

If you’re teaching in-person, you’ll also need to take out public liability insurance, which covers you in case a student has an accident during a lesson. This costs an average of £10 per month.

Don’t forget to register your business with HMRC too – you can operate either as a sole trader or a limited company.

4. Set up your lesson space

Next, you’ll need to decide whether to offer in-person or online lessons via a business website, and set up accordingly.

If you’re offering online lessons, you’ll need to invest in a good laptop, webcam, and microphone. You’ll also need to make sure your WiFi is fast and reliable.

For those offering in-person lessons, you can operate as a mobile tutor, which will involve visiting the student’s home or setting up your own tutor space.

Renting specific space can be costly, with rent for a small studio likely to set you back at least £600 per month, so it’s worth considering either offering mobile lessons or converting space in your home to get started to keep costs low.

If you’re setting up a physical teaching space, think about the type of environment that will encourage learning by adding warm and welcoming decor, and limiting distractions.

Can’t decide whether to offer online or in-person lessons? We’ve listed some of the pros and cons to each below:

In-person tutoring pros
  • Great for younger children or hands-on subjects
  • Ideal for local clients
  • More hands-on approach
  • Removes the risk of technological issues
In-person tutoring cons
  • Requires travel time (make sure you factor this into your pricing!)
  • Increased cost if you decide to rent a space
Online tutoring pros
  • Flexible, with no travel required
  • Allows you to reach students across the UK and beyond
  • Great for students with limited flexibility
Online tutoring cons
  • Needs good lighting, a webcam and a stable internet connection
  • Risk of technological issues causing disruption

5. Market your business

Having a solid marketing strategy to target clients is crucial to building your tutoring business.

Whether you’re tutoring for high school students, offering language lessons, or teaching niche subjects, below we’ve listed some of the best ways to market your tutoring business to build your student base.

1. Create a website

A website helps build credibility and offers a way for potential students to learn more about your services. You don’t need to hire an expensive web designer either. Website builders like Wix or Squarespace offer easy-to-use drag-and-drop interfaces for creating a professional site without coding knowledge.

Make sure to optimise your site for SEO by using keywords related to the subjects you tutor and your location, helping you to get discovered in local searches.

2. Promote yourself on social media

Social media platforms are a great place to promote your services. Facebook, Instagram, and TikTok are all great options. You can also join local Facebook groups to target local audiences.

Don’t just post advertisements for your services though, create fun content, and offer study tips and hacks to keep your audience engaged. Showcase all the specialised knowledge you have!

Some fun social media ideas for your tutoring business include:

  • Study Tip Tuesdays
  • Behind the scenes of setting up a session
  • Student case studies
  • Exam question walkthroughs

3. Offer discounts and deals

Offering an initial discount or a package deal can be a great way to attract new students – after all, everyone loves a bargain!

Why not offer a discounted or free first lesson, or set up packages for people who commit to multiple lessons?

Don’t be tempted to offer too many discounts, though. If you constantly have a sale on, you’ll end up devaluing your work and nobody will be willing to pay full price.

What do you need to set up a tutoring business?

Starting a tutoring business isn’t just about knowing your subject, you also need to have the right tools and systems to keep everything running smoothly.

Here’s some of the essential things you’ll need:

  • A reliable laptop and internet. If you’re tutoring online, fast WiFi is non-negotiable
  • Video conferencing software (platforms such as Zoom, Google Meet, and Microsoft Teams are all simple to use) to conduct online sessions
  • Scheduling system, such as Calendy or TutorBird, to keep track of your lessons and students
  • Payment system, such as Stripe or PayPal, to take payments online
  • A whiteboard or note-taking tool to help you explain concepts to students
  • Lesson materials, based on your service offering
  • A dedicated room or location to conduct your sessions if you plan to offer them in-person

How much can you expect to pay?

The good news is that you can start a tutoring business without breaking the bank, in fact new tutors can expect to pay between £100 – £2,000 to get started.

Let’s take a look at some of the things you’ll need to budget for:

  • Tech and equipment – You’ll need a laptop, webcam, and strong internet as a starting point. If you already have these, great! If not you might need to budget up to £1,000 to cover everything
  • Learning materials You’ll need to decide which tools and materials you want to use within your lessons. Sites like BBC Bitesize offer free resources to get started.
  • Marketing and branding – Marketing and branding costs will depend on whether you decide to do it yourself or hire a professional. If you decide to do it yourself, the only investment will be your time. A professional web designer could cost anywhere from £500 to build you a simple website
  • Business registration and insurance – You’ll need to budget for any registration fees, such as online registration for a limited company (£50). You’ll also need to take out insurance. Public liability insurance will cover you if a student has an accident in a session and usually starts at around £10 per month.
Money saving tips

  • Use free tools before upgrading as your business grows
  • Use word-of-mouth marketing and encourage customer feedback 
  • Leverage job sites, such as MyTutor, to find work and help build your CV

Final thoughts

Starting a tutoring business should be exciting. It lets you share your knowledge, be your own boss, and make a real impact on student’s lives.

Whether you’re teaching in person or online, a solid business plan and the patience to grow your client base are the key to success.

So, what are you waiting for? Take the first step today, plan your business, spread the word and start changing lives one lesson at a time!

Lucy Nixon profile
Lucy Nixon - content writer

With 10 years experience in the digital marketing industry, Lucy is a content writer specialising in ecommerce, website building and all things small business. Her passion is breaking down tricky topics into digestible and engaging content for readers. She's also committed to uncovering the best platforms, tools, and strategies, researching meticulously to providing hand-on tips and advice.

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Venture capital funds: A-Z Directory

Looking for equity investment? Here’s our directory of VCs that invest in start-ups

Venture capital investment has become a popular way for startups and growing businesses to secure funding – whether you’re in the early stages of starting a business or looking to grow further. Accessing the right business finance is crucial for any growing company, especially when it comes to scaling.

Nowadays, there are many ways to get the money you need, from traditional loans to more modern options like crowdfunding and venture capital – something that has allowed startups and small businesses to secure the funding they need to grow.

Venture capital firms play an important role in providing the necessary funding to help startups and emerging businesses reach their full potential. These firms offer not just financial support but also valuable expertise and connections.

Below, we’ve listed some of the top venture capital firms that are helping UK startups secure the financing they need to grow and succeed in the business world.

Venture capital directory for startups

Venture capital is a great avenue to accelerate growth, expand operations and gain access to valuable expertise and industry connections.

So if you’re looking for early-stage investment opportunities, here are some venture capital funds that can support and guide your business in your growth journey.

Accel

Founded in 1983, Accel (formerly known as Accel Partners) has a long history of backing successful startups, particularly in the technology sector. Some of its most notable investments include Facebook, Dropbox, Slack, Deliveroo and Bumble. Accel is based in California and has a strong presence in Silicon Valley, but it also operates in London, Bangalore and New York.

Current investments: 300+
Exits: 448
Industries: consumer internet, fintech, SaaS, AI

Advent Life Sciences

This London-based fund has invested in and helped create world-class technology and life science businesses. Since 2006, companies backed by Advent Life Sciences have successfully brought fifteen innovative medicines to approval. It also has a strong portfolio of past and present companies, with over 100 investments made since its inception.

Current investments: 55
Exits: 36
Industries: digital health, medical technologies, biopharmaceuticals

Ambient Sound Investments (ASI)

Established in 2003 by four founding engineers at Skype, this seed investment company invests in businesses across multiple industries. While based in Tallinn, Estonia Ambient Sound Investments (ASI) supports many companies across the globe, including the UK, Europe, Asia and the US.

Current investments: 58
Exits: 35
Industries: various

Atomico

Established by Skype co-founders Niklas Zennström and Janus Friss in 2006, Atomico focuses on investing in early-stage and high-growth technology startups, particularly in Europe. Its most notable investments include the likes of Klarna, TravelPerk and Gaia Family.

Current investments: 125
Exits: 49
Industries: consumer internet, SaaS, fintech, AI

Balderton Capital

A capital venture firm that invests in early-stage technology and internet startups. Since being founded in 2000, Balderton Capital has invested in over 275 European-based companies, including key players in the fintech sector like Revolut and GoCardless – both of which have achieved unicorn status.

Current investments: 189
Exits: 85
Industries: fintech, SaaS, consumer internet, digital health

Big Issue Invest

As part of the Big Issue Group, this venture capital fund provides finance to social enterprises in the form of business loans and equity. Since its inception in 2005, Big Issue Invest has invested over £900 million in more than 600 social-purpose and charities. 

Current investments: 14
Exits: Unknown
Industries: social enterprises and charities

Black Seed Ventures

A notable entrant of the Startups 100 alumni and winner of our Diversity, Equity and Inclusion (DEI) Award, Black Seed Ventures specialises in investing in Black-led businesses. Since its inception in 2021, Black Seed VC has secured multiple partnerships to support its fund, including Atomico, Natwest Bank and Molten.

Current investments: 3
Exits: 0
Industries: various

Blossom Capital

Blossom Capital is a Series A venture capital firm that primarily backs European tech businesses. It also limits its investments to 5-6 rounds per year to fully commit to supporting the companies it invests in. 

Current investments: 31
Exits: 6
Industries: fintech, SaaS, digital health

Bridges Fund Management

Founded in 2002, Bridges Fund Management specialises its investments in businesses with environmental and sustainability goals, including health and wellbeing, education and skills, sustainable living and under-served markets. As of now, it has made more than 220 investments and £1.7 billion in capital.

Current investments: 55
Exits: 14
Industries: health, education, real estate

Connect Ventures

A pre-seed and seed-stage firm that has supported product-led businesses since 2012, specialising in various industries including software-as-a-service (SaaS), fintech, digital health and Web3. Connect Ventures has several notable investments, including Typeform, Oyster and Truelayer.

Current investments: 72
Exits: 30
Industries: SaaS, fintech, digital health, Web3

Dawn Capital

Dawn Capital is Europe’s largest B2B software investor, backing companies from Series A and B, while also continuing to financially support top-performing businesses up to their exit. Dawn is based in London and invests in companies across Europe, the United States and Israel.

Current investments: 44
Exits: 19
Industries: fintech, data and analytics, dev ops and infrastructure, future of work, security and privacy

Delta Partners Ltd.

Delta Partners was first established in 1994 and invests in UK and Ireland-based technology companies, with a focus on early-stage funding. It has made over 50 investments in the IT, Communications and Healthcare sectors.

Current investments: 39
Exits: 21
Industries: IT, communications, healthcare

DN Capital

Nenad Marovac and Steve Schlenker founded DN Capital in 2000. Headquartered in London, it has invested in 349 companies, including well-known names like Shazam and Purplebricks. It also helps US businesses enter the European market.

Current investments: 62
Exits: 30
Industries: fintech, SaaS, marketplace, consumer internet, digital health

Index Ventures

With offices in London, New York, San Francisco and more, Index Ventures was first established in 1996 and primarily invests in technology companies and has a vast portfolio of well-known names, including Figma, Etsy, Roblox and Just Eat.

Current investments: 346
Exits: 430
Industries: AI/ML, business applications, data, entertainment, fintech, future of work, healthcare, media, mobility, open source, retail, security, HR

LocalGlobe

A trusted venture that has supported early-stage startups since 1999. LocalGlobe primarily invests in technology companies and has a portfolio of notable names in the industry, including Zoopla, Wise, bitly and more.

Current investments: 242
Exits: 49
Industries: various

London Venture Partners (LVP)

London Venture Partners (LVP) is a seed fund that specialises in investments for companies in the online, mobile, social and web game space. Since being founded in 2001, it has generated over $30 billion of equity value for the gaming industry.

Current investments: 56
Exits: 18
Industries: gaming

Mangrove Capital Partners

Specialising in backing companies within the mobile, software and ecommerce industries, Mangrove Capital Partners looks to invest as early as possible, regularly partnering with early-stage startups before a product launch. Skype, Wix and Flo are some of the many high-growth companies Mangrove has invested in.

Current investments: 40
Exits: 84
Industries: B2B, SaaS, social, commerce, marketplace and more

Molten Ventures

Formerly Draper Esprit, Molten Ventures is a  European tech-focused venture capital firm that aims to support tech entrepreneurs from Series A. Supporting high-growth companies since 2006, Molten Ventures boasts a diverse portfolio of successful businesses, including Revolut, Trustpilot and Ledger. 

Current investments: 87
Exits: 23
Industries: SaaS, enterprise, AI, deeptech, digital health, consumer

Notion Capital

SaaS and cloud businesses are the game at this London-based firm. Having made over 100 investments since 2009, Notion Capital helps Series A startups at the very beginning of their journey to help them grow and scale effectively.

Current investments: 41
Exits: 21
Industries: various

Octopus Ventures

This popular London-based firm has invested in 310 companies over the last 25 years. With a focus on the B2B software, fintech, deep tech, health, climate and bio sectors, Octopus Ventures invests in companies that aim to make a positive impact. Its portfolio of investments also includes several Startup 100 for 2025 alumni, including Metris Energy, seedata, trumpet and Swiipr.

Current investments: 122
Exits: 52
Industries: B2B software, bio, climate, consumer, deep tech, fintech, healthcare

Passion Capital

Passion Capital is one of Europe’s leading seed funds, which is run by a team of entrepreneurs to help founders and early-stage startups build successful digital media and technology companies. As of now, it has invested in over 100 companies – 5 of which have reached unicorn status – and has a 43% success rate for businesses raising Seed A funding.

Current investments: 60
Exits: 25
Industries: consumer, deep tech, enterprise, fintech, healthcare

Pentech Ventures

A leading early-stage software investment firm that backs companies in emerging markets, particularly artificial intelligence (AI) and machine learning (ML). Pentech Ventures was founded in 2001 and has raised over £150 million and invested in 85 companies. 

Current investments: 12
Exits: 28
Industries: SaaS, AI and ML

PROfounders Capital

Having invested in popular companies such as Get Your Guide and Unity, PROfounders Capital focuses on early-stage investment with a mission to empower the next generation of entrepreneurs, offering both funding and support during all stages of the business journey.

Current investments: 24
Exits: 32
Industries: travel, hospitality, gaming, healthcare

Scottish Equity Partners

A Glasgow-based firm made up of experienced growth equity investors, backing software and technology scaleup companies in the UK and Europe. Scottish Equity Partners has made 180 investments in the last 20 years and works with businesses to support their goals and ambitions.

Current investments: 18
Exits: 24
Industries: various

Seedcamp

Seedcamp was founded in 2007 by 30 European investors and primarily backs companies in the technology sector. It supports companies with global scaling potential and has invested in over 500 businesses to date.

Current investments: 612
Exits: 69
Industries: various

SFC Capital

Formerly Startup Funding Club, SFC Capital is an early-stage investment firm that provides funding and support for UK startups. With a combination of its angel investors and seed funds, it has successfully invested in over 400 businesses to date.

Current investments: 646
Exits: 19
Industries: B2B software, B2C technology, consumer, fintech, climate, hardware & robotics, healthcare and more

Wellington Partners

With a focus on early-stage and growth-stage life sciences companies, Wellington Partners has invested in over 100 businesses since 1998. As well as funding, it also offers support through its team of experts to help companies grow and scale effectively.

Current investments: 30
Exits: 10
Industries: healthcare and digital health

How to choose early-stage investment

Choosing a source of funding for your business is essential for your growth, control and long-term success. It’s not something you should decide all at once. Instead, you should carefully evaluate your options over time, considering factors like cost, risk, flexibility, and the impact on ownership and decision-making.

Here are the main points you should consider:

1. Defining your funding needs

For this, you’ll need to determine how much capital you’ll need for your next milestone. You’ll also need to decide what you want to use this funding for. For example, you could use the money for marketing, developing your first product or hiring a team of employees.

It’s also important to note that venture capital firms aren’t the only way to get investor funding. For example, angel investors are high-net-worth individuals who invest in early-stage startups, while accelerator and incubation programmes can help by providing funding, as well as mentorship and resources.

2. Evaluating investor fit

You shouldn’t just jump at anyone who offers you money. Much like how you would choose a suitable business partner, it’s important that you consider your investors carefully. To determine this, you should ask yourself the following questions:

  • Does the investor understand your sector?
  • Can they provide valuable networking connections?
  • Are they offering fair valuations and reasonable terms?
  • Does their vision align with your business goals?

3. Conducting due diligence

It’s important to note that not every investor has the best track record. That’s why you should research their history, such as past investments and success with similar startups.

Moreover, speaking with other founders in their portfolio can give you an idea of how much they were involved, the support they gave and their overall reputation. It’s also important to understand their expectations, decision-making style and any potential red flags.

4. Negotiating terms

As investors will want an equity stake in your business, this means that you’ll no longer have full control over it. Therefore, you should make sure the valuation is fair so you don’t give away more equity than necessary.

Additionally, pay attention to other details like investor rights, board seats and decision-making power, as too many restrictions can slow you down. You should also discuss an exit strategy early on so that everyone is on the same page about your long-term vision.

Alternatives to investor funding

Investor funding isn’t for everyone. Luckily, there are plenty of options available for businesses to gain capital through other means. These include:

  • Crowdfunding: many businesses take up crowdfunding to raise money from a large number of people through platforms like Kickstarter and Indiegogo.
  • Business loans: a loan that is distributed by banks and lenders specifically for business purposes. As with regular loans, the amount must be paid back with added interest.
  • Grants and competitions: business grants are a sum of money given to businesses either by the government or private organisations. Often they don’t need to be paid back but are subject to tax.

Read our guide on sources of business finance for more options to fund your venture.

Conclusion

Venture capital funding is a great way for new startup businesses to gain the funding they need, while also providing guidance and support to help them along the way. 

However, it’s also important for businesses to think about whether the funding or amount of equity is right for them. Moreover, with so many options available nowadays, venture capital funding may not be a fit for everyone, so businesses should also take the time to explore their options and determine which is best for their growth, sustainability and overall success. 

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How to start a window cleaning business

Thinking of starting a window cleaning business? The window cleaning tips in our guide will help you build a squeaky clean venture...

Thinking of starting a business as a window cleaner? You’ve come to the right place (If you need some more ideas you can find them in our How to start a cleaning business: 8 simple steps)!

Window cleaning is not all buckets and suds and step ladders. It’s a lot more dangerous than that. If you believe research conducted by Churchill Insurance way back in 2004, window cleaning might even be the most dangerous job in Britain. Thankfully, it’s not quite as risky as such surveys suggest: things have become a little safer with the passing of time. “Window cleaners now have equipment that allows them to completely eliminate the need to work at height,” Damian Whittaker of the British Window Cleaning Academy (BWCA) explains, “Modern window cleaning is no longer the dangerous job it once was.”

Perhaps because of this dangerous reputation, window cleaning has suffered from something of a poor public image in the past, but don’t let that deter you. Window cleaners come from all all walks of life. While a City background may not be what you expect from the MD of a successful window cleaning company, there are many who have just that.

Christopher Turner, who set up The London Window Cleaner in 2006, for instance, is a former hedge fund manager. “I was actually in a hedge fund for the charitable sector; and I spent eight years in charity work before I left,” he says. “There are lots of people in the business from the City. I got out because I wanted to go back to something that was fundamental, something practical and useful and that would always have a market.”

A City background is not a prerequisite of course – although it might help with your start-up costs. Window cleaning is often a family business and, according to Damien of the BWCA, there are a few husband-and-wife teams around. Like most start-up businesses, starting a window cleaning company is limited only by commitment and interest. In times of downturn especially, many people who have lost their job use their redundancy payment to start a business in something like window cleaning. So if you want to take up your squeegee and ladder, don’t let the scare stories put you off.

Here are the steps to starting a window cleaning business:

1. Understand the costs of starting

Window cleaning doesn’t carry sky high start-up costs, but there is more to consider than sponges and buckets, even if you aim to set up your business with as little investment as possible. “There are certain items that will need to be paid for upfront, such as insurance and training,” advises Damian Whittaker of the British Window Cleaning Academy.  “And you will also need to pay equipment and vehicle lease deposits.”

Starting out, you’ll still need to consider the cost of following:

  • Training
  • Equipment
  • A vehicle
  • Public Liability Insurance
  • Website
  • Logo design/marketing

It’s a good idea to decide initially how big you want your company to be, too. You can start off very small (just yourself), but no matter how small you are to begin with you should build your brand on what you expect to achieve. Because as workable as a micro business is, a bucket and ladder will not get you very far: it is worth considering your strategy and long-term goals before launching into things. “You can grow from small beginnings, but you will hamstring yourself,” Christopher Turner of The London Window Cleaner explains, “because you’ll be limited to one kind of client. Somebody who starts out by investing a couple of hundred quid in a ladder and a bucket and a squeegee won’t really have the potential to grow.”

So although you can buy equipment for as little as £100, you should allow for an initial investment of a few thousand pounds in your venture. Even if you  plan to start off on the lowest rung, some backing will allow you to invest in training and marketing, and to grow. When Christopher started out, for example, he says he had ‘reasonable’ backing in terms of cash. So straight off, he was able to purchase a number of vehicles and to invest in a website and logos for his vans. This route comes recommended as it sets your business up on a firm footing. “Again, it depends on the kind of company you want,” he says. “If you want a turnover of a million quid in three or four years, you’re going to have to pitch yourself that way.”

Visibility is important for a window cleaning company.  Consider how you will achieve this: through marketing, through painting your vans, or perhaps by creating an impressive website and online presence? Christopher took the name The London Window Cleaner some six months after starting up the company, and then worked very hard to ensure that the website was top of Google rankings, for instance. “So now, if you Google London Window Cleaner, you’re sure to come across our site,” he says. “We do no advertising, and have no advertising budget. We just operate from our website. So our company name and our profile on the internet is absolutely crucial.”

At the start, you will have to go out, and work hard to get your name out there. It can take time. For The London Window Cleaner, it took probably two years to get that investment back. “Nowadays,” Christopher says, “companies call us and we to come in and give a quote. But we do very little active marketing because of the position we worked to establish in the market.”

In the early stages, especially if your focus is residential, some footwork will not go amiss either. Damien Whittaker of the BWCA believes flyer posting is a good way to spread the word. And there are advantages to canvassing in person too: “By knocking on the doors of householders, you have an opportunity to promote and offer your service face-to-face and then to immediately answer any questions that may come up,” he explains. “There’s no doubt that it is one of the most effective ways to build a residential window cleaning round quickly.” Be aware, this can be done any time after 9am but you should avoid doorstepping later than 7pm at night.

The BWCA also has it’s own accreditation programme called ClearChoice. Damien says ClearChoice members can use their membership card and online profile to help them win new business.

2. Source your equipment

The traditional kit contains squeegees, sponges and a scraper and blades; but if you have the funds, you should really invest in a water fed pole and filtration kit, or ‘reach and wash’ system, which is made up of a 20 metre pole that runs with purified water.

A system like this will allow you to work more quickly, and without access to domestic water supply. You will also be able to reach upper floor windows without the need for climbing equipment such as ladders or a cherry picker. “You need a water purifier as well, which needs to be brought to each different location,” explains Christopher Turner of The London Window Cleaner. “It is a big investment. We have vehicles which have to carry over a metric tonne of water.” This may be less vital if your main market is the residential market rather than commercial, but still has its advantages.

If you take a long-term view, this kind of equipment will pay for itself many times over. “Residential window cleaners using a system like reach and wash are able to earn at least £25 per hour,” says Damien Whittaker of the BWCA. Once you have made the initial investment in a system like this, the overheads are low and it’s quite possible for a window cleaner to take £200 a day in income, he says.

As a rule, domestic window cleaning is not where the big money is found, though. If you want to grow your company and step into the big league, commercial window cleaning is probably the market you should aim for.

In commercial window cleaning, there are four main areas. You have general window cleaning, which requires a bucket, a ladder and a squeegee, and is done by hand: this is just for internal work, for inside office buildings and so on. The second area is exterior high level, cleaning buildings of up to 60ft with the reach and wash system, as detailed above. The third area is abseiling, which requires specialist individuals. And the fourth is crane cleaning, where you bring in a high level crane and cherry picker, and reach over the building to reach the windows.

If you want to cover all four of those areas, you will need substantial investment from the outset. “The cranes are always rented in because they’re jolly expensive to maintain.” Christopher explains. “We tend to focus more on abseiling these days. People see them and they say, ‘Wow, that looks professional.'”

3. Invest in training and insurance

Perhaps the most important consideration with a window cleaning enterprise is health and safety. Before you even consider setting up shop, you should expect to spend time swotting up on health and safety. Taking courses, joining relevant industry bodies and reading up on government requirements: that’s all part of your initial investment.

“Training is very important,” says Damian Whittaker of the British Window Cleaning Academy. “It will not only equip you with the skills you need, but will also give you the confidence to build your business.” Christopher Turner of The London Window Cleaner agrees: he spent some five months researching the area. This is not a bad idea when you consider it will form one of the keystones in the reputation you build for your business.

When you’re first starting out, unless you are already an experienced and fully qualified window cleaner, it will be necessary to invest in staff and provide training for them. You should arrange training such as the Federation of Window Cleaners and Institute of Occupational Safety and Health-accredited “Cleaning Windows Safely” one-day course, which covers the use of water fed poles and portable ladders, for your staff.

There are many other courses too, which include one day risk assessment and policy courses, approved by the HSE and the IOSH. And as well as seminars such as their Introduction to Window Cleaning, and courses in Marketing a Window Cleaning Business, the BWCA runs a course in Health and Safety for Window Cleaners. “We found training to be very important and we update it regularly,” says Christopher. “It’s important that staff get their qualifications in cleaning.”

If you are comitted to building a good reputation as a window cleaning company, you need to take health and safety very seriously. You should meet with environmental health officers in different areas, and ensure you have the best health and safety documentation out on the market.

Intimately connected to health and safety, of course, is the issue of insurance. Be aware, insurance rates in the window cleaning industry can run quite high. “Insurance is mega hefty,” admits Christopher Turner of The London Window Cleaner. Having a dedicated broker is helpful. If you can present a sound health and safety record and a clean history, you can prove to the insurance broker that you operate in a safe manner: this should help bring your premiums down.

The nominated insurance brokers of the Federation of Window Cleaners is Allied Insurance Services Limited, and they offer exclusive offers on public and employer’s liability, underwritten by Hiscox, for Federation members. Unfortunately, at the time of writing, few companies in the UK sector are prepared to insure small window cleaning companies, which makes things difficult as there’s less competition and so insurance can be expensive. But, Christopher assures, a broker will help you get the right price.

It’s worth noting, that since 28th February 2005, a sole trader or single person in a limited company is no longer required to have employers liability cover. However, if have any hired help, even if it’s just seasonal or temporary workers you’ll need to make sure you’re covered.

Join the Federation of Window Cleaners from the outset. They provide good advice which is invaluable in the early stages. The Federation also have legal teams, if you have any issues, and they can also point you in the right direction if you have queries regarding health and safety and insurance.

If you live in Scotland you’ll need to apply for a window cleaning license from your local authority.

4. Be specific about your customers

“We will turn down customers who, for instance, may have a very public building that they only want cleaned once a year. That means it’s revolting nine months of the year — and it’s my name on that building! People will walk past, and see, and think ‘that company’s no good!'”, explains Christopher Turner of The London Window Cleaner. Don’t be afraid to pick and choose your customers.

Choose customers who will invest in your service. If their windows look great, this will reflect well on your business.

5. Define your point of difference and build a reputation on it

Make a decision at the outset on whether you will aim to compete on price alone. If you decide you will be the cheapest in the market, your business plan will be very different than one that is based on quality of service alone. Decide on the kind of service you will provide:  will it match, or go above and beyond, what others can provide?

Your name should give people an indication of the business you’re offering. Keep the same faces in the company; it encourages a sense of trust. Clients will view you as a family business.

If you genuinely believe you can devote a large proportion of your life to setting up a company, such as a window cleaning enterprise, it will be worth it. Financial reward should not necessarily be your primary drive though, because, as Christopher Turner of The London Window Cleaner puts it, “I’ve never gotten anywhere near the salary I had when I was in the City.”  You’ve got to believe you’re getting more out of life in setting up a company that’s your own.

Useful contacts for your window cleaning business

Federation of Window Cleaners http://www.f-w-c.co.uk/

Institute of Occupational Safety and Health http://www.iosh.co.uk/default.aspx

Health and Safety Executive http://www.hse.gov.uk/

The British Window Cleaning Academy http://www.bwca.co.uk/

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Getting your business’ product stocked in stores

Developing the product is only half the battle. Here’s how to get shops to sell it

Getting your products stocked has long been one of the hardest parts of starting up a business. With an increasingly competitive market, the contest between different brands has never been so gruelling, as buyers are inundated with meeting requests and sales pitches from eager suppliers.

Even before contact is made with retailers, business owners need to make sure their product is labelled, branded and packaged to perfection, to give them as good a chance as possible to secure the deal and supply their goods to that seller.

In today’s world, having a great product is only half the battle. As well as branding and packaging, you need to choose manufacturers wisely and be confident that you are negotiating the best possible contract with these manufacturers.

Once production is sorted, the next major hurdle for many businesses is approaching retailers, writing an elevator pitch and pitching to their buyers. Their time is precious and it can be incredibly difficult to pin them down and book in a sales meeting. And even when businesses have secured deals with retailers, there is the added problem of negotiating contracts and orders, as well as safeguarding against late payments.

These guides aim to provide useful information and advice for businesses trying to get their products stocked:

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How to start a handyman business

Want to make a living out of odd-jobs? Read our guide

Before starting a business, there are some rather important areas to think about when becoming a handyman are:

What is a handyman business and who is it suited to?

The handyman is a fairly new concept industry-wise. Years ago, property maintenance companies confined themselves to specific services, such as plumbing, electrical, and painting. However, recently there has been an eruption of handyman businesses, carving themselves out as distinct service providers. With the ever-depressing job market, people are seeking news ways to make a living, and an increasing number of people are following their passion and setting up their own companies.

Perhaps the success of the handyman business is due to the increasingly busy and hectic lives that people lead. Finding enough time to juggle work with family and other commitments can be troublesome, and consequently more and more people are looking for help with odd-jobs around their home, whether it’s changing light fittings, putting up shelves or repairing dripping taps.

In essence, anyone can set up a handyman business. City-workers who have grown weary of their office jobs are among those who have taken the plunge, as well as individuals with a background in property maintenance. This is also not an industry reserved for men, since there are numerous handywomen on the scene. Kerrie Hanafin started A Woman’s Touch in 2003, a company that boasts a team of highly qualified tradeswomen. She explains: “Being a woman can be a fabulous advantage, I think people find it easy to trust you and feel happy leaving you in their home, or with their young children”. Kerrie spotted a niche in the market, and with a current turnover of £3.5m, her handywoman business is flourishing.

An interest and basic knowledge of the different trades are important factors when thinking of starting your business. While there are no specific qualifications required, it is helpful if you are familiar with all aspects of the trade, from painting and plastering to plumbing and carpentry. Central to the handyman concept is that no job is too small, and so a willingness to offer all services is beneficial. Customers will not come back if you refuse the small jobs like changing their light bulb, therefore if you are prepared to do any job, however big or small, you will stand yourself in good stead to be called upon again. Will Davies set up Aspect Maintenance in 2005, a thriving business that today enjoys a turnover of £10.5m and employs 110 fully-qualified maintenance workers.  He believes that the key to success is to offer as wide a range of services as possible. “Many handyman businesses can only deal with problems up until a certain level, often they are not suitably registered for the more complex jobs and so while they may be fine for basic problems, they might not be able to resolve the more difficult ones.” This, he explains, can be a hindrance to the growth of your business, because people won’t use you again.

Perhaps most crucial is your attitude and behaviour towards customers; being friendly and approachable is fundamental to build and maintain trust between you and your clients. People want to be able to rely on you, and so honesty and dependability are invaluable qualities when dealing with customers. Chris Gilbey established his own handyman company Bitsbobsandoddjobs in 2006, and affirms the importance of building solid relationships with clients.  He says: “The most important thing is customer relations and being responsive to clients. I think we are unique in the way we deal with people, and most of our business comes through word-of-mouth, so it is essential to gain peoples’ trust.”

Researching the market and creating your business plan

You need to decide the scope of your business early on. That is not to say that you can’t add further services to your list at a later date, but its important to set out boundaries of the types of jobs you will do. The handyman industry is incredibly broad, and services can range from the simplest of tasks such as changing a light bulb, to fitting a new bathroom or even completely renovating a house. Some of the more complex jobs require specific training and qualifications, as well as industry authorisation, which can limit the scale of services you offer. Nevertheless, it is beneficial to lay out clearly what you are offering so that customers can make an informed decision on whether to hire you.

Starting up any business requires a good degree of planning and preparation. While it may seem fairly straightforward, setting up a handyman company is no different. Kerrie Hanafin suggests talking to people in the area to find out what they would look for in a handyman business. Researching your locality and main competition can really help to establish your place in the market. Sorting out your pricing is also essential at the early stages, so find out your competitors’ prices to get an idea of what you could charge.  “No matter how small your company, you should lay out your plans for the next 12-24 months”, explains Will Davies. “If your goals are clearly laid out in front of you, you will find it far easier to achieve them.”

A unique and memorable name for you company is fundamental. Chris Gilbey, from Bitsbobsandoddjobs, stresses that coming up with a good name can really help with branding your business, so it’s worth dedicating time to this.

Experience is probably the most valuable tool. There is nothing better than going out and gaining practical skills and know-how. Chris Gilbey from Bitsbobsandoddjobs spent time as an apprentice for a building company, which has helped enormously with setting up on his own. He says: “There’s nothing better than experience, having a background in the building industry is a huge advantage and it is invaluable to get some practical experience.”

Rules and regulations

There are no specific certificates or training required for starting up as a handyman. However, if you want to be able to offer a full range of services, it is worth getting certified with certain regulatory bodies.

The NICEIC is the organisation that authorises the electrical industry, and if you intend on carrying out any new electrical wiring, this is vital.

For work relating to gas engineering, it is important to register yourself on the Gas Safe index.  Initial registration costs £428, which must be renewed every year for a further £205 via telephone, or £180 online. The Gas Safety Register is the UK’s official body for gas safety, having replaced CORGI in 2009, which requires anyone working on gas maintenance to carry the card, proving they are part of the network and are therefore approved.

There are a variety of credible courses that can help you acquire the more complex skills. Kerrie Hanafin from A Woman’s Touch recommends taking a few short courses in each trade. You can find courses for one or two weeks which will give you enough confidence and knowledge to be able to offer your services in that trade.

You will need to think about registering for VAT. As of 2010, you must register for VAT if your turnover for the previous 12 months is more than the current registration threshold of £70 000, or if you expect it to go over that figure in the next 30 days. If your turnover hasn’t crossed the registration threshold, you can still voluntarily register for VAT, because it may be beneficial to you, however, it is not required.

If you are planning on sub-contracting some of your work to other servicemen, you need to register with the Construction Industry Scheme (CIS).  As a contractor, you will need to check your workers are registered with HM Revenue and Customs.

Reputation and marketing

Reputation, reputation, reputation. Shakespeare’s famous quotation from Othello rings true throughout all trade industries, and is fundamental for securing a solid customer base. As service providers, keeping your customers satisfied should always be your number one priority, because one unhappy customer could be catastrophic for your business.

Basic rules apply, so a respect for other people’s homes is paramount, as is a friendly and approachable manner. Word-of-mouth accounts for a huge proportion of new business, and recommendations are gold dust in this industry, therefore being helpful and going that extra mile can really help you build a reputable and trustworthy enterprise.

Advertising and marketing are good ways to promote your business and to generate commerce. James Irwin left his career in finance to set up The Handy Squad in 2005. He stresses the advantages of creating a website for your business, to develop and retain a strong online presence.  “We invested a lot in our website initially because we believed it would really help us market our business.  It is also good to have a reliable IT system – it’s a worthy investment”, he says.

Cost of starting and running a handyman business

The cost of setting up a handyman business can be fairly low, especially if you are a one-man-band. Initially you will need to purchase a set of tools, many of which you may already own, and you also need to think about a vehicle – a van, car, or even scooter will do. However, if you don’t have enough funds to buy a vehicle straight out, it may be worth looking into vehicle leasing. Will Davies from Aspect Maintenance recommends going to your local bank to ask about vehicle leasing, as many of the main leasing companies are associated with major banks.

Other costs you may want to consider are that of getting a dedicated business mobile phone plan (which may be able to be claimed as a business expense) and branding and marketing costs (from invoice design to local advertising).

In terms of what you can earn, this can vary according to the size of your business. Most handyman services charge customers at an hourly, or sometimes half-hourly rate, although some also charge a separate call-out fee. Occasionally companies charge according to the job, however this can be complicated, says Will Davies, because it is often difficult to judge the size of the job from speaking with the customer over the phone.

A fairly standard charge may be £20 or £30 per half hour plus VAT. Individual handymen can make up to £300 in a day if business is good, but this may require working long days. Chris Gilbey’s working day often starts at 6am and may not finish until after 10 at night. He says it’s a very “hands-on industry”, however he insists that the excitement and satisfaction of running your own business far outweighs the arduous working hours.

Kerrie Hanafin has learnt two important lessons from starting her business.  She highlights the significance of keeping a close eye on the figures and to work out costs ahead of schedule, to make sure you stay on top of things. She also emphasises the importance of paying yourself first.  “When cashflow is tight, you often find that you end up working for nothing because other people need to be paid.  However, you must always ensure you pay yourself first, to avoid letting yourself down.” James Irwin, from The Handy Squad, reaffirms this point, having witnessed his own salary take a back seat in the early days of his business. He also highlights the importance of being fair in business.  He says: “Always treat customers fairly and price fairly, because that way customers will return with more business and will recommend you. Probably half of our business is through word-of-mouth and repeat customers, and I’m sure it’s because we are fair.”


Useful contacts

There are a number of helpful websites that offer information and advice on how to start up a business. Business Link is a credible government site that can provide personal advisors to individual businesses, free of charge. There is also an extensive range of easily accessible leaflets on all areas of business that can be an invaluable source of information. Visit www.businesslink.gov.uk

NICEIC Head Office 0870 013 0382 www.niceic.com

Gas Safe Register 0800 408 5500 www.gassaferegister.co.uk

Construction Industry Scheme (CIS) 0845 366 7899 www.hmrc.gov.uk/cis/

VAT Registration 0845 010 9000 http://www.hmrc.gov.uk/vat

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How to start a craft business

Before starting a business in crafting, here are the key steps for learning how to start a craft business are:

  • 01 | Define your craft business idea
  • 02 | Understand the skills required
  • 03 | Research your competition
  • 04 | Define your target market and customers
  • 05 | Develop your brand and business name
  • 06 | Build a website or store
  • 07 | Evaluate essential costs and fees
  • 08 | Develop your marketing strategy

What is a craft business?

Austerity chic: thanks to the current economic dip, crafting really is ‘in’. Think crochet, soap, cross-stitch, jewellery-making, and wooden toys. Or pottery, glassblowing and tapestry. For hobby suppliers, it’s big business, and growing exponentially. According to figures released by speciality craft and hobby store HobbyCraft in December ’09, cake baking alone was up 85% year-on-year while knitting sales were up close to 28%.

And this trend shows no signs of waning. In July 2011, HobbyCraft reported an 18% jump in pre-tax profits, year-on-year, driven by the growing popularity of crafts. Sewing and knitting groups such as Stitch London are popping up all over the country. Homebaked is fast becoming the only way to go: so why not go for a piece of the cake?

If you are one of the recession’s newly converted crafters, or even if your mother or grandmother taught you to crochet, knit, sew, bake and rag rug long ago, you could well have found yourself thinking: there’s more to my craft skills than those throw cushions I zipped up for the lounge. And you’re right. The skills you take for granted could well become a promising venture.

Many crafters take time to come round to this way of thinking. Crafting ambitions can be unfairly dismissed, as Amanda Ryan of craft gifts shop Maisielu.com explains: “I never thought of using these skills as my source of income because throughout my academic years ‘helpful’ careers advisers told me I needed a proper job in an office with computers and business profiles!”

But when you think of it, this home-based, low investment business has much to recommend it: self sustaining organic growth is not to be sniffed at. Meanwhile, the growing number of online marketplaces, such as Notonthehighstreet.com and Folksy, are offering crafters more cost-effective routes to market than ever before.

So whether you’re a dab hand at felting, a knitting fanatic, or a screenprint superstar, keep on reading to see if it’s for you.

Who is starting a craft business suited to?

Crafts businesses and mums… the cliché holds true to a certain extent. Start-ups in this area are often powered by mothers who want to stay at home to be a full-time parent to their children. Joanne Dewberry, of party bags and toys craft company Charliemoos.co.uk, explains: “A lot of craft business owners are mums who suddenly have more time on their hands and start crafting for a hobby. Then they end up with loads of finished products and the best thing to do with them is sell them!”

Of course, you don’t need to be a mother to go in to the area. Don’t worry if you’ve not gone to art school, and don’t be overly concerned if you have no professional training in your craft either. You don’t necessarily need this to start up a business. Many successful businesses are powered by the enthusiasm of talented amateurs. “One of the factors that held me back from starting my own craft business was the belief that I didn’t have the correct background,” Amanda Ryan of Maisielu.com admits. “Most of the craft orientated businesses that I liked and researched had been started by people who had completed degrees and had suitable contacts in this market…”

But if you research the various structures a business can take, you will find a ‘new wave’ of craft businesses taking off. There has been a surge in numbers using on-line market places specialising in the hand crafted area; such as Etsy (take a look at our dedicated guide on how to start an Etsy shop), Misi and Folksy. “Looking at the array of people from amazingly different backgrounds on these sites helped me understand that to set up a craft business all you have to know is your craft,” Amanda explains. “Everything thing else can be researched, and gained through experience and the helpful knowledge of others.”

Joanne agrees: “I have totally self taught to sew. My first sewing machine was a child’s tiny £10 sewing machine which my hubby bought me for Christmas! I know what I like and I just find out how to do it.” Even though she had no ‘craft’ background, Joanne had the wherewithal to make things work. Before she had her children and set up her own business, she worked as a nursery manager. She believes this, and a number of relevant courses, has afforded her all the background business knowledge required, and now mentors through the Prince’s Trust.

Fiona Morris of Samigail’s Handmade Personalised Gifts had a similar experience. Not only did she lack a craft background, but she was unsure how she could make a viable business out of any craft in her repertoire. “Even when I was a solicitor, I always enjoyed lots of different types of arts and crafts,” she says. “But at the time I couldn’t think of any class that I did that really would be commercially viable.” Then she found pyrography. “I just taught myself that, and then a friend of mine said they would work as a gift for her children’s teacher at Christmas. In that way I realised I had a commercially viable product!”

So as long as you enjoy the hobby, and you have the requisite equipment, then that’s all you need to set up a craft business. Don’t let any perceived cliquishness turn you off.

Getting your business started

When you are setting up your craft business, the most important choice is, of course, the craft you choose. There are many popular craft areas, and it’s a competitive field. So it’s extremely important to differentiate your offering.

“In terms of crafts, there’s a lot of people who make handmade cards,” Fiona Morris of Samigail’s Handmade Personalised Gifts notes. “I know when I go to a craft fair or a school fair, there are a lot of stalls with handmade cards, and a lot of stalls for jewellery. If you want to go into business in craft, you would be wise to think about an area that isn’t already saturated in the craft market.” Find a unique selling point, like Fiona has. She says she always knew she wanted to personalise items for people, and make something very special and particular to them.

It’s imperative to research your product well, too. When determining which craft to go into, Fiona searched on Google for the products she had in mind, looking for what was already out there and how hers might be different. It’s a good idea to look for the products that actually sell. “Ebay is very good for checking up on products that sell well,” Fiona advises. She suggests you might check for prices too, “obviously bearing in mind that your product might be different, so it might have a slightly different price. But for a general guideline for what sells at what price, it works!”

You need to know your market, also. If you’re producing wedding jewellery costing hundreds, for instance, you should not aim to sell at a school fair, or a Sunday hall market! There are other reasons to do careful product research, though. “It can prevent copying others’ designs,” according to Amanda Ryan of Maisielu.com: “You may not do it on purpose but with certain jewellery suppliers selling to lots of makers you can end up with very similar products.”

It’s not a good idea to rule out all copying, however. Once you have decided on your craft, you’d be well advised to seek the advice of fellow crafters online. It’s easy to source very specific advice, according to Fiona. “A lot of people use online forums, in particular, mum’s forums. Some of them have a separate section for business. And the crafting forums give great advice.”

Crafting forums will be full of people who have gone through similar experiences to you in setting up their own businesses, and can give you avenues to finding out things like public liability and insurance specific to crafters. “You can Google a lot of things,” says Fiona, “but finding craft insurance was one of the things I struggled with. Searching the specific craft forum really just solved that very quickly.”

Amanda Ryan of Maisielu.com agrees: “The greatest thing for someone setting up a craft business is website forums: the sales sites all have them for sellers to discuss business together.” Importantly, forums are also often frequented by customers who are hoping to seek out artisans for commissions. “The sites I used most was Crafteroo, a forum for crafts people most of whom run their own businesses,” Amanda advises, “and UKHandmade, an online magazine for craftspeople.”

If you’re starting your craft business from home, check out the insurance you might need as a home-based business owner.

What does it cost to launch a craft business?

If you need to invest substantially in anything for your start-up, it will likely be in equipment for your chosen craft, and perhaps a website to sell your produce. If you’re a beginner it’s not advisable to go for new top of the range equipment. Not just in case your things don’t take off, but because it’s possible to find good equipment second hand. “You can try looking in your local charity shops,” Joanne Dewberry of Charliemoos.co.uk suggests. “You’ll find lots of people buy all the equipment, give up or never use it. It’s a great way to get started.”

Crafting does not usually require a great deal of investment to start off with. Often, you’ll already have most of the initial stock and equipment from practising your hobby. This was the case for Amanda Ryan of Maisielu.com: “I was lucky that my business was a hobby first so I already had a lot of supplies and equipment,” she says.” I think a lot of craft businesses evolve this way giving the owner a good start up stock.”

Business grew in an organic manner, and very intentionally so, for Fiona Morris of Samigail’s Handmade Personalised Gifts, too: “I was very aware that I was going to start the business on a very tight budget. Except for the initial expenditure in a basic pyrography iron and some wood blanks, at every stage of growth the business has paid for itself.”

Organic growth is certainly something to aim for, but at the very early stages, investment needs will vary according to your craft, your equipment and the kind of stock you need to order in. Like any business, it is advisable to have a buffer in place.

Selling your craft products

In terms of bringing your crafted items to market, there are many ways and means. Fiona recommends starting off at school fairs, and church fetes as well. It’s a good way of spreading word-of-mouth. Someone may buy something from you directly, and perhaps go on to seek out your site.

Of course the site of sale will depend on what your product is. It may need a street presence, or sell better in an established local shop. It may be more suited to craft fairs at seasonal times. If you’ve done the correct research you’ll know. But mistakes can be costly, so be fastidious.

“I chose to sell through Misi and Folksy first,” says Amanda Ryan of Maisielu.com. Both of these are British run craft selling websites. There are others like Notonthehigstreet and Etsy too. “These fitted my needs,” Amanda explains. “With minimal set up costs, you can set up a store within their site, list your products and off you go! You get support from their forums, an online presence, get to test your products on a target audience and all for a very cheap fee and commission rate.”

These kinds of sites are excellent. But do not take it for granted that they are for you as they’re not suited to every craft business. With Maisielu.com, the products are small, so it was not cost effective for Amanda to open a high street store with huge overheads. Your business, should it be a pottery or a wicker workshop, for instance, could benefit from a studio shop, or artisan workspace.

Many crafters set up their own website. It is possible to build your own site at home for free, as Amanda ultimately did. “I felt the major breakthrough for my craft working as a business was when I launched my own website. Selling through my own space rather than sales sites, I don’t have to pay fees to others.” Even if you are quite technophobic, the process is not extraordinarily difficult. “I used create.net,” Amanda says, “a website template company. They were on hand if I ever had questions and made it a joyful project.”

Fiona also built her first site, but she was not entirely happy with the result. “You can do things very cheaply,” she explains. “I started with a free website and really that is something I regret. I wish I had gone for website hosting that I have now, straight away. I wish I had not bothered with the free website!” It’s worth considering all of the services you’ll need a website to offer your customers: it may be worth investing in a site to ensure usability etc.

If it is going to form a central facet of your business, and you want to encourage repeat custom, it is important to have a good quality site. Have a mailing list and a newsletter too. Look into Twitter feeds and set up a Facebook account – this can link to your online store. Make sure your site boasts a range of features including customer and or/community forums, news updates and images, as well as your basic online ‘shop’.

And if you are getting a site built, or hosted, do watch how much you pay. “My hosting costs about £60 a year,” says Fiona. “But there are a lot more expensive ones out there.” If you are on a budget, watch details such as this.

Depending on how you choose to sell, there can be sellers’ fees, commission taken, insurance, and fete table costs. There can be studio rents, utilities, and so on. You also have to consider Paypal fees, accountant fees and tax, too. Like any business, once you look into it, there is a great deal to arrange. “But none of these should put you off your business idea,” Amanda advises. “These things just need to be researched and managed.”

Similarly, there is much to consider in terms of pricing your product. With a craft business, you must take into the equation not only the cost of materials but also how much time you have put into a product. And weigh up your target market. High end clients will expect to pay a premium for handmade products.  “Don’t pitch yourself too low,” Joanne Dewberry of Charliemoos.co.uk warns. “When the work starts flying in and you’re up making at all hours and the cash tin is empty you’ll struggle to raise them up higher.” So make sure you get your pricing right.

Research is key to this. You have to decide where you want your products to be stocked and what price ranges are the norm for your business. Galleries can take up to 50% in commission and table costs can be high at the best craft fairs. “So think outside the box,” Amanda advises. “Do open house events where your living room is your studio and invite friends and family round for the afternoon. Or hire a small venue for the evening for your own gallery evening, and send pieces to local magazines with covering letters for fashion shoots.”

The possibilities are endless. In your business set up as well as your craft, it pays to be creative.

Tips and useful contacts

Top tips

Value your customers

“Try to value your customers,” advises Fiona Morris. “Word of mouth has gone a long, long way for me. Value the quality of product, but also value your customers. And that way you’ll get more customers coming back.”

Seek out positive advice

“Surround yourself with people that have positive attitudes and will give you constructive advice,” Amanda Ryan suggests. “I find the worst aspect of a craft business is the negative comments people can make. Some people don’t understand how much time and resources can go into a hand crafted product. They think it should be the same price as a mass marketed item!”

Join online craft forums

“There’s a huge amount of support that’s on there from genuinely very kind people,” Fiona advises. “They are in the same boat as you.”

Price carefully

“Don’t forget to cost for your time,” warns Joanne Dewberry. “Or you’ll find you’ve worked all hours and have made no money. Buy in bulk and steer clear of shops such as HobbyCraft where you will pay high street prices and thus have no room for profit!”   Phone your local tax office “I know a lot of people are scared of the tax office. But it’s really a wonderful resource,” Fiona says. “They genuinely want to help you. They send you out quite a lot of things just so you don’t get lost with you tax and your National Insurance….”

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How to start a mobile apps business

Combine sky-high downloads with impressive revenue. Read our guide to cracking the apps market

Thinking of starting a business in mobile applications? Funnily enough, like anything else you care to name, there’s an app for that.

Search the App Store, Android Market et al, and you’ll find plenty of examples: there are applications that offer app development code tutorials; apps that enable you to test your idea through market research; and even more applications that allow you to submit your mobile app idea to developers. Then, there are applications that help you keep track of sales once you’ve launched your mobile app…

With more than 225,000 apps to choose from on Apple’s App Store, tens of thousands on Android Market, and other platforms such as Blackberry, Nokia and Windows Mobile doing their darnedest to catch up, mobile apps is a growing area if ever there was one.  It’s a crowded and competitive marketplace too, however, and not an easy one to break. While it’s true anyone can develop an app, and many get brought to market, very few mobile app businesses actually make any money.

What is it and am I suited?

Since the launch of the iPhone in 2007 and the resultant boom in smart phones, mobile apps have become the hot spot for new businesses. As Tristan Celder of Zolmo (the developers behind Jamie Oliver’s iPhone app which won top prize at the Apple Design Awards winner) puts it, the mobile app industry is “a lot like the music business. It’s all about the Top 40.” It’s dog eat dog, and things move very quickly.

To top the charts, you need a good idea, for sure. But you don’t need to be an expert developer yourself. It’s a business like any other: you have to work hard to create a decent app and you need to know your market.

In the UK, the most popular apps change all the time. Everything from throwaway gaming to retail, social networking and education gets a look in. Stand out successes range from gimmicks such as iPint from Carling and World Cup favourite Vuvuzela, to giants such as GoogleMaps and Facebook.  There’s a world between them all: so what do the chart toppers have in common?

Our case studies, Jamie’s 20 Minute Meals, Tweetdeck, Touchnote and The App Factory, have seen varying degrees of success in the mobile app market. They are very different businesses, each with their own approach to development; to monetising their product; and to growing their venture. But what marks each out as a special case is the solid business thinking behind them:

  • Jamie’s 20 Minute Meals: a made-to-measure paid for app with celebrity credentials
  • Tweetdeck: a free social networking app with big business funding
  • Touchnote: a free-to-download app linked with a mobile provider
  • TheAppFactory.co.uk: a self funded early stage app development agency and publisher

Investing in your app

Before you launch into the app world, be prepared: developing a mobile app is not cheap, whether you put the hours in yourself, or commission a pro to develop your product. Figures will vary according to the complexity of your app, but regardless, development costs can be fairly high, especially if you plan on developing quite a few.

If a developer is creating your app for you, their charge may vary according to platform. For a really simple app on Android, for instance, £500 is probably the minimum. For a simple app on iPhone, it can go from around about £800 plus. At the higher end, for a more complex app, you could be going for £4,000.  Things can get a great deal more expensive than that however. Anecdotally, we have heard of an American development company flying over to a UK client via private jet. Apparently, they wanted to charge £25,000 for the project in question, and a percentage of the revenue too. (We suppose they needed to pay for the jet somehow.)

There are development companies out there who will go for really high prices, and there are companies who will pay it. Raam Thakrar of Touchnote warns: “I know people that have built apps for not much more than a thousand dollars. But I also know of many companies that have spent in excess of £100,000 on an app. Just be really careful of what you put in, because a start-up going into mobile… most of them don’t make money on it.”

If you need a good bit of start-up money to develop your app and to get it off the ground, how you go about securing this investment is another question. You can save, self fund, and start small, like David Carter of The App Factory; or you can try to secure the backing of investors, like Iain Dodsworth of Tweetdeck. His company has the backing of ProFounders Capital, the fund set up by Bebo founder Michael Birch and Lastminute.com founder Brent Hoberman.

“A year ago,” Iain explains, “Tweetdeck was a one man operation. Now there’s 15 people. In order to grow that quickly in terms of resources, in order to build quickly, you need to have an amount of money, but you also need to talk to the right people.” With an investment base you get a lot more than money; through them you are better connected, and are likely to find developing relationships with platforms and providers comes a great deal more easily. “We could have done it as a one man band,” says Iain, “but it would have taken a lot longer to get to the stage we’re at.”

You could also decide to tie your app to a particular mobile service provider, as Raam Thakrar of Touchnote has done with Sony Ericsson; or share revenue with your developers, as Zolmo and Jamie Oliver have done. There are many ways to skin a cat, and as many paths to funding your app.

Even if you don’t have financial backing, you shouldn’t let high development costs put you off, according to Tristan Celder of Zolmo: “If you haven’t got the capital to risk and your idea is strong enough, there are ways and means of getting your application produced.” Apparently Zolmo is always looking for strong content partners, and so in this case, the cost of producing an app would be zero as Zolmo would act as publisher.

The development stage

You do not need to be an expert developer in order to take a mobile app to market, although it could certainly keep costs down. But whether you build and test the app yourself or work with a developer, you need to invest a great deal of time in the development stage. You could mock something workable up in a week or two, but if you are serious about things, two months is really the minimum. Many apps take six months and more to work up to a finished product.

If you are developing the app yourself, you need technology appropriate to the platform on which you’ll be launching too. If you want to launch on iPhone, for instance, this means an Intel-based Apple computer, and devices for beta testing: an iPhone, an iPod Touch, and perhaps an iPad. You’ll need to register as a member of the iPhone Developer Program, which costs; and get your hands on the iPhone Software Development Kit (SDK), which is free, and assists in the development of native applications for iOS, using Cocoa, Xcode etc.

You may need to buy a platform specific developer license for certain other platforms too. For Android Market, the system for app development is less proprietary: Android is a Linux-based platform from the Open Handset Alliance whose members include Google, HTC, Motorola, Qualcomm, and T-Mobile. Unlike iPhone, Android apps can be developed and obtained by users from anywhere, even a third party developer’s own website, and sales are not limited to Android Market. All this opens things up for developers. Of course, as the platforms are generally mutually incompatible, the techie detailing and coding changes with each.

If you’re not a technology expert, the thought of coding and intensive testing can sound too much. But you can leave that side to the developers, as David Carter of The App Factory explains: “If you’ve never built an app, you’re better getting a company or an independent developer. The coding itself is very easy for someone who’s in the know. But if you’re new to it, you could take hours trying to work it out!” We can safely say, ‘hours’ is probably an underestimate.

In any case, don’t let coding and such hold you back. Making an app requires the coming together of many disciplines: in the broad sense, developing an app takes so much more than technical knowledge. “Of course you need software engineers,” Tristan of Zolmo explains, “but you also need great product designers, graphic designers, sound designers, content producers, and in the case of 20 Minute Meals, a photographer and entire video production team.” In addition, you need great marketing and PR people. You could say one of the most important skills required for building an app is the ability to build a great team.

What platforms to use for your app business

Symbian, Android, Windows Mobile, Blackberry, iPhone… There are many platforms vying for developers’ attention. The App Store for Apple is the primary market right now, and Android Market, and its various carrier partners, is fast becoming a fierce contender. Blackberry, Windows and others should not be discounted out of hand though: many carriers are looking around for interesting propositions, and working hard to grow their market share. As Iain Dodsworth of Tweetdeck says: “All the app stores are searching for really good applications to put out for their user base – so they can market their store as the place to go to get cool apps.”

Developers should consider their options carefully. Choosing to go Apple or Android is a big commitment: “The App Store is certainly the place to be at the moment but Android is showing signs of promise,” Tristan Celder of Zolmo advises. “At the moment, you have to build different apps for different platforms and this takes resources, so choose your platform or platforms wisely.”

Many companies choose to launch their app across multiple platforms. Like anything, there are pros and cons to this. “There are platforms such as Flash,” Tristan explains, “which promise to operate on multiple platforms. But as Apple has rightly pointed out these come at the cost of features and performance.” Often companies publish on a number of platforms because this approach offers more earning power, however. So it could balance out. Touchnote, for instance, is now live on four different platforms. “We’ll be on six or seven in the coming few months,” says Raam Thakrar, CEO. “For us, it’s been a significant development and a big cost.”

Each system is so different that each platform requires a native build. “The thing is,” Raam explains, “a lot of the stuff used for one platform won’t be useful for other platforms.” So for instance, what you develop for the iPhone: technically, it’s no help to what you might do for Android. It may be useful in terms of features, but not in terms of the real developers spending time working on it.

In terms of revenue, and pricing, the platform generally takes a percentage: Apple and Android take thirty percent of sales revenue and publishers take the rest. “In many cases the publisher and developer of an app are one and the same, such is the case with 20 Minute Meals and Zolmo,” Tristan tells us. “The reward can be good for publishers, but it comes with its risks – so make sure you do your market research.”

Whichever platform you go for, you want to make sure that the first app you do is spot on. “Don’t submit it with any errors in it,” says David Carter of The App Factory, “That’s the sort of thing the platforms pick up on. They go into amazing detail and will find it if there’s anything wrong with the app.”

Pricing strategy for your app

Deciding on how much you charge for your app can be tough: as Raam Thakrar says, there’s a lot of interesting thinking around that!  Many companies struggle to make the numbers tally even if they charge; many others choose not to charge for their app in order to get higher numbers of downloads. Touchnote, for example, offers a service whereby they give the application away for free, and then charge each time it is used.

“We very much wanted to encourage multiple and repeat usage,” Raam explains. “So that was a very easy decision. You can think of many other apps that do charge on the first download. But for an app developer, the central question is, ‘What is my return on investment, in terms of the amount of money I will likely make versus the amount of hours I will put in?'”

Often you can adjust the price and monitor the reaction, and make the decision through trial and error, and learning what sells and what doesn’t. “We’ve tried a number of pricing strategies,” says David. “So if some apps were doing well, we put them up a bit. But then they wouldn’t sell, and so then we would cut them and see if we would get more downloads…”

Some of the apps The App Factory develops and publishes are free downloads, and money is made back on adverts. If you go down this route, when you put your app through to the store, the platform decides on the advert that will display on your banner.

The Tweetdeck app is entirely free, without advertising; founder Iain Dodsworth suggests developers decide whether they want to make money directly from the product they’re building or if they want a lot of users. “We’re not selling these apps,” Iain says, “They’re all free. We are developing a broad user base.”

In terms of monetising the venture, if you make your app free, it is not plain sailing. If you want to trial this approach, it is best to have funding behind you.  Again, there are not many people who make money out of it.  As Raam says: “There are too many people putting hours and weeks and months into it, who are getting £2,000. When it comes to a return on two months of work, that is not even enough to live on, let alone increase the business on!”

All the platforms need developers to continue developing applications as they are doing now. So perhaps things will ultimately change so that developers/publishers get a better return on investment. Until then, choose your pricing strategy with care.

 Growing your app venture

Depending on whether you decide to develop one app and stick with that, like Zolmo, Tweetdeck and Touchnote; or turn your app talents into an agency, like The App Factory, you’ll want to grow your business into a bigger venture. So how do you go about establishing your app as a market leader, and get yourself known in the app world?

The best start is building/publishing a great app. “There is an old cliché that says the best marketing is word of mouth marketing,” says Tristan. “This is true for so many reasons, but the key to getting this kind of marketing is by building a great product – followed up with great PR.”

And think long term from the development stage. If you think your application has a shelf life, then you should develop accordingly. So if you’ve got a game that you think is going to be popular for only three or six months, for instance, then you should plan to evolve it.  On the other hand, if you have something you think will be around for the next three or four years, then you need to keep on improving it and iterating so that you can keep your customers engaged.

Some, such as David Carter of The App Factory don’t believe marketing is strictly necessary. “If we do an app on iPhone or for Google or Blackberry,” he says, “they take care of promotion themselves. Once it’s in the store, that’s it.” But if you are planning to promote your app, earlier is best, if you take Tweetdeck’s advice. “If you develop a kind of fanfair, some kind of PR, then you’ll be able to give it a better shot. From what I’ve seen,” says Iain, “it really is all about that initial spike of interest and downloads and obviously revenue from selling your app. So if you can maximise that spike, you should.”

There are many paid-for apps which work on this basis. They exploit the initial spike of interest by adding on new levels to games. The developers produce version two of the app, version three… and it keeps interest going. In this way, they keep downloads high. The trick is to drum up numbers when you first launch the app – and then keep interest by iteration and new developments.

Keep in mind, for your app to be profitable, and to get enough return on your investment, you need to be getting 50,000 downloads, or even 100,000 or 200,000. There are far too many apps that haven’t made that, according to Touchnote’s Raam Thakrar. “You need to think about it,” he says, “You need to build and develop a marketing campaign, or somehow you need to have built a sufficiently addictive or viral enough proposition that people start telling each other.”

 Tips and advice for a mobile app business

Get close to service providers and platforms

Tip from Tweetdeck: “If you want to put something up on iPhone, you’ve just got to get in there with Apple. If they really like what you’re doing, you find yourself walking past an Apple store and you see your logo in the window. It’s obviously worth spending a lot of time speaking to the people who run the platforms.

“When you’re thinking about Android, obviously it’s going out to different carriers and their own app stores. And all the app stores are searching for really good applications to put out for their user base. So they can market their carrier store as the place to go to get cool apps.

“Spend a lot of time trying somehow to get in with those people, the platform itself and then the carriers.”

Find a mentor Tip from Touchnote: “Go and find yourself a mentor. Someone who can help you along the way, who’s possibly a few years more experienced than you are and who’s been through similar issues. They will not necessarily solve technical issues, but they will be around making sure your proposition is strong, making sure your thinking is correct, challenging some of your assumptions and so on.

“Go and find one of those people. They are worth their weight in gold, they really are.”

Listen to your users Tip from The App Factory: “You can get user comments on comment boards in app stores, which can help with development and iteration. Some users will send emails through to your company as well, which are really helpful actually. You get great ideas from what people say.

“Often if you get an idea this way, you’ll think, wow that’s great. Most of these people like the app you’ve put out, and just want to see an update of it. And as you’ve got the IP, you can build it easily.”

Useful business contact

Got an idea for an app but not sure who to get in touch with? Here’s a list of useful contacts and organisations to get in touch with:

Android developer site: http://developer.android.com/index.html

Android SDK http://developer.android.com/sdk/index.html

Nokia Ovistore: http://store.ovi.com/

02: http://www.o2.co.uk/

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£5m start-up fund for armed forces veterans

Government announces package of loans and grants

The government has created a £5m fund to help armed forces veterans start their own business ventures or become self-employed.

The Be the Boss campaign was announced by the Department for Business Innovation and Skills and has been developed in partnership with the Royal British Legion.

Ex-service personnel, who have been discharged since October 2001, will be able to apply for a loan of up to £30,000 and grants of up to £7,500. In addition, business advice and mentoring will be provided through the Royal British Legion.

Veterans Minister Kevan Jones said: “So many members of the armed forces have the skills and discipline to make a success of their own business.

“This scheme will provide them with the tools – and confidence – to develop sound business plans, as well as funding start-up costs. It is another example of our commitment to the men and women who have served our country.”

Paul Kyriakides, who left the Army in 1999, started a business last year after being made redundant in 2008. He set up his own plant-growing business and now sells at farmers’ markets in London and the South East.

He said: “These are difficult times and it would be wrong for me to suggest that starting your own business is easy. However, it is an incredibly rewarding experience and has allowed me to use the discipline and hard work that I learned in the Army.”

For further information on the scheme, or to apply for financial support, visit www.civvystreet.org or call 0800 678 5787.

© Crimson Business Ltd. 2010

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Essence of the Entrepreneur winners previewed

An exclusive look at Rankin’s portraits of the winners of this year’s BT Business Essence of the Entrepreneur competition
An exclusive look at Rankin’s portraits of two of the winners of this year’s BT Business Essence of the Entrepreneur competition.

The BT Business Essence of the Entrepreneur competition has once again identified 20 successful entrepreneurs who are building successful and fast-growth small businesses with the help of technology.

A panel of judges headed by Dragon Peter Jones sifted through hundreds of entries to choose this year’s list of winners.

Jones said: “The BT Business Essence of the Entrepreneur winners are bucking a trend, creating stand-out businesses, harnessing the developments of technology and thriving. I was massively impressed with the standard of entries, and the diversity of the entrepreneurs, and I congratulate the winners for being selected.”

All of the winners had the spirit of their business captured by renowned portrait and fashion photographer Rankin, who made his name photographing celebrities including Kate Moss, David Beckham and Naomi Campbell.

The judges also identified an overall winner, Robert Matthams, founder of innovative online delivery service Shiply.com, as the outstanding entrepreneur of the year.

Matthams will receive a £10,000 grant from BT Business to help him further fuel the growth of Shiply.com, which helps customers find cheap courier services by matching them up with under-booked delivery companies already making similar trips across the UK & Europe.

Additional recognition was given to four entrepreneurs in the following categories:

  • Best female entrepreneur – Sara Murray – Buddi

Murray set up Buddi, which manufactures the world’s smallest assisted GPS personal trackers with emergency support, after losing her daughter in a supermarket, and it is now a hugely successful company

  • Best male entrepreneur – Mitesh Soma – Chemist Direct

See below

  • Young entrepreneur – Daniel Ox – Fruit For the Office

Ox transformed his family’s traditional fruit and veg stall in Piccadilly Circus into a thriving online business, which is the first company in the UK to offer a specialised fruit and veg delivery service to the office

  • Most original business concept  – Bompass and Parr

Self-confessed ‘jelly mongers’ Sam Bompass and Harry Parr use CAD to create fine English jellies, design bespoke jelly moulds and curate spectacular culinary events

 

While a high profile exhibition of Rankin’s portraits of the entrepreneurs will be launched on January 27 with a private view party, Startups has been given an exclusive look at two of them.

The portraits will be displayed from January 28 at the gallery@oxo on London’s South Bank until February 28. Startups also has two pairs of tickets to give away to the private view launch party (full details below). For a full list of this year’s winners, visit www.bt.com/entrepreneur, where you can also find out how to enter next year’s scheme.

WINNER: Mitesh Soma, chief executive, Chemist Direct

Founded at the end of 2007, Mitesh Soma’s online pharmacy has grown remarkably quickly, achieving £5m in its first full year and projecting between £10 and £15m for 2009. The already profitable Chemist Direct buys stock in bulk, sells nationally and offers discounted prices on 20,000 products that include everything from toothpaste to anti-malarials. Customers can also call to speak to registered pharmacists who check every order.

A fortuitous meeting with former Skype co-founders Niklas Zennstrom and Janus Friis, now of VC fund Atomico, led to a £3m investment which Soma said has “allowed us to continue our hard work in growing the business in a number of areas, such as expanding the customer services”. The firm’s cut-price offering has helped it secure more than 300,000 regular customers.

With Chemist Direct now the market leading online pharmacy in the UK, Soma has also recently launched an offshoot that will sell office supplies and stationery online.

Soma was named male entrepreneur of the year in this year’s scheme. While he’s no stranger to winning awards, including online business of the year in last year’s Startups Awards, he said Essence of the Entrepreneur offers something unique.

“There are plenty of fantastic awards out there but what appealed to me about Essence was the unusual format, with a Rankin photoshoot replacing the traditional awards ceremony. This is a fun and different approach, which chimes well with the entrepreneurial spirit of the entrants,” he said.

“The exhibition should be good fun, if a little strange in terms of seeing our own faces staring back at us. I hope the photo the exposure will help raise the profile of Chemist Direct in one or two different arenas to the ones we’re normally used to.”

WINNER: Marcus Simmons, managing director, iknow-uk

When Marcus Simmons’ work as a consultant dried up at the start of the decade, he developed technology to power “high visibility websites” that performed well in search engines. “You couldn’t sell them eight years ago,” he said.  “I thought it was important, so I built one myself.”

Founded in 2003, iknow-uk’s regionally branded directory websites allow hotels and B&Bs to gain huge search audiences and sell individual entries at a low cost. The company has doubled its turnover in the last 12 months to £1.5m and will be launching a new regional site every other month in 2010. Its sites get an average of 250,000 unique visitors a week.

Simmons said: “Being named as a finalist in the BT Business Essence of the Entrepreneur awards has certainly been a highlight of 2009 and is testament to the hard work of our entire team.

“We’re still a young company. Winning an award gives customers confidence in the company, and crucially, helps us recruit excellent people. The best people can have doubts about joining smaller companies and we find this really helpful.

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Brewing success: how to start a café or coffee shop

Thinking of turning your coffee shop dream into reality? We have the ultimate guide to brewing up a perfect business in the cafe sector.

Startups.co.uk is reader supported – we may earn a commission from our recommendations, at no extra cost to you and without impacting our editorial impartiality.

In recent years, the UK has been steadily moving towards the kind of well-established cafe culture that our European cousins are famous for.

And while independent coffee shops have taken a hit following the COVID-19 pandemic and the ongoing cost of living crisis, the industry is starting to bounce back.

However, starting a business and opening a successful cafe requires more than a passion for coffee. It also needs careful planning, strategic decision-making and a deep understanding of the market.

In this guide, we’ll walk you through everything you need to take your coffee shop business plan and turn it into a thriving business – from bean to cup.

💡Key takeaways

  • Social media, local partnerships, and a professional website are effective ways to promote your coffee shop.
  • Loyalty programs like stamp cards or points can also help boost repeat business and build customer loyalty.
  • Typical coffee shop costs include equipment, supplies, utilities, marketing and taxes (e.g. income tax, VAT, and business rates).
  • You should choose a spot with high foot traffic, good visibility, and a layout that fits your vision.
  • You must comply with numerous regulations, such as adhering to food hygiene standards (FSA) and getting licenses for playing music.

Creating a business plan

Before anything else, you’ll need to write a business plan. Put simply, this is a document where you’ll outline your cafe’s goals, target audience, financial projections and strategy for success. It serves as a roadmap for your business, helping you stay on track while showing potential investors or lenders that you have a well-thought-out plan to get your business off the ground.

When writing a business plan for a cafe or coffee shop specifically, you should consider the following.

The overall industry and how your business will fit into it

This section should address how your cafe will align with current market trends. 

For example, are you catering to a growing demand for premium, artisanal coffee and sustainable practices? Or are you focusing on providing an independent, unique alternative in an area dominated by large chain brands? Understanding where your cafe fits will help define your target market and positioning.

Competitor analysis

You should look at competitor pricing, location, branding and marketing strategies. Are they attracting a specific type of customer? Do they have strong brand loyalty or a standout social media presence? 

You should also identify gaps in their offerings – such as limited seating, slow service, or a lack of speciality drinks – to help you position your cafe more effectively.

Beyond analysing competitors, think about what makes your coffee shop special. Will you focus on sustainability, locally sourced beans or a cosy atmosphere for remote workers? Perhaps you’ll offer unique experiences like coffee-tasting events or live music performances. The key is to create a distinct identity that resonates with your target audience and keeps them coming back. 

Sales and marketing

You’ll need to demonstrate how your cafe will attract customers and drive sales. Your sales strategy could include loyalty programmes, promotions or limited-time offers to keep customers engaged. For marketing, you might plan to focus on social media, partnerships with local businesses or hosting events to build a community around your cafe. Define your target market and how you’ll communicate your cafe’s brand and core values to them.

Conducting market research

Coffee quality is essential, as high-quality drinks ensure that customers get a consistently good experience, which builds trust and keeps them coming back. 

At the same time, understanding customer needs and the unique preferences of your target market will allow you to tailor your offerings – whether it’s creating custom blends, offering alternative milk options, or the atmosphere of your cafe.

But first, you’ll need to carry out extensive market research to understand your target market, their preferences and what influences their coffee-buying decisions. To do this, you’ll need to do the following:

1. Conduct primary and secondary research

First, you should carry out primary research by gathering direct feedback from potential customers by asking about their coffee habits, preferred drinks and spending habits. 

You can do this through surveys, questionnaires and focus groups and offer small incentives – such as cash, gift cards or free samples – to encourage participation.

Pro tip: questions to ask

For primary research, you should ask open-ended questions to get more detailed answers. For example:

  • What kind of drinks do you like to order?
  • Where do you usually get your beverage?
  • What’s most important to you when buying coffee? (e.g. taste, price, convenience, sustainability)
  • How much are you willing to spend on a cup of coffee (or any other drink)?

Moreover, you can observe customer behaviour by visiting a competing coffee shop and seeing how customers interact with the space. You can look at factors such as:

  • Do professionals prefer grab-and-go options?
  • Are students staying longer, using WiFi and ordering refills?
  • Are coffee enthusiasts asking about bean origins or brewing methods?

Once you’ve got the relevant information from your primary research, you can then move on to secondary research, which involves researching existing data. For this, you can:

  • Check social media (e.g. Instagram, Twitter or Reddit) for coffee-related conversations, trends and customer sentiment around different coffee styles, shops and experiences.
  • Look at Google Trends to analyse search interest for specific coffee-related terms in your area, such as “best coffee near me” or “speciality coffee”.
  • Review industry reports and market studies from sources like the Speciality Coffee Association (SCA), Statista or IBISWorld for insights on consumer behaviour and coffee industry trends.
  • Explore coffee-related forums and blogs to learn about emerging trends, customer pain points and potential niche markets.
  • Use government and business databases, such as Census data or Chamber of Commerce reports, to assess demographics, economic factors and foot traffic potential in different areas.

2. Research your competitors

Visit nearby coffee shops and observe their menu, pricing strategies and ambience. You should also check customer reviews on Google, Yelp and social media to see what people like and what could be improved. This will help you identify any market gaps that you could fill. For example, there could be a demand for more organic coffee, unique brewing methods or a more community-focused space.

3. Create a customer profile (persona)

A customer persona is a detailed, semi-fictional representation of your ideal customer, based on market research and real data. It helps businesses understand the needs, preferences and behaviours of their target market – allowing them to create products, services and marketing strategies that resonate with them the best.

Here are a few examples of customer personas to help you develop your own:

The busy professional (ages 25-45)

  • Needs coffee fast, prefers mobile ordering, values efficiency over ambience
  • Likely to choose espresso shots or simple lattes

The student (ages 18-25)

  • Prefers a cosy, affordable space with free WiFi
  • Orders flavoured lattes, cold brews or seasonal drinks

The coffee enthusiast (ages 30-50)

  • Enjoys speciality beans, brewing techniques and ethically sourced coffee
  • Willing to pay more for quality and experience

Starbucks’s slump in Australia

When Starbucks first tried to enter the Australian market in 2000, things didn’t quite go as planned. This is primarily because it didn’t adapt its business model to the local market. 

Specifically, the Australian coffee culture came from Italian and Greek immigrants who arrived in the 20th century and introduced espressos. By the 1980s, Australians had also developed their own kinds of drinks, such as flat whites and macchiatos. They also didn’t like sugary drinks – something that’s featured prominently on Starbucks’s menu.

Moreover, Australian coffee culture is centred around socialisation, so Starbucks’s to-go-focused cafes didn’t resonate well with the market. While the chain still operates in Australia, it closed down two-thirds of its site in 2008 due to significant losses. Today, there are only 72 stores across the country – all of which are located on the east coast, such as Victoria, New South Wales and Queensland.

4. Test your concept

Before committing to a full-scale coffee shop, consider testing your concept with a pop-up shop, a food truck or a stall at a farmer’s market. That way, you can measure customer interest, experiment with your menu and collect valuable feedback.

Additionally, you can also:

  • Collaborate with local businesses: partner with bakeries, bookstores or coworking spaces to set up a small coffee stand and test demand.
  • Offer catering services: provide coffee for corporate offices, local events or private gatherings to evaluate interest in your offerings.
  • Host tasting events: invite potential customers to try different brews, provide feedback and engage with your brand.
  • Track sales, foot traffic and customer feedback: use this data to refine your pricing, branding and product offerings before making a long-term investment.

Finding the right location

Next, you’ll need to find a location for your coffee shop. Don’t just pick any place at random, as where you set up shop can make or break your business. A good location means more foot traffic, easier access for customers and a better chance of success.

These are the steps you should take to find that perfect match:

1. Analyse foot traffic and visibility

A high-traffic area is essential for a coffee shop’s success. Look for spaces near office buildings, shopping centres, universities or public transport hubs where people naturally pass by. You should also spend time at different locations throughout the day to observe pedestrian flow. After all, a shop on a main street or corner will get more visibility than one tucked away in an alley.

2. Check nearby businesses and competition

Your surroundings can impact your success. Being near contemporary businesses – like bookstores, coworking spaces or gyms – can bring in steady foot traffic. However, too much competition from established coffee chains (e.g. Costa and Starbucks) may make it harder to stand out. Visit nearby cafes to analyse their customer base and see if there’s a gap in the market you can fill. 

3. Evaluate space and layout

The physical space should accommodate your business needs. Make sure there’s enough room for seating, counter space and kitchen equipment. If you plan to expand in the future, consider whether the space allows for growth. You should also factor in renovation costs, as some spaces may require significant investment to meet your vision.

4. Consider parking and accessibility

Customers should be able to reach your shop easily. Check if the area has sufficient street parking, bike racks or public transportation access. If you’re located in a walkable neighbourhood, make sure the space is visible and inviting. Also, you should check to see if the location is accessible for all customers, including those with disabilities.

5. Research future developments

A certain location might seem perfect now, but what about in a few years? Research upcoming developments in the area – new apartment buildings, office complexes or transit expansions could bring in more customers. On the other hand, rising rent prices or planned roadworks could impact foot traffic.

6. Start looking for potential locations

There are many ways to find free spaces for your coffee shop, including:

  • Checking commercial real estate websites like RightMove and Zoopla for available properties.
  • Driving around high-traffic neighbourhoods and looking for “For Rent” or “For Sale” signs on storefronts.
  • Contacting local estate agents who specialise in retail or hospitality spaces – they often know about listings before they go public.
  • Networking with local business associations or city planning offices to learn about upcoming opportunities.

The costs of running a coffee shop

Like with any other business, running your own coffee shop involves several costs – from equipment and utilities to marketing and taxes. These are the key costs you’ll need to consider.

Equipment, utilities and supplies

Your cafe or coffee shop will need a lot of equipment – some of it you’ll need straight away, while other items you could get further down the line, depending on your business requirements. The main equipment for a coffee shop includes:

  • Coffee makers: espresso machines, drip and cafétieres and equipment for any other specific drinks you offer (e.g. pour over or filter)
  • Coffee grinders: break coffee beans into smaller pieces to release the flavour or aroma
  • Cooking devices: ovens, toasters, sandwich presses, etc.
  • Storage: refrigerators, freezers, shelving, cupboards, etc.
  • Food containers: to store ingredients and syrup
  • Non-edible supplies: plates, cutlery, cups, takeaway boxes, etc.
  • Security devices: alarms, CCTV cameras and water detectors
  • Payment equipment: a card reader, an iPad and/or till, plus point-of-sale (POS) software
  • Clothing and uniform: staff uniform, aprons, etc.
Pro tip: renting equipment

Cafe equipment can really burn a hole in your wallet. Luckily, you can hire certain items on a rental or lease basis.

For example, espresso machines are notoriously expensive, so if you don’t have the budget for it right now, it might be worth renting one for the time being.

You’ll also need to consider utility costs for your coffee shop, including:

  • Electricity
  • Water
  • Gas
  • WiFi and phone 
  • Waste disposal and recycling

And finally, you should think about the type of coffee you’ll sell. Consider which (and how many) strengths will be on offer, and do your research about where it comes from and how it’s produced. When choosing suppliers, you should:

  • Carry out taste tests so that you have an idea of what your customers will experience.
  • Check a supplier’s records, such as reviews, whether they’ve won any awards, are fair trade or organic certified.
  • Review the contract from a potential roaster. Would you prefer an exclusive supplier, or be able to use beans from multiple roasters?

Marketing

There are several ways you can promote your cafe business, including social media, email marketing and traditional marketing.

Social media

Social media can be a great way to promote your business. Platforms like Facebook, Instagram and TikTok are free to use and offer an easy way to share content tailored to your target audience.

But social media is more than just advertising – it’s also an opportunity to engage and interact with your customers – whether that’s through videos of baristas making the perfect cup of coffee, or resharing photos your customers have taken.

Marketing on social media is free, but if you struggle to reach your customers organically, you can opt for paid promotions to place your ads in front of specific audiences, which can be based on location, content consumption, the places they visit and more.

Here’s a rough breakdown of the typical costs that come with paid social media ads:

Facebook & Instagram AdsTikTok AdsGoogle Ads (Search & Display)YouTube Ads
Influencer Collaborations
Cost-per-click (CPC): £0.40–£2.50 per clickCost-per-click (CPC): £0.08–£0.80 per clickCost-per-click (CPC): £0.80–£2.50 per click for keywords like “best coffee shop near me.”CPV (Cost per View): £0.04–£0.25 per viewNano-influencers (1K–10K followers): £40–£160 per post
Cost per 1,000 Impressions (CPM): £4–£16 per 1,000 viewsCost per 1,000 impressions (CPM): £4–£12 per 1,000 viewsCost per 1,000 impressions (CPM): £8–£24 per 1,000 views for display ads.Cost per 1,000 impressions (CPM): CPM: £8–£16 per 1,000 viewsMicro-influencers (10K–100K followers): £160–£800 per post

You should also consider a good social media management tool, such as Buffer or Hootsuite, to schedule posts, track engagement and manage multiple accounts from one platform.

Hootsuite (30-day free trial)BufferSocialPilot (14-day free trial)Sprout Social (30-day free trial)Zoho Social (15-day free trial)
Professional: £89 per monthFree: £0Standard: £34.85 per monthStandard: $199 per monthFree: £0
Team: £249 per monthEssentials: $5 per monthPremium: £68.85Professional: $299 per monthStandard: £12 per month/£8 annually
Enterprise: CustomTeam: $10 per monthUltimate: £137.70Advanced: $399 per monthProfessional: £30 per month/£22 annually
Enterprise: CustomPremium: £50 per month/£35 annually
Pro tip: using SEO for your business

Search engine optimisation (SEO) is free and can get you great results if carried out correctly. For the best SEO practices, you’ll need to:

  • Conduct keyword research: research relevant keywords related to coffee, coffee shops and your specific offerings, then incorporate them into your website copy, meta descriptions and titles. That way, your business is more likely to appear in local search results through location-based keywords (e.g. “coffee shop in [your city]”)
  • Claim and optimise your Google Business Profile: a Google Business Profile (previously known as Google My Business) allows you to add accurate contact details, opening hours, photos and customer reviews. This will help you improve visibility in local searches.
  • Create relevant, high-quality content: write blog posts, share coffee-making tips or publish articles about local events to engage potential customers and improve rankings.
  • Improve site speed and mobile optimisation: make sure your website loads quickly and is easy to navigate on mobile devices, as these factors can impact your search rankings.

Email marketing and CRM tools

Email marketing and Customer Relationship Management (CRM) tools are crucial for building and maintaining strong relationships with your customers. With email marketing, you can regularly communicate with your customer base by keeping them informed about new products, special promotions or events at your coffee shop.

Meanwhile, a CRM system helps you organise and track customer interactions, allowing you to offer tailored experiences, follow up on purchases and even reward loyal customers with exclusive offers or discounts.

HubSpot CRMSalesforceZoho CRMMonday CRMPipedriveFreshsalesZendesk
Free: £0Starter Suite: £20 per monthStandard: £16 per month/£12 annuallyBasic: £10 per month (billed annually)Essential: £14 per month (billed annually)Free: £0 (up to 3 users)Support Team: £15 per agent/month (billed annually)
Starter Customer Platform: £18 per month/£14 annuallyPro Suite: £80 per monthProfessional: £28 per month/£18 annuallyStandard: £14 per month (billed annually)Advanced: £39 per month (billed annually)Growth: £7-£9 per user/month (billed annually)Support Professional: £45 per agent/month (billed annually)
Professional Customer Platform: £1,017 per month/£1,130 annuallyEnterprise: £40 per month/£35 annuallyPro: £24 per month (billed annually)Professional £49 per month (billed annually)Pro: £29-£35 per user/month (billed annually)Support Enterprise: £89 per agent/month (billed annually)
Enterprise Customer Platform: £3,740 per monthUltimate: £52 per month/£42 annuallyEnterprise: CustomPower: £64 per month (billed annually)Enterprise: £49-£59 per user/month (billed annually)
Enterprise: £99 per month (billed annually)

Traditional marketing

While it’s easy to solely focus on digital marketing, cafes and coffee shops are often central places in a local community, so you should make sure to connect with people face-to-face as well.

However, traditional marketing is often more expensive than digital marketing. Printed ads or physical promotions may cost more in terms of design, production and distribution, so you should weigh the costs carefully and ensure you’re seeing a return on investment (ROI).

Flyers & PostersLocal Sponsorships & Event Hosting Direct Mail (Postcards or Catalogues)Local Newspaper & Magazine AdsBusiness CardsLocal Radio & Podcast Ads
Flyers: £50-£300 for 500-1,000 copiesSponsorship: £200–£2,000 (depending on the event)Postcards: £100–£500 for 500–1,000 mailersLocal Newspapers: £100–£500 for a small ad£20–£100 for 500–1,000 cardsLocal Radio: £200–£2,000 per ad (depending on the station and time slot)
Posters: £50-£200 for 10-50 postersHosting events: £100–£1,000 (costs for equipment, performers, or refreshments)Catalogues: £200–£1,000 for 500–2,000 copiesLocal Magazines: £200–£1,500 (depending on the magazine’s circulation)Podcast Ads: £100–£500 per ad (depending on the show’s audience)

Taxes

You’ll also have to comply with various tax obligations. These include:

Income tax

As a business owner, you’ll have to pay income tax on the profits your coffee shop makes. The amount you pay will depend on your earnings after deducting allowable business expenses. You’ll also need to complete an annual Self-Assessment tax return and pay income tax based on your profit.

The tax rates for 2024/2025 are:

  • Personal allowance: up to £12,570 – no tax
  • Basic rate: £12,571 to £50,270 – 20% tax
  • Higher rate: £50,271 to £125,140 – 40%
  • Additional rate: Over £125,140 – 45%

Corporation tax (if you’re a limited company)

If your coffee shop is set up as a limited company, the business is taxed separately from your personal income. You’ll pay corporation tax on the business’s profits. This is something that’s paid annually and you must make an annual return with HMRC.

The corporation tax rates for 2025/2026 are:

  • Annual profits less than £50,000 – 19%
  • Annual profits between £50,000 to £250,000 – 19-25%
  • Annual profits over £250,000 – 25%

VAT (Value added tax)

VAT (value added tax) is a sales tax applied to goods and services, and you may need to register for it if your business turnover exceeds the threshold of £90,000 annually. The current VAT rates are:

  • Standard VAT rate: 20% – applies to most goods and services, including food and drink sold in a cafe.
  • Reduced VAT rate: 5% – applies to some food and drink items if consumed off the premises (e.g. takeaways).

If you’re VAT-registered, you’ll charge VAT on your sales and can reclaim VAT on any business-related purchases.

National Minimum Wage (NMW) National Insurance Contributions (NICs)

If you have employees, you’ll need to pay the National Minimum Wage (NMW), which will increase to up to £12.21 per hour in April 2025. You’ll also have to pay National Insurance Contributions (NICs) based on employees earnings. The NI rate for employers is expected to increase to 15% in April 2025.

Business rates

Local councils levy business rates on commercial properties and the amount you pay is based on the “rateable value” of your premises, which is assessed by the Valuation Office Agency (VOA). 

The VOA sets this figure, which is based on factors like location, size and the type of property and from there, your local council will calculate the rate you owe. Business rates are typically paid quarterly, but some small businesses may qualify for Small Business Rates Relief (SBRR) to reduce or eliminate this cost.

Regulations for running a coffee shop

Running a coffee shop in the UK involves several legal and regulatory requirements to ensure you’re compliant with the law. These are the key regulations you need to be aware of:

Business registration

First, you’ll need to register your business with the appropriate authorities.

If you’re setting up as a sole trader or partnership, must register with HMRC for tax purposes. If you’re starting out as a limited company, you’ll need to register with Companies House. Registering as a sole trader is typically free, but registering on Companies House costs £50 for business incorporation.

Food hygiene and safety

Your coffee shop must adhere to food hygiene regulations. You’ll need to register with the Food Standards Agency (FSA) at least 28 days before opening.

Your premises will also undergo an inspection by your local Environmental Health Officer (EHO), who will assess food hygiene practices, cleanliness and storage. Based on the inspection, you’ll receive a Food Hygiene Rate, which is rated 0-5. Registration is typically free, but costs for inspection vary depending on your local council.

Licensing and permits

Depending on your services, you may need specific licences. These include:

  • Premises Licence from your local council if you want to sell alcohol
  • Music licence from PRS for Music and PPL if you plan to play music in your cafe
  • Late-night Refreshment Licence if you plan to stay open late

Employment law and employee rights

If you hire staff, you must comply with the UK’s employment laws. This includes ensuring staff are paid at least the National Minimum Wage. You’ll also need to provide contracts of employment, which clearly outline job responsibilities, pay and working conditions. Staff are also entitled to statutory benefits, such as sick pay, maternity leave and pensions

Additionally, you’ll need to operate a Pay As You Earn (PAYE) system for tax and National Insurance Contributions, and wages and employee benefits will add to your overall costs.

Insurance

Coffee shops need several types of insurance to keep things running smoothly. Most notably:

  • Public Liability Insurance: covers costs if someone is injured or their property is damaged on your premises.
  • Employer’s Liability Insurance: a legal requirement if you employ staff. Covers injury or illness caused by work-related activities.
  • Buildings and Contents Insurance: protects your premises and equipment from loss, fire, theft or damage.

Waste disposal and recycling

You’ll need a contract with a licensed waste disposal company for general waste and recycling. Some businesses may need to dispose of specific items like oils or hazardous materials in a particular way. Waste disposal services typically cost between £100-£300 per month, depending on the amount of waste generated.

Environmental health and packaging regulations

Coffee shops need to comply with packaging regulations, especially regarding single-use plastics. Offering eco-friendly options is increasingly important, and you’ll need to ensure your business meets UK packaging waste regulations. Costs for sustainable packaging can range from £0.10-£0.50 per cup, depending on your supplier.

Other essentials

Remember – a successful cafe business isn’t just about great food and drink. It’s about creating a welcoming atmosphere, building strong customer relationships and standing out with a unique brand and experience that attracts and retains customers.

Concept, branding and design

Branding is important for your coffee shop because it helps differentiate your business from competitors and creates a memorable experience for your customers. A strong brand identity builds trust, creates loyalty and makes your cafe instantly recognisable. These are the best branding practices you should follow:

1. Define your brand identity

First, define your mission and vision. What do you want your coffee shop to stand for? Do you want to focus on sustainability, premium quality coffee or creating a sense of community? Your mission and vision will shape how you communicate your values to your customers.

You should also determine your Unique Selling Proposition (USP). What makes your coffee shop different from the others in the area? For example, this could be special blends, an innovative menu or a unique customer experience. Identify what sets you apart and emphasise it.

2. Develop a strong visual identity

This includes:

  • Logo and design: your logo should be simple, memorable, and align visually with your brand’s personality. Think about colours and typography, plus design elements that reflect the atmosphere you want to create.
  • Interior design: the interior design of your coffee shop should match your branding and create the right vibe for your customers. Whether that’s cosy and rustic or sleek and modern, the atmosphere should complement your brand values.
  • Packaging and merchandise: use branded cups, napkins and takeout containers that reinforce your brand’s image.

3. Create a brand voice

Your tone of voice (TOV) should clearly reflect your brand’s personality. Are you friendly and casual, or more sophisticated and professional? Once you’ve decided on your TOV, you should be consistent with it in how you communicate on social media, your website and in-store.

4. Create a memorable customer experience

You can do this through:

  • Ambience: the music, lighting and overall feel of your coffee shop should align with your brand and make customers feel comfortable and welcome.
  • Customer service: consider offering loyalty programmes, free samples or customised drinks to show your customers that you value them.
  • Storytelling: share the story behind your coffee shop’s creation – why you started the business, what inspired you and how you source your ingredients.

5. Have an online and offline presence

Showcase your brand on social media platforms like Instagram, Facebook and TikTok. Share visually appealing content like coffee art, behind-the-scenes looks, customer testimonials and community events. You should also use hashtags and engaging captions to build a following.

Moreover, you can get involved in your local community by sponsoring local events, collaborating with nearby businesses or hosting charity activities. This will help further establish your coffee shop as a beloved community spot.

A business website

Your cafe will benefit from having a business website that provides the key details that your customers need to know. This includes:

  • Clear branding: your logo, brand colours and overall style. You should also include a brief statement about what you stand for, whether it’s sustainability, quality coffee or community.
  • Detailed menu: a well-designed menu, with clear and easy-to-read items and prices. If you offer speciality drinks, dietary options (e.g. vegan or gluten-free) or seasonal options, make sure they’re featured.
  • High-quality images: photos of your coffee and food items can entice customers and give them an idea of the quality of your offerings.
  • Location and opening hours: Make sure your cafe’s location is easy to find, including a map or embedded Google Maps for convenience. You should also clearly list your operating hours, including any special hours for holidays and events.
  • Online ordering and delivery information: if you offer online ordering, delivery or in-store collection, you should have a dedicated section where customers can place orders directly or through delivery partners (e.g. Deliveroo and Uber Eats). If you have your own app or system for pre-ordering, make sure this is highlighted on the site.
  • About us section: share the story of how your coffee shop started, what inspired it and what makes it unique.
  • Contact information: include your business’s phone number, email address and social media links.
  • Customer reviews and testimonials: show reviews or testimonials from happy customers to build trust and credibility. You can integrate reviews from Google or Yelp.
  • Blog or content section: include a blog or content area where you can share coffee-related tips, news about your cafe or relevant stories. This can help boost your SEO ranking and keep customers engaged.
  • Loyalty programmes or special offers: highlight any loyalty programmes, discounts or special offers you may have to encourage new or returning customers.
Finding the best website builder

Building a website from scratch is a lot of hard work, and unless you already have the skills, you might not get the results you want.

Luckily, there are plenty of easy-to-use website builders that can help you set up a professional-looking website without needing any tech skills. Check out our guide to the best business website builders to find the right one for your coffee shop.

Payment methods

Taking card payments for your cafe business is a must, especially as there were 2.2 billion debit card transactions made in September 2024 – a 4.5% increase compared to the previous year. 

While cash isn’t totally out of the picture, you should offer as many payment options as possible, such as:

  • Debit/credit cards
  • Contactless payments (tap to pay)
  • Mobile wallets (Apple Pay, Google Pay and Samsung Pay)
  • QR code payments
  • Gift cards/vouchers
  • Buy now, pay later (BNPL) through platforms like Klarna, Clearpay and Afterpay
  • Loyalty or reward point systems

Recruitment

Finding the right staff is essential for creating a positive customer experience. Here’s how to find and hire the best team for your cafe:

1. Define the roles you need

Start by listing out the positions you need to fill, such as baristas, cashiers, kitchen staff and managers. Also, think about whether you need full-time or part-time employees and what experience level is required.

2. Write a clear job description

Make sure your job description includes essential information, such as job responsibilities, required skills, expected working hours and any perks you offer (e.g. free coffee, staff discounts or flexible working hours).

3. Post on job boards and social media

Share your job vacancies on platforms like Indeed, Totaljobs and local Facebook groups. LinkedIn can also be a good place to attract passionate coffee lovers looking for work.

4. Ask for referrals

Let your network know that you’re hiring. Ask friends, family and even current employees if they know anyone who’d be a good fit. Word-of-mouth recommendations can lead to reliable hires.

5. Hold trial shifts

As well as standard interviews, your recruitment process could also include inviting potential hires for a trial shift. That way, you’ll be able to see how they interact with customers and handle the fast-paced environment before making any hiring decisions.

6. Build a good work environment

A good organisational culture keeps employees happy, motivated and engaged. It also leads to better customer service, lower staff turnover and a strong team overall. A clear sexual harassment policy is an important part of that culture, as it shows staff that their wellbeing is important, sets out what behaviour is unacceptable, and makes sure everyone knows how to raise concerns safely.

You could also offer growth opportunities, like barista training and leadership roles to keep staff interested in their jobs.

Loyalty programmes

There are many ways to offer loyalty programmes to your customers to keep them coming back. Some popular options include:

  • Stamp cards: customers get a stamp for every drink they buy and after a set number (e.g. 10 drinks), they receive a free one.
  • Points-based rewards: customers earn points for every purchase, which they can redeem for free drinks, discounts or exclusive offers. This can be managed through a mobile app or POS system.
  • Exclusive member discounts: offer loyalty members discounts on certain drinks, seasonal specials or early access to new menu items.
  • Refer-a-friend: reward customers with a free drink or discount when they refer a friend to your coffee shop.
  • Birthday perks: give customers a free drink or special treat on their birthday to make them feel appreciated.

Conclusion

Running a successful coffee shop is all about balancing the basics – like great coffee and food – with a good environment and solid business practices. From hiring the right team to offering multiple payment options and running smart marketing campaigns, every little detail matters.

But success doesn’t happen overnight, so you should stay flexible, listen to your customers and keep evolving your business. Whether you do it by refreshing your menu, launching a new loyalty programme or simply making sure everyone feels welcome, the key is to keep improving. 

With passion, planning and a bit of creativity, your coffee shop is sure to thrive.

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The 20 secrets of being a great supplier

Want to be a great supplier? Here are the qualities you need to keep your clients happy

Want to be a great supplier? Read on to find out the qualities you need to keep your clients happy and boost your profits.

Price, reliability and quality are three things you most definitely need to offer as a supplier. Disappoint your clients or be outperformed by your competitors in any of these areas, and you’re on course for disaster. But you’ll also need to do far more to keep your clients loyal and happy. We spoke to a handful of successful suppliers to provide you with the ultimate checklist for success…

Communicate

Excellent communication is a beautiful thing. Steve Wallis, head of procurement at buyingTeam, which finds efficiencies in the supply chain for technology giants Canon and Siemens, advocates regular dialogue. For his company, this means weekly project status reports and quarterly strategic discussions at a more senior level. Award-winning pre-employment screening firm Powerchex, which boasts HSBC among its clients, says speed is also key. “Calls are answered on the third ring and all queries are resolved on the first phone call,” declares founder Alexandra Kelly, proudly.

Get personal

Customers want to feel special. “It’s all too easy for corporate customers to get the impression that they’re just a ‘number’,” says Alex Cliffe, operations director at telecommuications supplier Elite Telecom which works with Air France/KLM, Intercontinental Hotels and more. “Obviously, the personal touch is particularly important at times like Christmas,” he continues, “but we encourage our account managers and support team to note client milestones, such as birthdays, weddings and births. We find sending a card, flowers or simply acknowledging special events gives us a human touch, showing that we’re not simply faceless people sat behind desks.”

Provide access

“Our clients have access to their own suite of online reports, so at any time they can view the latest campaign response figures or check their stock position,” says Stephen Bentley, chief executive of Granby Marketing Services, which provides outsourced call centre services for the government and Sainsbury’s among others.

Offer senior input

Don’t just hand new business down the chain of command. “Customers need to have access to, and regular meetings with, the senior relationship manager, and not just interface at a lower level,” says Ben Gladstone, chief executive of outsourced IT service provider Conosco, which works for online greetings cards outfit Moonpig and designer handbag brand Anya Hindmarch.

Be transparent

Discuss risks or potential issues openly, advises Sarah Hunter, account director at Berkshire Consultancy, which was named Supplier of the Year in the 2009 Home Office Supplier Value Awards. The management consultancy serves both private and public sector clients, and was acknowledged for making organisational “efficiency savings” of almost £2.2m for one happy customer.

Be ethical

Gloucestershire-based Ethical Workwear is reaping the rewards of having a social conscience. It supplies a number of large organisations, such as Adas UK, with polo shirts, fluorescent jackets, hard hats and heavy-duty boots. “We have had a fantastic response to the business,” says founder Joanna Dale. “We are introducing more of our own-label products, which carry a small Ethical Workwear label, so that others can see that our clients are putting their money where their mouth is in terms of corporate social responsibility.” Clearly, we can’t all claim such ethical credentials, but you should at least check the provenance of materials used.

Get accredited

Granby Marketing Services works to PRINCE 2 standards for project management. “It is not totally prescriptive in its use, but acts as a guide to best practice,” says Bentley.

Put it in writing

“Never surprise by invoicing above expectations unless agreed in writing,” counsels Simon Lake, managing director of corporate communications agency Likemind. “Have a contract that covers payment and service delivery. If they owe you money, chase it politely through finance and only become involved when it is vital.” This is one way the company has won business from British Airways, O2 and Marks and Spencer.

Entertain… appropriately

Corporate hospitality works, according to Elite Telecom’s Cliffe. “We regularly use it at events such as the British Grand Prix and Six Nations rugby, as well as golf and football matches to have face-to-face time with our customers – there is no substitute,” he says. However, it’s vital to make sure that any client entertaining is appropriate to your guests, not overly ostentatious and not viewed as simply a jolly. “Ultimately, your customers’ fees are paying for the hospitality, so keep it simple,” warns Conosco’s Gladstone. “Deliver a great service for the price and let them decide how they would like to be entertained.”

Network your customers

“We hold a dinner twice a year where senior folk from across our client base are able to network. It helps clients understand the range of services we provide,” says buyingTeam’s Steve Wallis, who explains that it has also boosted his company’s cross-selling opportunities.

Hire excellence

Continuing the people theme, you’ve got to have a great team. “The people factor is also extremely important as we are all relationship managers to some extent,” says Bentley.

“We recruit and train well, and by doing so we have low attrition, happy staff and satisfied clients. Subsequently, our productivity is higher, and we can, therefore, be more cost-competitive in our charging.” buyingTeam’s Wallis adds that his company typically hires staff with large-company experience to aid client understanding.

Be even-handed

Treat every client as equal. Although some may be giving you more business than others, Powerchex’s Kelly says no client should get special treatment.

Balance the client book

For Granby’s Bentley, a single client should not account for more than 25% of your turnover. Powerchex’s Kelly sets this level at 16%, stressing that the balance is crucial for healthy cashflow and an ability to deliver. “We have made a point of recruiting several smaller clients to balance out our top five, which currently represent 40% of our sales,” says Kelly. Chris Quigley, founder of online opinion research company Delib, which works for government departments and the BBC Trust, has also taken this route. “In the past, we’ve relied on one or two big-ticket clients, but now we have a greater number of smaller ones meaning that cashflow has improved,” he says.

Seek feedback

“We used to talk to our main customer contacts about their requirements, but we missed end-users’ opinions. So we’ve created ‘IT Wish List’ wallcharts for our customers, enabling the actual end users to note down their needs,” says Conosco’s Gladstone. He adds that it’s also a good idea to carry out formal reviews, such as focus groups with templated questionnaires.

Visit the shopfloor

Conosco’s technical managers make regular site visits. These are not simply to fix specific issues, but to talk to the staff and scout for niggling problems, says Gladstone. The Berkshire Consultancy is another supplier that heads to the shopfloor to deliver its coaching.

Add insight

Tell the client something they didn’t know at every meeting, suggests Likemind’s Lake. “We find that by giving them information about industry best practice, regulation and new developments, we are seen as trusted advisers, as well as suppliers,” adds Cliffe. Delib’s Quigley works with clients in the US and UK, and is similarly proactive about sharing learning, including ‘briefing papers’ relating to his company’s offering.

Over-deliver

Talking of being proactive, go over and above the call of duty when you can. Add more innovation and more ideas; don’t just fulfil, recommends buyingTeam’s Wallis. “As a customer, you don’t want suppliers calling you up every day, but most organisations would be receptive if you staged a workshop a couple of times a year to share ideas on the market,” he says.

Avoid stupid mistakes

“Don’t make silly errors, such as being late for meetings, sending emails with spelling mistakes and not returning calls quickly,” says Lake. And own up if you do mess up, rather than trying to cover it up.

Pass on savings

This may have you wriggling uncomfortably, particularly when many suppliers are currently being squeezed like lemons, but it will aid your reputation. “Our pricing is fair, and when we negotiate better prices from our suppliers, we always adjust our rates to our clients,” says Powerchex’s Kelly.

Keep in touch between contracts

Finally, don’t forget good clients when you’re not working for them, says Berkshire Consultancy’s Hunter. You never know when they might come back.

 

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How to build a profitable freemium business

Discover how this innovative approach is transforming the digital landscape and captivating both consumers and business owners alike.

As you navigate the early stages of building your pricing strategies, you might be wondering if a freemium business model is the right fit for you. If you find yourself concerned about whether freemium models can actually be profitable – or how they even work at all – then you’ve come to the right place.

You don’t need to be an expert or have extensive knowledge of pricing strategies to grasp the essence of freemium models. We’ll break it down for you in plain English. We also have some great real-world examples of successful companies that have leveraged freemium models to their advantage.

We’ll demystify the freemium model, delve into its benefits and challenges, and provide insights on how it can work for your specific business. Whether you’re developing an app, a software solution or an online platform, understanding the potential of freemium models is definitely worth reading up about.

What is a freemium business model?

The freemium business model allows customers to first access a basic version of the product for free, while offering advanced features, enhanced functionality, and/or additional content through a paid subscription and/or premium tiers of a product or service. 

As a monetisation approach, it’s gained immense popularity because it ultimately allows businesses to acquire a large user base while eliminating the initial cost barrier

This model has gained traction because it is able to attract and engage users rapidly through a taster tier at zero cost, then introduce upsells.

There are benefits and challenges associated with this kind of business model: 

Benefits of a freemium model:

  • User acquisition: by offering a free version, businesses can attract a larger user base, potentially increasing brand awareness and market share.
  • Product exposure: freemium models allow users to experience the core functionalities of a product, encouraging them to upgrade for a more comprehensive experience.
  • Upselling opportunities: providing a free tier creates an opportunity to upsell premium features or services to engaged users.
  • Feedback and improvement: free users can serve as a valuable source of feedback.

Challenges of a freemium model:

  • Monetisation balance: striking the right balance between what is offered for free and what incentivises users to upgrade is crucial for sustainable revenue generation.
  • Conversion rates: converting free users into paying customers can be challenging, as some users may remain content with the free tier and not see the value in upgrading.
  • Profitability: managing costs while providing a free tier can pose financial challenges, especially for resource-intensive products or services.

How freemium models work

There are a couple of different freemium models you can try. As long as it centres around offering the customer something for free to entice them into further buy-in, you can customise this model pretty much any way you want. 

The traditional model (and the one businesses most commonly use), is typically comprised of a “free forever” deal. With this model, there is the expectation that most customers will never buy, but there will still always be enough paying customers and cash flow to sustain the business if the product is useful enough to the consumer. Free tiers can sometimes be part-monetised through other means, such as displaying adverts on a free-tier of an app, then removing these on premium tiers.

Another popular model could be described as the “corporate model” where a software or app will be free until it exceeds a certain number of employees or users.

Essentially, to get customers to upgrade to premium services, you will have to either: 

  • Limit a portion of the product/service
  • Entice users to access additional content through a tiered pricing strategy
  • Have a free trial period that revokes access after a specific period of time, or
  • Monetise through ads 

Premium users can enjoy full, enhanced functionalities, advanced tools or an ad-free experience.

Consider factors such as your target audience, product offering, competition, and revenue goals when selecting a freemium model. 

To choose the right freemium model for your business:

📝 Understand your product/service: gain a deep understanding of your product or service, its unique value proposition, and the problem it solves for your target audience. Consider the nature of your offering, its complexity, and the level of value it provides.

📝 Define your target audience: identify your target audience and their characteristics. Understand their needs, preferences, and behaviours. Determine if offering a freemium model aligns with your target audience’s expectations and if it will help attract and retain customers.

📝 Assess the market and competition: research the market landscape and analyse your competitors. Determine if freemium models are prevalent in your industry and if they have been successful. Evaluate how your competitors implement their freemium models, what features they offer for free, and how they monetise their offerings.

📝 Set clear goals: define your business objectives and align them with the freemium model. Determine if your primary goal is user acquisition, upselling premium features, or building brand loyalty. Clearly outline the metrics you will use to measure the success of your freemium strategy.

📝 Determine the value exchange: decide on the value proposition you will offer to free users and the additional value they will get by upgrading to the premium version. Identify the key features that will be available for free and the premium features that will require payment. Ensure that the free version provides enough value to attract users and showcase the benefits of your product/service.

📝 Consider pricing and packaging: determine the pricing structure and packaging for your premium offerings. Evaluate different pricing tiers and decide on the features and benefits included at each level. Consider offering discounts or incentives for long-term subscriptions to encourage conversion to the premium version.

📝 Balance limitations and incentives: strike a balance between the limitations of the free version and the incentives for upgrading. The free version should provide value but have limitations that encourage users to upgrade to the premium version for enhanced functionality or additional benefits.

📝 Monitor the results: your freemium model’s performance should be closely monitored. User behaviour, conversion rates, and revenue generation are the most important key performance indicators to track. Gather feedback from both the free and premium users to understand their needs, and to improve your freemium strategy and offerings based on these data and user insights.

Successful freemium examples

  • Dropbox: offers free storage space with limited features, and users can upgrade to premium plans for more storage and advanced collaboration features.
  • Spotify: provides a free tier with limited features and ads, while premium subscribers enjoy ad-free listening, offline playback, and enhanced customisation options.
  • LinkedIn: offers free access to networking features, while premium members gain additional benefits like advanced search filters and messaging options.
  • Evernote: allows users to access basic note-taking features for free, while premium subscribers unlock features like offline access, collaboration, and larger storage capacities.
  • Zoom: offers free video conferencing with time limitations, while premium plans provide extended meeting durations and additional features.

Is a freemium model profitable?

Freemium models certainly have the potential to be profitable, but careful consideration is required to strike the right balance between free and paid incentives. 

Both need to be engaging, as both matter. You need to entice free users with enough value to keep them interested, while also showcasing the additional benefits and exclusive features available in the paid tier. 

With a taste of your product or service through the free version, you can attract a wider user base and create brand awareness. However, to drive revenue and profitability, it’s important to create a clear distinction between free and paid tiers

The goal is to offer enough value in the free plan to captivate users and make them see the potential of the premium experience. Finding that sweet spot where users are motivated to upgrade while feeling they are getting their money’s worth is the key to unlocking the profitability potential of freemium models.

How do you calculate the profitability of a freemium model?

Calculating the profitability of a freemium model involves considering various factors. Here are the key elements to assess:

📒 Revenue from premium subscriptions: determine the income generated from users who upgrade to the paid tier of your product or service. This includes subscription fees, one-time purchases, or additional features available only to paying customers.

📒 Revenue from free tiers: the ad-supported revenue stream enables companies to continue offering valuable services without imposing direct charges on their users. Through strategic ad placements, companies can generate revenue by leveraging the attention and engagement of their free users.

📒 Cost of acquiring and retaining users: evaluate the expenses associated with acquiring new users through marketing, advertising, and promotions. Additionally, consider the costs of user retention efforts, such as customer support and engagement initiatives.

📒 Conversion rates: analyse the percentage of free users who convert to paid subscribers. Calculate the conversion rate by dividing the number of paying customers by the total number of free users.

By comparing revenue against acquisition and retention costs, and factoring in the conversion rate, you can measure your freemium model’s profitability.

What are the factors that contribute to the profitability of a freemium model?

Several factors influence the profitability of a freemium model. Understanding these elements can help you optimise your strategy and drive revenue growth. 

Here are the key factors that influence profitability:

💵 Conversion rate optimisation: the higher the conversion rate, the more profitable your freemium model becomes. Effective marketing strategies, persuasive value propositions, and seamless user experiences play a vital role in encouraging free users to upgrade.

💵 Retention strategies: retaining free users is crucial for long-term profitability. Engage and nurture your free user base by continuously delivering value, offering new features, and fostering a sense of community. Satisfied free users are more likely to upgrade and become paying customers.

💵 Cost management: managing the costs associated with providing a free tier is vital. Evaluate the expenses involved in maintaining the free version, including server costs, bandwidth, customer support, and content creation. Balancing these costs with revenue from premium subscriptions ensures profitability.

💵 Upselling and cross-selling opportunities: identifying opportunities to upsell or cross-sell additional products, features, or services to paying customers can significantly boost profitability. Explore ways to offer complementary offerings that enhance the overall customer experience and drive additional revenue.

And here are ways you can potentially increase the profitability of your freemium model:

📈 Enhance conversion rate optimisation: continuously analyse and optimise your marketing efforts to increase the conversion rate. Experiment with different pricing strategies, promotions, and targeted messaging to incentivise free users to upgrade.

📈 Improve user retention: focus on delivering consistent value to both free and paying users. Regularly update your product with new features, content, and improvements to keep users engaged and excited. Implement retention strategies such as personalised experiences, exclusive benefits, and excellent customer support.

📈 Monitor and reduce acquisition costs: continuously evaluate your customer acquisition channels to optimise their effectiveness. Identify cost-effective marketing channels and campaigns that yield higher conversion rates. Refine your targeting to reach potential customers who are more likely to convert.

📈 Upsell and cross-sell effectively: analyse the needs and preferences of your customers and offer relevant upselling or cross-selling opportunities. Ensure that the additional offerings align with their interests and provide clear value.

How to convert free users to paying customers

Converting free users to paying customers requires strategic approaches and effective communication. Here are some tips to consider:

🔁 Make your value proposition compelling: your free plan should provide enough value to engage users and create a desire for the premium experience. Provide exclusive discounts, extended free trials, or additional features to entice free users to upgrade.

🔁 Limit features or functionality in the free plan: create a differentiation between free and paid tiers to motivate users to upgrade for the complete set of features.

🔁 Keep users engaged: the best way to do this is to continuously deliver new features, content, or updates to maintain user interest and encourage them to remain active and consider upgrading.

🔁 Provide a clear path to upgrading: simplify the upgrade process and clearly communicate the benefits of upgrading to encourage users to take the next step.

🔁 Streamline the upgrade process (and remove barriers to entry): ensure the upgrade process is user-friendly, straightforward, and minimises as much friction as possible.

🔁 Provide excellent customer support: promptly address user queries and provide exceptional customer support to foster trust and loyalty and let your paying people speak for themselves, showcasing and advocating for you with testimonials.

🔁 Referral programs: reward users who refer others to your product, creating a viral loop that expands your user base and potential customer conversions.

Conclusion: is a freemium business model right for you?

The freemium business model can be an effective strategy for acquiring users, generating revenue, and fostering growth. 

It requires careful analysis, strategic decision-making, and a focus on delivering value to both free and paying users. For profitability, considering key contributing factors and implementing effective strategies is key to optimising your freemium model.

However, it is essential to carefully balance what is offered for free with incentives for users to upgrade. 

Profitability is not solely based on revenue but also on cash flow management, conversion rate optimisation, and user retention – all of which you’ll have to continuously assess and refine in order to ensure a successful and profitable freemium business. 

Frequently Asked Questions
  • What are some common mistakes that freemium businesses make?
    Common mistakes that freemium businesses make include not having a clear monetisation strategy from the beginning, offering too few features in the free version, or failing to provide sufficient value.
  • How do you retain free users?
    To retain free users, it's important to consistently deliver value and engage with them. Actively listen to user feedback and address their concerns promptly to show that you value their input and are committed to improving their experience.
  • How do you convert free users to paying customers?
    Offering tiered pricing plans can be one way to cater to different user segments and their willingness to pay. It’s also important to make the upgrade process as simple and frictionless as possible, ensuring that users can seamlessly transition from free to paid version without hurdles.
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