21 important factors to consider before starting a business

Want to start your own business, but not sure what the road ahead looks like?

With today’s world in an almost-continual state of permacrisis – such as the Government’s latest business initiatives and the ever-increasing cost of living, being able to build a strong business that can withstand hard times is more important than ever.

With entrepreneurs now facing rising expenses and having to adapt their business models, the path to success is extremely tough.

But that doesn’t mean you should be discouraged, as running a business can always be an incredibly rewarding experience – it just takes a lot of hard work and resilience.

In this article, we’ll list the most important factors to consider when starting a business – helping you prepare for success.

Need some business planning guidance? Our free business plan template will help get your business on track.

1. Demand

Your business idea might sound good on paper, but it won’t be enough if there isn’t a demand for your product or service.

For this, you should ask yourself: Does this solve a real problem? Are people actively looking for a solution like this?

This is where you’ll need to conduct market research. This includes primary research such as surveys and interviews with potential customers, as well as secondary research through Google Trends, joining relevant forums or social media groups. Early customer feedback is crucial at this stage, as it’ll help ensure you’re building something that people truly want.

2. Competition

An important part of market research is looking into your competitors. For this, you should look at businesses offering similar products or services, such as through their websites, social media presence, reviews, pricing strategies and customer experience.

Tools like SEMRush, SimilarWeb or even a simple Google search can give you insights into traffic and keywords. Knowing your competition will help you define your unique selling proposition (USP) and what you can offer your customers.

You can also carry out a competitive analysis through the Strengths, Weaknesses, Opportunities and Threats (SWOT) technique. This is a widely used framework that helps better understand your competitors, including what’s going well, what could be improved and if there’s a gap that your business could fill.

3. Passion

While demand and profit are important, you also can’t run a successful business without passion. After all, starting a business is no walk in the park – it involves long hours, challenges and times when things just don’t go to plan.

But if you truly care about what you’re doing, you’re more likely to stay motivated and push through obstacles. Passion also comes through how you talk about your band, which can inspire both your customers and your team.

4. Target market

This is the specific group of people you aim to serve, and the ones most likely to buy your product or service. To identify your target market, you’ll need to look at:

• Demographics: age, gender, income, education, nationality, marital status, etc.
• Geography: country, region, city or places they often travel to
• Psychographics: lifestyles, interests, attitudes and values
• Behaviours: purchasing habits, brand loyalty and usage of products/services

Understanding your target market properly will help you to tailor your product/service, brand messaging and marketing.

5. Audience personas

Once you’ve figured out your target audience, you should develop audience personas.

Put simply, these are fictional characters that represent your ideal customers. They should include name, age, job, lifestyle, pain points, goals, buying habits and even quotes or catchphrases.

Aim to create 2-3 personas to help you humanise your audience and keep your messaging focused. Also, make sure to use real data from customer interviews, surveys and analytics to keep them accurate.

6. Business plan

A business plan is an essential document that should outline your goals, strategies, market research, financial projections and operations. A solid plan helps you clarify your vision and is important for securing funding. Here’s a quick breakdown of what it should include:

• Your business’s mission statement
• Your business objectives
• Your target market and main competitors
• The team behind your business
• A financial summary (proof that your business is profitable)
• Your marketing plan, plus any associated costs
• Your skills/qualifications
• Clear information about your products/services
• Your pricing strategy
• The growth potential for your product/service (+ potential challenges)

7. Business model

This refers to how your business will deliver value to customers and how it’ll make money. A good business model will help you understand your costs, pricing, revenue streams and the best way to reach your customers. It also makes it easier to pitch your idea to investors or business partners because it shows you’ve thought about how the business will work in the real world.

There are several different business models, but the main ones include:

• Product-based: making or buying physical products and selling them directly to customers either online, in-store, or both.
• Service-based: selling your time, skills or expertise (e.g. consulting, coaching, beauty treatments, etc.) and charging per hour, project or session.
• Subscription: customers pay a regular fee (monthly/yearly) to access a product or service. Streaming services like Netflix and Spotify, subscription boxes, and software like Canva Pro are popular examples of a subscription model.
• Freemium: offering a basic version for free and charging for premium features. This is particularly popular with apps and software, such as Dropbox and Zoom.
  

You should choose your business model based on your product, audience and market behaviour. It’s important to think about customer needs and expectations, how they buy, and how your competitors are generating revenue.

8. Set-up costs

Startup costs vary widely, so it’s difficult to pinpoint exactly how much you’ll spend. Depending on your business type, you might spend anywhere from a few hundred to several thousands. However, here’s a quick rundown of the typical startup costs you can expect:

Business essentials	Estimated cost
Business registration	£50-£150
Equipment (machinery, office supplies, furniture, POS systems, business software, etc.)	£200-£5,000
Inventory and stock	£500-£10,000
Utilities (electricity, water, gas, etc.)	£100-£500+ per month
Rent	Up to £10,000 per month
Insurance	Up to £150 per month
Licenses/permits	£0-£10,000+ per month
Accounting	£0-£500 per month
Marketing	£0-£5,000

9. Budget

Budgeting properly is crucial for keeping your business afloat, and being irresponsible with money will only end in disaster. Therefore, you should set a budget to ensure you can maintain your finances.

List all your expenses

You should list all your fixed and variable costs. 

Your fixed expenses could be things like rent (if you have an office space), internet/phone bills, insurance (e.g. business, public liability, etc.), salaries for full-time staff, software subscriptions, loan repayments and website hosting fees.

On the other hand, your variable costs will change depending on how much you sell or use. For example, raw materials and stocks, packaging and shipping, marketing and ad spend, freelancer/contractor payments and payment processing fees (Stripe, PayPal, etc.).

Consider taxes

For this, you should consider your income tax, value-added tax (VAT), or sales tax, depending on where you’re based. A good rule of thumb is to put away around 20-30% of your profits so that you’re not caught off guard when tax season rolls around.

Use accounting software

There are plenty of good accounting software options out there, including QuickBooks, Xero, FreshBooks or Wave – all of which can help you track income and expenses, generate reports and simplify taxes. Even if you’re a sole trader or one-person business, it can save a lot of time and stress.

Estimate your income

Start with realistic, conservative estimates. Base it on market research, industry benchmarks or any early customer feedback. Also, try not to overestimate either, as it’s better to be surprised by more income than to fall short. 

Create a cash flow projection

A cash flow forecast involves mapping out when money will come and go, so that you’re not left short. This will help you spot any gaps, manage slow months and plan any significant purchases without draining your funds.

Set aside emergency funds

One major rule of business budgeting is to always plan for the unexpected. Therefore, you should make sure to set aside some money each month to build an emergency fund. Aim for at least three months’ worth of business expenses to cover any surprises or downturns.

Review and adjust regularly

Your budget isn’t set in stone, so make sure to check in monthly to see what’s working, what’s changed and where you need to adjust. This will help keep you on track and make smarter decisions as your business grows – whether that means cutting back, investing more or switching up your strategy,

10. Funding

Next, you’ll need to find ways to fund your business. Luckily, there are plenty of options to choose from, both for short-term and long-term funding needs. These include:

Bank loans and overdrafts

A traditional lending method in which you borrow a fixed amount of money and repay it over a predetermined period, plus interest. Long-term loans are usually repaid within 3-10 years, whereas short-term loans are around 6-12 months.

Similarly, banks also offer overdrafts, allowing you to withdraw more money than what’s available in your account. However, unlike loans, overdrafts are more flexible and can be used and repaid as needed, but interest is charged on the amount you borrow.

Investor funding

This includes both angel investment and venture capital funding.

Angel investors are wealthy individuals who invest their personal money into a business, usually in exchange for equity or convertible debt. They usually step in during a company’s early stages, such as product development, building a team or entering the market.

On the other hand, venture capital funding comes from contributions from wealthy individuals (known as venture capitalists), investment firms or corporations (AKA limited partners). Unlike angel investors, VC firms tend to invest in businesses that already have traction (e.g. steady revenue or proven growth potential).

Crowdfunding

This is when a business collects small contributions from a large number of people.

Crowdfunding has become popular among early-stage startups as it gives them an alternative way to raise money without needing a bank loan or investor up front. Instead, you pitch your idea to the public – usually on platforms like Kickstarter or Indiegogo – and if people are on board, they chip in a small contribution to help fund the venture.

Merchant cash advance (MCAs)

A merchant cash advance (MCA) is a type of funding where a lender gives you a lump sum of money upfront in exchange for a percentage of future sales – usually from customer debit or credit card payments. Instead of paying a set monthly amount like a loan, the repayments are taken daily or weekly, depending on your sales volume.

Peer-to-peer lending (P2P)

Peer-to-peer lending (P2P) is a way to borrow money directly from individual investors through online platforms, without having to go through a traditional bank. You can apply through sites like Funding Circle or LendingClub, and if approved, multiple people can chip in to fund your loan.

Business credit cards

Business credit cards are specifically designed for business expenses. They work like personal credit cards, but they’re meant to be used for things like office supplies, travel, software, advertising or any other business-related costs. They offer access to funds when needed, but this must be paid back in full every month.

11. Business overheads

Business overheads are the ongoing costs you have to pay to keep your business running, whether you’re making money or not. They’re not directly tied to promoting your product or service, but they’re essential for everyday operations.

Fixed overheads	Variable overheads
Rent (e.g. office space, shop, cafe, etc.) or coworking space fee	Office supplies/equipment
Utilities (e.g. electricity, water, gas)	Marketing and advertising
Internet and phone bills	Travel and transport
Insurance (e.g. public liability)	Professional services (e.g. legal, accounting, IT support)
Salaries/wages	Staff training/development
Software subscriptions (accounting software, CRM tools, etc.)
Banking/accounting fees
Business licenses or permits

12. Legal documentation and requirements

In business, there are a few key legal documents and requirements you need to have in place to stay compliant, protect yourself and maintain trust. Here’s a breakdown of what these include:

Business registration

Whether you’re a sole trader, limited company or a partnership company, you’ll need to register your business structure with HMRC. By this point, you’ll need a business name which you’ve made sure is available and not trademarked.

Business license or permits

Depending on your industry, you may need specific licenses or permits to operate legally. For example:

• Food business registration if you sell, cook, store or distribute food. You’ll have to register with your local council at least 28 days before starting.
• Alcohol license if you sell or supply alcohol. You’ll need a premises license and a personal license holder in place.
• Music license if you play music in your premises (even in the background), you may need a license from PPL PRS.
• Street trading license if you’re selling in public spaces, like a market stall or food van.
• Beauty & cosmetics treatment license for treatments like massages, piercings, tanning or semi-permanent makeup, as they often require specific approval from your local council.
• Taxi or private hire license for anyone running a taxi or ride-share business.
• Waste carrier license if your business transports, carries, or disposes of waste.
• Pet business license if you run a kennel, cattery, pet grooming or breeding service.

Tax and National Insurance

You’ll need to register for Self-Assessment if you’re a sole trader, or corporation tax if you run a limited company. You will also need to register for VAT if your turnover is over £90,000. Also, if you hire employees, you’ll need to register for Pay As You Earn (PAYE) and National Insurance Contributions (NICs).

Contracts and legal agreements

For client or service agreements, you should set clear terms for services, payment, timelines and responsibilities. You should also make sure you have a contract with suppliers that clearly outlines delivery terms, costs and legal protection.

Employment contracts are also required by law if you employ anyone in your business, even if they’re just part-time.

Insurance

The most common kinds of insurance your business may need include:

• Employers’ liability insurance: legally required if you hire staff.
• Public liability insurance: recommended as it covers the cost of payouts and legal fees if your business is sued by a third party.
• Professional indemnity insurance: protects you against claims for loss and damage caused by clients or third parties due to negligent services or advice.

Data protection and GDPR

If you collect any personal data from customers (even if it’s just an email address), you must follow the UK’s General Data Protection Regulation (GDPR) rules, requiring organisations to have a legal reason to collect data, get clear consent from users, only collect what’s needed, explain the data being collected (and why you need it), and protect the data.

Under a Subject Access Request, users have the right to see what data you have on them, update it, or delete it entirely.

Most UK businesses are required to register with the Information Commissioner’s Office (ICO) and pay an annual fee of either £52 or £78 annually.

Health and safety requirements

If you have a physical location – like a retail store, office or cafe/coffee shop – or any employees, you’re legally required to follow certain health and safety rules to keep people safe on the premises. These include:

• A written health and safety policy is required if you have five or more employees.
• Regular risk assessments to identify any potential hazards (e.g. slippery floors or fire risks).
• First aid equipment and someone who is trained to handle emergencies.
• A Health and Safety Executive (HSE) law poster in a visible spot (e.g. the break room or entrance).
• A fire risk assessment with clearly marked exits and the right fire extinguishers.
• An accident book to log any accidents or injuries. Some incidents may need to be reported to RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations).
• Trained employees on health and safety procedures (e.g. using equipment safely or handling hazardous materials).

13. Equipment

The equipment you need depends on your industry and business type, and can include tools, machinery, tech, software, or vehicles. Here’s what you should consider:

• Prioritising what you truly need to launch and operate, and what can wait until later.
• Comparing prices from multiple suppliers and looking into whether you want to buy or lease equipment. Leasing can help with cash flow, but buying might be cheaper long-term.
• Checking for second-hand or refurbished gear, as you can often save a lot by buying used equipment in good condition, especially laptops, furniture or specialist tools.
• Some equipment (e.g. POS systems, commercial kitchen gear or workshop machinery) might need professional installation, so you should factor that into your budget and timeline.
• Factoring in the cost of ongoing upkeep. For example, a cheap printer or machine might cost more in the long run if it constantly breaks.
• Training your team on how to use the equipment safely and effectively (e.g. manufacturer training, online courses, or hands-on demonstrations).
• Choosing equipment that comes with good warranty terms or reliable customer service.
• Software subscriptions, such as accounting software, design programmes, CRM systems or booking platforms.

14. Location

If you’re looking for an office space, you should consider the cost of rent and accessibility of the building. On the other hand, if you want to open a retail store, restaurant or cafe, you’ll also need to think about foot traffic and proximity to suppliers.

If you’re not sure where to look, here are a few places you can start:

• Online real estate platforms, such as Zoopla, Rightmove and Loopnet
• Local estate agents who specialise in commercial properties
• Visiting locations that have a “For Rent” or “For Sale” sign
• Local business meetups or chamber of commerce events
• Local community groups on platforms like Facebook and LinkedIn
• Local councils or development offices

15. Support

Being an entrepreneur can be isolating at times, but you’re not alone.

If you need help, you can find support through local business hubs, government programmes, startup incubators, online communities or mentors. These can offer advice, training, funding opportunities and valuable connections to get you back on track.

You can also tap into industry-specific associations, trade groups, or your local Chamber of Commerce for networking and resources tailored to your sector.

Don’t be afraid to ask for help, as many people have been where you are and want to see you succeed. That’s why joining groups or peer support circles can help give you new ideas and motivations. Plus, having someone to bounce ideas off or guide you through challenges can make a significant difference.

Here’s a quick list of places where you can go for support:

• British Business Bank for funding guidance and financial support schemes
• Gov.uk business support for business grants, advice and tools based on your region and industry
• Start Up Loans, which offer government-backed loans and mentoring for new businesses
• Federation of Small Businesses (FSB) for legal advice, resources and networking
• Chambers of Commerce for local business networking and support

16. Team

Think about what roles are essential from the start – do you need marketing help, a developer, admin support, or maybe customer service? Early on, you might wear many hats yourself, juggling everything from social media to operations. But as your business grows, hiring or outsourcing becomes key to scaling effectively.

You should build a team that complements your skills and shares your vision. Also, it’s not just about finding people with the right experience – organisational culture and communication matter just as much as skill.

Also, consider flexible options like freelancers, contractors or virtual assistants if you’re not ready to hire full-time staff. This lets you access expertise without long-term commitments.

17. Sourcing

Whether it’s inventory, raw materials, or software subscriptions, having the right suppliers can make or break your business operations. Therefore, you need to make sure your suppliers are reliable, cost-effective and aligned with your core values – especially if sustainability or ethical sourcing matters to your brand.

Take time to research multiple suppliers, read reviews and ask for samples or demos before committing to anything. Don’t be afraid to negotiate prices, payment terms and delivery schedules either – good suppliers will often be open to working with startups to build a long-term relationship.

Also, consider the location of your suppliers. Local suppliers can reduce shipping times and costs, help with quicker restocks, and lower your carbon footprint. On the other hand, international suppliers might offer better prices or unique products, so you should weigh the pros and cons carefully.

18. Logistics

This covers how you deliver your product or service – from manufacturing and storage to distribution and customer service. You should map out each step: how orders are taken, processed, shipped and followed up.

For physical products, think about where you’ll store your inventory (warehousing), how you’ll track stock levels, and which delivery partners or courier companies you’ll use.

If you’re offering services, logistics might mean scheduling appointments, managing client onboarding, or using workflow and project management tools to keep things organised and timely. Automated booking systems, reminders, or customer portals can improve the experience and reduce admin.

Also, consider your return and refund process and how easy it is for customers to send items back or get support if something goes wrong.

19. Branding

Your brand is more than just a logo – it’s the whole experience you create for your customers. It includes your tone of voice, visuals, core values, and the story you tell about who you are and what you stand for.

Start by defining your brand identity – choose a memorable name, design a visually appealing logo, pick a colour palette that reflects your personality, and share messages that clearly communicate your mission. Think about the emotions and values you want your customers to associate with your business – whether it’s trust, innovation, friendliness, or luxury.

Remember that consistency is key too, so use your brand elements all across your platforms, including your business website, social media, packaging, emails and even customer service. This will help create an experience that builds trust and recognition over time.

Also, don’t forget to regularly revisit your branding as your business evolves to make sure it still fits who you are and what your customers want. You might even consider rebranding if there’s a need for change.

20. Marketing

Marketing is how you get your business in front of the right people and turn interest into action. It’s not just about selling – it’s about building relationships, creating awareness and showing the value your business brings.

Start by creating a marketing plan that outlines your goals (e.g. generating leads, getting sales, or building your brand), your target audience, and the best channels to reach them. For example, this might include social media, email campaigns, search engine optimisation (SEO), paid ads, events or content marketing (e.g. blogs and videos).

You should also focus on where your audience actually spends time. If your customers are active on Instagram, you can start there. Or, if you’re targeting a more professional audience, LinkedIn might be a better fit. 

Make sure to set a realistic budget as well – track your results, and regularly adjust your strategy. Use tools like Google Analytics, social media insights or email platform reports to see what’s working and what’s not.

21. Reporting

Tracking your performance helps you make smarter decisions. Without it, you’re just guessing.

Make sure to set up systems early on to monitor key areas like sales, customer feedback, website traffic, ad performance, and finances. This will give you a clear picture of what’s working, what needs improving and where to focus your efforts (and budget) next.

Google Analytics will give you a good idea of your web traffic and user behaviour, while accounting software can help you stay on top of your income and expenses. You should also use a good CRM tool to track leads, customer interactions, and conversions. If you’re using email marketing or social media ads, most platforms offer built-in analytics too.

Review your reports weekly or monthly, as regular reporting will keep you accountable, help spot trends or problems early, and show whether you’re meeting your goals.

Next steps

Starting a business is a huge commitment that takes a lot of planning, research, and most importantly, resilience. 

From understanding demand and building a solid business model to managing budgets, sourcing equipment and creating a strong brand – every piece plays a part in setting your business up for success.

These steps are here to guide you through the foundations. Think of them as your startup toolkit – something to keep referring back to as you grow. You don’t need to have everything perfect from day one, but the more thought and effort you put in early, the smoother your journey will be.

Next, visit our guide on how to start a business for more ways to help you get going and take your startup from its basic form to its full glory.