Starting a new business can be exciting, but also a little overwhelming. Where do you start? And how do you make a success of it? Don’t worry – we’ve got you covered. Here’s our 10-step checklist on how to start a small business completely from scratch.
1. Find your business idea
Your idea must be:
- Viable: there must be a market for it
- Exciting: you need to be passionate about the concept
So, how do you narrow down your search? Here are some tips.
First, identify your strengths and qualifications, and think about what excites you. A good idea combines your strengths and your passions.
Next, do some market research:
- Check that there’s a need for your services or products.
- Identify your target customer base.
- Work out your unique selling point (USP).
2. Write a business plan
Want to know how to start a small business on the right foot? It’s not just about the idea – you need a business plan. Here’s what to include:
- Business name and key objectives
- Results of market research
- Marketing strategy
- Qualifications and experience
- Current finances and projections
Remember to review your plan as you go along to ensure you’re on track.
3. Look at funding options
Next, think about how you plan to fund your business. You have three main options:
- Angel investors: wealthy individuals who offer funding in exchange for equity (e.g. shares in the company).
- Crowdfunding: you set a financial target and ask a large number of people to help you reach this number.
- Small business loans or grants.
Or, you can always fund the venture yourself, especially if it’s a very small business and you don’t need much funding to get started. It’s probably best to get financial advice before you sign up for any business funding.
4. Choose a business structure
Basically, your business structure determines how the company runs and the steps you should take to register it. Here are your three main options:
- Sole trader: a self-employed individual runs the business alone. Just notify HMRC and register for self-assessment tax returns.
- Partnership: two or more people invest money and run the business together. Again, all you need to do is tell HMRC what you’re doing.
- Limited company: public or private companies can be more tax-efficient than sole trading or partnerships, but you need to register with Companies House.
5. Have an exit strategy
It’s not just about how to start a small business – you need an exit strategy. You need to set out what happens if you:
- Retire and want someone else to take over
- Sell the company or some of your shares
Deciding what happens to your business is a key part of estate planning, too, so it’s probably worth getting legal advice here.
6. Organise your finances
From cash flow statements to invoices, you must keep accurate financial records. So, although you don’t necessarily need to hire an accountant, you should at least consider purchasing some accounting software.
And, don’t forget to set up a bank account for sending and receiving monies.
- Sole traders can use personal accounts.
- If you’re running a partnership or limited company, you need a business bank account. You might also want a business credit card, too.
Check with HMRC to ensure you understand your tax liabilities and when to file your accounts.
7. Choose your location
Where will your business be based? It can be a:
- Home office
- Retail space or commercial unit
- Private or shared office
Once you’ve chosen your location, think about the setup.
- What equipment do you need (e.g. IT and furnishings)?
- Is the space suitable for the type of business you’re running?
- Will the location work in the long term? If not, how easy will it be to expand your space?
8. Check your responsibilities
Check if you need any special licences or insurance cover to run your chosen business, like business contents insurance.
It’s always worth getting legal advice to make sure you’re properly covered.
9. Hire a team
Options here include:
- Going it alone
- Hiring employees
- Outsource work to independent contractors
If you’re going it alone, consider hiring a small business coach to help you stay on the right path.
10. Market your business
Okay, so that’s how to start a small business, but how do you get customers? Well, you need to market your business so potential customers can find you. Here are some steps you should take.
- Get a logo for your business.
- Trademark your business name.
- Set up at least one social media account and a company website.
There’s no ‘right’ way to set up a small business. What’s important is that you choose a viable idea that excites you enough to stick with it and watch it grow.
And if you want to start a small business, don’t forget the business plan – it’s the best way to ensure you’re actually meeting your long-term business objectives.
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.