11 important factors to consider before starting a business in 2023 Give your startup the best chance of success and cut out the risks by taking these seven easy-to-apply factors into consideration. Written by Stephanie Lennox Updated on 29 June 2022 Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. Written and reviewed by: Stephanie Lennox Writer Are you planning to start a business of your own? Not sure what the road ahead may entail? Well, today we're going to talk about the important factors to bear in mind when launching a business.With today's world in an almost-continual state of permacrisis, and the ever-increasing cost of living, being able to create a strong business that can withstand hard times takes on even greater significance.The current economic landscape and societal pressures demand careful thought and planning. New entrepreneurs must navigate the realities of rising expenses and adapt their business models accordingly. While the path to success may be more complex than in previous years, don't be discouraged.These factors to consider when starting a small business could help you to eliminate the risks and obstacles you'll face on the journey – take note to help prepare your business for success! Guest Tips: Graeme Donelly, CEO of online company formation agent Quality Formations Throughout this guide, we have insights from Graeme Donnelly, an entrepreneur who has founded several leading online company formation agencies which have offices around the UK, and has almost 20 years experience. His company Quality Company Formations has worked with Barclays, Lloyds and Namesco. In this article, we will cover: 1. Do you have a great idea? 2. Are you passionate about your new business? 3. Who is your target market? 4. What is your business plan? 5. What is your business model? 6. What are your funding and budget options? 7. Have you identified your overheads? 8. Have you prepared all the necessary legal documentation? 9. Do you have the right equipment for your needs? 10. Do you know where to go need help? 11. Who will be on your team? Next Steps FAQs 1. Do you have a great idea?Having a great business idea is like having a solid foundation for your entrepreneurial journey — it helps you stand out from the competition, attract customers, and drive growth. It's also the driving force that shapes your business strategy, and will guide your decision-making process.It's not just about coming up with something completely unique or revolutionary, but rather finding a problem or need in the market and offering a solution.So, whether you're an aspiring entrepreneur or an established business owner, remember that a strong and innovative business idea can be the key to unlocking your business dreams.“No business can develop in the absence of a great idea. A great and a practical idea is the only thing on which the development of your business will depend. Moreover, as a lot of companies are involved in the market, you need to have a unique idea that stands out,” says Graeme Donnelly of Quality Formations. Businesses you can start in 2023 Every year, we research the top industry trends to suggest the best new ideas to start, including the cheaper ideas to help you get going quickly on a budget. Check out our mega guide: 101+ small business ideas to start now, and our line-up of the best business ideas for 2023. 2. Are you passionate about your new business?Being passionate about your business idea is absolutely key if you're going to be working on turning it into a reality for the next 12 months.When you are passionate about your business, it shines through in everything you do—from developing your product or service, to networking effectively, to engaging with customers.Your enthusiasm becomes contagious and attracts like-minded individuals who share your vision. It also enables you to weather the storms of entrepreneurship, as your passion provides the resilience needed to persevere during tough times.“It is one of the most important things that will help you in passing all the challenges and difficulties,” Graeme states. “There will be a lot of risks and hurdles you will face in this process and the only thing that can save you will be your positive attitude. You will have to work hard to develop a company of your own.” Startups.co.uk can help your business succeed At Startups.co.uk, we're here to help small UK businesses to get started, grow and succeed. We have helpful resources for helping new businesses get off the ground – you can use the tool below to get started today. What Does Your Business Need Help With? Project Planning Creating a Website Getting a Business Loan Business Bank Account Get Started Get started with accounting software. Use our smart quote-comparison tool to find the best deal for your business's specific needs. Compare accounting costs It's 100% free and takes just one minute. 3. Who is your target market?One of the most important things to consider, even before you spend time fleshing out the business in the next step – is to figure out who your target market is.Knowledge of who you will sell to makes everything else exponentially easier. For example, once you understand the larger demographic of the people you want to reach, you can figure out their location, their desires, their likes and dislikes and even whether or not the product you want to offer will be within their price range.You will also be able to discover the potential business competitors you may have in entering your desired market space, relative and adjacent to your industry, who are competing for the same demographic's attention. This helps you gather intel on how you can maximise your strengths and develop your brand in a way that helps your business stand out from the crowd. 4. What is your business plan?Most people have heard of business plans through shows like The Apprentice. However, few of us actually know what should go in one.Graham tells Startups: “No business can develop fully in the absence of a business plan. Writing a business plan can help you determine if your idea is feasible and provide direction. With a business plan, you will be able to know every next step that should be taken.”Here is also where you'll want to consider what kind of company structure is best for your business. Each structure has its own benefits and drawbacks, so it would be a good idea to seek advice from a lawyer or accountant. You can visit our business plan template page to get started.Competitor analysis is a key aspect of designing a business plan that many entrepreneurs jump straight past. But it can come back to bite you down the road.As Graham says: “You need to know what your competitors are doing and what their strategies are. With this knowledge, you will be able to take appropriate decisions about your company. It will also help you in developing a much more effective strategy for your business.”If you're unsure how to carry out competitor analysis, we recommend using project management (PM) software. Some of our top small business project management platforms cost very little and make market analysis simple and easy. 5. What is your business model?Where your business plan is the “what” of your new company, your business model is the “how”. It determines the core method in which you will be able to make money (and ultimately a profit) from your hard work marketing and selling.There are many different business models to choose from including those such as the franchise model, the subscription-business model, the software-as-a-service business model or the pay-as-you-go business model.Your business model also determines how you primarily (or exclusively) do business: for example, the software-as-a-service model can only be conducted online. This is something to think about early so it can help to inform your marketing strategies or save you time if you have a preference for the way you would rather do business. 6. What are your funding and budget options?Budgeting and finance may not be the most glamorous aspects of entrepreneurship, but they are the backbone that supports your dreams and aspirations.BudgetingThink of budgeting as your financial roadmap. By creating a budget, you gain a clear understanding of your income, expenses, and overall financial health. This allows you to make informed decisions and adapt your strategies as needed. Taking the time to outline your expenses and project your revenues allows you to identify potential pitfalls and take proactive measures to mitigate them.Creating a cash flow forecast is a vital aspect of managing your business's finances, and of your budgeting strategy as a whole. It involves estimating the amount of money flowing into and out of your business over a specific period, typically on a monthly or quarterly basis.Finance“The next important factor that should be considered involves the funding of your business. You need to properly identify the sources through which you will be able to get the funding for your business. Moreover, it is better to have a plan so that the budget of a company can be properly maintained.” Graham states.Understanding finance and where you might be able to get it is vital for any entrepreneur. While it may seem intimidating at first, grasping the basics of finance empowers you to make sound financial decisions.Given current high-interest rates, it's a good idea to shop around. Startups' 🔍specially-designed online tool is a good way to compare loan provider quotes so you can find the best deal with a realistic and achievable repayment plan.Financing options include:CrowdfundingInvoice financingAngel investorsJoint venture partnersSeed fundingSeries fundingIncubatorsBefore you engage in any early-stage finance rounds, it's a good idea to download accounting software – a way to manage and keep track of funds, and carry out cost estimations through revenue forecasts. 7. Have you identified your overheads?In today's challenging economic climate, keeping a close eye on overheads is more important than ever for businesses.Overheads refer to the ongoing expenses that are necessary to run a company, but that do not directly contribute to the production of goods or services – for example rent, utilities, salaries, and business insurance. Considering this important factor will be what helps to increase their chances of survival in tough times.Examining overheads helps businesses identify areas where they can reduce costs or if there are more cost-effective alternatives available, so as not to compromise on the quality of the businesses products or services.This may involve renegotiating contracts with suppliers, implementing energy-saving measures, exploring remote work options to reduce office space requirements, or even streamlining operational processes.By proactively managing overheads, businesses can maintain a leaner operation, improve cash flow, and enhance their overall financial stability, thus increasing their resilience in an uncertain economic climate.See our guide on how to calculate your break-even point for more. 8. Have you prepared all the necessary legal documentation?The next factor that needs to be considered is the completion of legal documents.Registering your business is the first step – the evidence of which is known as business formation documents. From there, you'll most likely need:Companies house registration documents (based on which company structure you decided on in your business plan)Governing DocumentsIntellectual Property Assignment AgreementNondisclosure AgreementsShareholder Agreements and Buy-Sell ClausesEmployee ContractsGraham says: “For the sale of some specific products and services, there are some requirements for the preparation of legal documents. Make sure you have already done all the legal documentations for your business.”For more, see our guide on how to register a limited company. 9. Do you have the right equipment for your needs?Investing in small business software is hugely important for increasing business efficiency. Purchasing it early is a good idea so you can get ahead of what your business goals are.Here's some of the top software products that SMEs should consider:Accounting and bookkeeping softwareStartups recommend: QuickbooksAs we've touched on, financial tracking and management is particularly crucial for startups. Installing a small business accounting software will make sure you're on top of your finances from the get-go.Payroll toolsStartups recommends: IrisWhilst not the most exciting software, small business payroll tools are absolutely fundamental for paying yourself or staff.Website buildersStartups recommend: WixParticularly for today's startups, a website can be the face of your entire business. Decide early on what small business website builder you're going to use, as it will likely have an impact on your next steps.Ecommerce buildersStartups recommend: ShopifyOnline retail has boomed during lockdown. Lots of startups are setting up ecommerce stores – similar to choosing a small business store builder, it's a good idea to get this sorted early.CRM softwareStartups recommend: monday.comIf your business is going to take any form of transaction, we recommend installing a small business CRM (Customer Relationship Management) system as early as possible for a streamlined sales process that can bolster brand loyalty and awareness.Marketing softwareStartups recommend: HubSpotBrand building is a key priority for those that have just started a business. You need to immediately work on getting your brand name out there and generating customers – for which we recommend HubSpot. 10. Do you know where to go for help?One of the most common pieces of feedback we hear from startup owners is that starting a business is a lonely journey.Mentors and community groups can provide important guidance and experience on the industry. They also might help you to avoid costly mistakes, and encourage you to analyse your progress to gain insight and advice about your business direction.“The development of a business is not a matter of seconds, it will involve a lot of time that is spent with hard work,” Graham states. “However, in this process, you will be needing the help of some experts. Make sure you already have an adviser who can provide you with the best advice at the hour of need.”But it doesn't always have to be so formal – entrepreneurs can find local community or business groups on social networks like Facebook. These can play just as important a role in helping you to navigate the challenges of running a business. How should I use social media for my business? Today, having a social media presence is not just a good idea for business owners – it's a necessity.Our expert article on how to use Instagram for your business is just one of our many digital marketing guides that can show you how to develop a strong and effective presence on the network. 11. Who will be on your team?Speaking of people who will support you: who will be on your team? What skills and experience will they have, and what will their strengths and weaknesses be?There is a quote from Richard P. Feynman where he claims: “If you're the smartest person in the room, then you're in the wrong room.”Many famous entrepreneurs and billionaires can echo this sentiment.It's a great tip for when you're looking for potential business partners, stakeholders or employees.Ultimately how you choose your team is up to you, your own personal tastes, and some discernment. Gathering a good team around you is one of those rare things where it is better to go by your intuition, connection and assessing the complementary skills of the person (in relation to you) particularly in the beginning stages. For instance, Elon Musk famously claims to “hire talent, not diplomas.”Thinking back to the first point in this list, one of the most important factors to look for in a team is how passionate they are, and their willingness to help you reach your ultimate goals. Next stepsThe above guide has given you a quick rundown of what to consider before starting on your new business journey.Next, visit our full 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. Frequently Asked Questions What are the seven factors to consider before starting a business? The seven factors to consider before starting a business are: a great business idea, passion, business plan, budget and finance, legal documents and equipment. What is the most important factor to consider when starting a business? The most important factor is to have a great business idea. How do I know if I have a great business idea? You will know if your idea solves a problem that people want solving, and are willing to pay to have solved. A good idea is also to conduct target market feedback on their wants and needs, or create a minimum viable product. Share this post facebook twitter linkedin Written by: Stephanie Lennox Writer Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 11 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.