How to Start a Business From Scratch? – The Plan Ahead! (Part 2)

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Published: December 21, 2021
Last Updated: February 13, 2025

Starting your own business can be difficult and risky, but the potential benefits are worth the risk. Starting a business is about identifying what you do best and tailoring it to suit your customer needs. In our previous blog, we have talked about the importance of research before finalising to start a business. Today, we will talk about the steps you need to take once you have decided to start the business after conducting your detailed research.

Starting a Business in the UK

If you are thinking about starting a business in the UK, you should know that it is possible and less complicated than you might think. You can either register as a sole trader, partnership, or company. No matter which business entity you opt for, there are specific laws and regulations that one needs to adhere to. You could make many costly mistakes if you don’t know what to look for, so make sure you do your research! That is why we have put together this comprehensive guide that will take you through the steps, from choosing your industry to finding your target market to marketing yourself effectively. If you decide to start a business, try to avoid common pitfalls. For instance, make sure you understand how taxes work before registering your company and get advice from an attorney before drawing up contracts for partners and employees.

Read on to Learn About the Steps Involved in Starting a Business in the UK

1. Prepare a Business Plan

A business plan is a formal document that outlines your business idea, the market you will be targeting, and how you plan to create a sustainable company. You should start with a one-page summary that indicates the type of company you are establishing. Whether it is an online retail store or a consulting agency, this document should include what you are selling and to whom. Once your summary is complete, expand it into a detailed outline of what your business will look like in five years’ time.

2. Assess how much finance is required

The actual amount of finance needed will depend on the size of the business and how it is set up, but there are formulas you can use to estimate. You should assess how much finance is required for each stage of your business. Once you have a good understanding of the market and know your objectives, it is time to think about how much money you will need. The assessment of finance required will vary depending on the type of business plan that you are planning to undertake. For example, if you want to start a restaurant, your budget will be different from someone who is starting a tech company. You should ensure that you have enough savings or money to cover all expenses to cover a minimum of three months of operational expenses, including rent, rates, equipment, and inventory. You will also need to take into account any other costs incurred when setting up your business, such as marketing materials, stationery, and advertising.

3. Pricing your product & service

Pricing your product is a tough decision. It has the ability to either make or break your company. On one hand, you want to make a profit on the sale of your product/service, but on the other hand, you don’t want to price too high and scare off potential customers. It is important to make sure that you cover the costs of your products by pricing them at a point where you are making a profit while ensuring that the price is not extremely high as per your target audience’s expectations. It will be helpful if you conduct market research before setting your price, as this will give you an idea of what products or services are being sold for. A good way to figure out pricing is to look at what competitors are doing in the same industry.

4. Choose a business structure

Legal entities are the foundation of every business. A legal entity is an organisation that is recognised by law as separate from its owners (or shareholders). It may be a sole trader, partnership, company, or an LLP. This blog will give you a good idea of which business structure is apt for your business. Every business structure has its pros and cons; it is up to your business needs that will decide the final business structure.

5. Choose your business name & register your business

A catchy business name is an important consideration, but it should also be relevant to your product or service. For example, if you are planning on providing driving lessons, you might want to call the company “drive-car.” If you are selling pastry, then maybe “pastry-shop” would work well. A business name is the simplest part of starting your company. If you are unsure of what name to choose, try brainstorming with friends and family for some ideas. The name must be legal in the UK and can’t be close to an existing business. Once you have your name, you can register your business. Registering your business can be done online or at your local council.

6. Learn about rules applicable for your type of business

Home-based businesses are not regulated as closely by the government as those in a fixed locations. You might, however, need to register for Value Added Tax (VAT).

Useful Read: UK VAT Explained for Beginner!

You will also need to complete a self-assessment form because your business profits will be treated as income and subject to standard income tax. This is the most crucial step. If you want to avoid any problems with authorities, later on, it is crucial for you to know all the rules applicable to your kind of business. It would help if you also researched which license or certificate you need to start your company. The type of business you start may be subject to different rules and regulations. For example, if you are planning on renting properties, then you need a house in multiple occupation licence, notification to process personal data, and a few other licences. Also, location will play an important role in the type of licence, i.e., whether you are located in England, Scotland, Wales & Northern Ireland will impact the type of licence. You can check this site to understand your business licence requirement.

7. Choosing the right team and vendors

A team can come in many forms, but it is essential to have a core group of people that will take the burden off you. These individuals may be from employees, professional business advisors, friends, or family members. As soon as you get your head wrapped around the whole starting a business thing, it would be best if you started thinking about the people and organisations that will help you get your venture off the ground. You will need a team of talented advisors and professionals that can bring their expertise to bear for your company. This can include accountants, lawyers, investors, recruiters, and more. Hiring an employee makes you obligated to PAYE as well. Get advice from payroll outsourcing services providers before drawing up contracts with employees to avoid issues with HMRC.

8. Protect Your Business – Insurance

Insurance is a great way to protect your business. There are several types of insurance that may be suitable for you and your business. If you are unsure what type of insurance is right for your business, it is important to speak with a qualified insurance professional. This way, you will know exactly what coverage to purchase and the annual costs.

9. Create a system for keeping business records

As you grow your business, it is important to keep records of every purchase. This will help you know what you have spent, where it came from, and how much profit you made on each transaction. It is also a great way to stay organized while running your business. Keeping records of your business and the financial transactions that take place is vital. You need to keep a record of:

– all money coming into and out of your business

– the purchase of any items for resale

– what you sell, when, where, how much etc.

– who you sold it to, when, where etc.

– what you buy for resale

This information will be invaluable if your business goes bust or if HMRC ever comes knocking. When you first start your business, it is good to set up a system for keeping records of all transactions. You can do this by using a spreadsheet or simply having a book for recording your finances. From the beginning, you should practice good record-keeping habits to help maintain control over your company finances. You can even opt for accounting and bookkeeping outsourcing to make the process hassle-free for yourself.