16 October 2021
By Roger L. Jones II
There is no denying that the UK is a great place to start a business due to its robust economy. As per Reboot SEO Agency, some 835,494 new companies were registered in the UK in 2020, as the pandemic inspired the entrepreneurial spirit in many. Starting a business is a great way to bring your wonderful ideas to life, but this demands more than vision and passion. As such, it is crucial to know the exact steps to take when starting a business to achieve your aim successfully. Below are some helpful tips you can rely on to set up your company in the UK.
- Conduct effective market research
Many experts agree that thorough market research is crucial when setting up your company, so keep this in mind for the best results. This research is vital to understand your industry, competitors, and target market properly, and the results can shape your pricing, company structure, consumer demographics, and other essential aspects of your business. You can start your market research by interviewing your target audience to see if your product or business idea generates interest. However, always ask people you do not know to obtain unbiased insights that give you a realistic appraisal of your ideas. For this, you can ask potential clients to fill out surveys online or create a focus group and ask them what they would want to see from your services and products. In addition, be thorough with your competitor research since you seek to identify and fill a gap in the market. Therefore, examine their pricing, customer service, social media accounts, and websites to understand how they operate and what you can improve to stand out from them. Startups who research their ideas and market are reportedly more likely to succeed due to feasible business models, so effective market research is non-negotiable if you wish to launch a successful enterprise.
- Open a business bank account
Opening a business bank account is a legal requirement if you set up a limited company and LLP. However, many financial experts believe that opening a business bank account is an excellent idea for freelancers, sole traders, and other entrepreneurs who are not legally required to have one. A business bank account is worth opening because it offers your brand a more professional appearance since your bank details would be under your business name instead of your name. Clients are most likely to place more trust in your business if they receive invoices with your business bank details instead of your bank particulars. Also, a business bank account enables you to separate your personal and business finances. This way, you can quickly see how much money you have as a business and a person.
Additionally, if you store business and personal funds in one account, payments into your account will always look like business transactions you are not accounting for. Therefore, you would always have to prove that your transactions are not taxable income. Luckily, a business bank account makes it easier for the HMRC to make a tax enquiry and saves you time during tax filing season. Furthermore, a business bank account also helps build your business credit rating, which may come in useful in the future when you need to apply for a business loan or take out a credit card. You will need an ID and proof of address when setting up this account. Also, your full business address and company registration number are crucial when opening this account. Therefore, it is vital to know what to do if you’ve lost your company registration number since you cannot open your business bank account without it. Thankfully, you can easily find this number on your Certificate of Incorporation, official letters from Companies House, and Companies House Service if you forget or lose it.
- Write a business plan
A business plan is also necessary when launching a business, so it is essential to write one. This plan is a road map that helps you focus on what your company needs to achieve its goals. Additionally, a business plan is a blueprint that convinces others about the viability of your company’s ideas, so having one is vital if you seek investment for your enterprise. Generally, this plan should include a summary of your business and what you plan to achieve, as well as a brief description of your business idea. Also, it should outline your marketing and sales strategy with details about your competitors, clients, pricing, marketing, and distribution tactics.
Furthermore, your business plan should also capture your management structure and details about your business operations, like your location and IT systems. In addition, this plan should have financial projections and short and long-term objectives that convince potential stakeholders that your company is an excellent long-term bet. Your business plan does not have to be lengthy, but it should be comprehensive enough to capture all the essential details. Research from the Harvard Business Review in 2017 concluded that entrepreneurs who write formal business plans are 16% more likely to achieve viability than their counterparts who don’t plan. Therefore, write a great business plan and choose the most suitable business plan template before starting your business, and update it along the line to match new realities in your business journey.
- Choose the right legal structure
Selecting the proper legal structure is one of the essential choices to make when starting a business since it affects your taxation, ability to raise money, the amount of paperwork your business must do, and your liability. You can register your business as a sole trader, the most common structure for UK startups. This is best for you if you are self-employed and run your business individually. Alternatively, you can register your business as a Limited Liability Company. These companies have legal identities and are separate from the owners, so you are not personally responsible for the company’s debts and liabilities. Also, a partnership is worth considering if you are launching a company with a partner or partners. Finally, you can register your business as a Limited Liability Partnership (LLP), which is similar to a partnership, only that each partner is not liable for another’s negligence or misconduct. Each business structure has its unique legal requirements, accounting, and tax obligations, with different pros and cons. Therefore, it is best to put great thought into choosing your business structure to ensure that your choice is best for your unique circumstances.
- Purchase business insurance
Your company needs business insurance from the get-go because it helps cover the costs of liability claims and property damage. Without it, you may have to pay for costly legal claims and damages against your company out-of-pocket. Your choice of business insurance depends on what type of business you run. For example, if you are venturing into the landscape business, landscaping business insurance should be your utmost priority.
Public liability insurance is essential if clients visit your premises occasionally. This insurance will protect you if clients are injured or have their property damaged at your premises, and your company faces a compensation claim as a result. Public liability insurance can also cover you when you are working in public or at clients’ sites. If you are a lawyer, doctor, psychiatrist or operate in a specific field where you advise clients daily, a professional indemnity clause is worth taking. This insurance protects you if your advice has unintended negative consequences and legal action is taken against you. Employers’ liability insurance, self-employed health insurance, and small business health insurance are other insurance types you may need for your company, so keep this in mind.
- Pick a great business name
Your business name is vital because it reflects your brand’s personality and helps you stand out. As such, your name should be distinct and appeal to your target consumers. Your business name should be flexible enough so your company can grow without having to change it. Also, avoid initials when selecting a business name since people may struggle to remember the correct letter order. Finally, remember to check at the Companies House to see if any businesses use your chosen name or have similar names before making your final choice.
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