In the midst of rising energy bills, continued threat of recession, and a cost of living crisis, you might be surprised to learn that now is still an excellent time for entrepreneurship in the UK.
Despite the economic backdrop, analysis of Companies House data reveals that more than 436,000 businesses were registered in the UK between January and June 2023, an increase of 8% from 2022. On average, 101 new businesses were registered every hour in the first half of 2023, according to iwoca, a small business lender.
Anyone can start a business – you don’t need impressive funding or a big-league degree in order to begin. What you do need, however, is a set of actions, a realistic time frame, and a clear goal to work towards.
We’ve collaborated with some other small business founders on the below guide to help you get started. Read on for our step-by-step formula to starting a business in 2024:
Step 1: Come up with a business idea
Ironing out your business idea and operating model
Every budding entrepreneur starts off with a rough idea of what they want to achieve. The first step is to take this general ambition and turn it into something specific and measurable.
While this might sound daunting, at this stage you simply need to be able to answer ‘YES’ to the following top-level questions:
1. Do you know if you want to start a side-gig or a full-time company?
2. Do you know what product or service you want to sell?
3. Do you know if you want to sell online or in-person?
4. Does the idea fit your skillset?
5. Do you know what industry you want to sell in?
What is your business idea?
If you’re looking for inspiration, have a read through our business ideas pages. Every year, we research the emerging industry trends to identify the most likely routes to success – as well as the cheapest ideas to get going quickly on a budget.
Are you starting a business in a specific industry? Click through our How To guides to find your niche. Or, go straight to five trending new business ideas, as listed below:
💷 Want to start selling on a budget?
Two of the cheapest business models that you can start up with only a small savings pot include dropshipping or selling on Amazon.
In comparison, starting a gym business is an expensive venture up-front, thanks to pricey equipment and premises rental costs.
Lots of businesses launch from a personal need. Sanjay Lobo MBE was inspired to start the volunteering platform onHand when he needed a cheaper way to get carers for his dad, who had Parkinson’s.
Step 2: Research your idea
Conducting market research, market analysis, and competitor analysis
🔍 Market research
The aim of market research is to build up a complete dataset of who your audience base is, including age, gender, and socioeconomic status. Typically, it takes the form of a physical or online survey. Here are the key questions you should ask:
- Who is your target customer or client? Where are they based?
- What products or services do they already use that you’ll compete with?
- What makes your product or service worth the money?
- How much would your target customer or client be willing to pay?
Top tip: Your market research must not involve family or friends. Aim to get a truly randomised set of respondents that will give you an accurate, unbiased reflection of your business idea.
🔍 Market analysis
Once you’ve completed your market research, you should carry out broader market analysis to see how your audience findings might align with any current sector challenges and opportunities. Market analysis uses a combination of field research and desk research.
Field research = market reports, news articles, and competitor websites.
Desk research = feedback from market testing like customer questionnaires or focus group feedback.
🔍 Competitor analysis
Finally, it’s time to check out the competition. Download a free competitor analysis template to evaluate what options your target audience currently have. That way, you can identify any needs that aren’t currently being met.
List the key information about your competitors:
- Name
- Location
- Business size
- Product/service offering
- Sales channels
- Pricing
- Strengths/weaknesses
- Direct or indirect?*
*Competitors take two forms: direct or indirect. Direct competitors sell the same or similar products or services. Indirect competitors sell substitute or alternative products or services
Sarah McNena and Joelle Drummond founded low-alcohol, zero-carbon brewery Drop Bear Beer Co. after they couldn’t find any similar product idea during market research.
Step 3: Create your business plan
Downloading a business plan template to build your strategy
Business plans are often thought of as a tool for attracting investment. Even if you’re not interested in raising capital straight off the bat, a business plan is a solid roadmap to launch your business.
Our comprehensive guide to how to write a business plan has more information about what to include. Here’s a quick overview:
✏️ Business description and objectives
A business plan should include all of the below strategy materials to give the reader an idea of how you will run your business, and what your idea of success looks like.
📊 Financial analysis
Entrepreneurs are often surprised at the average cost of starting a business. Recent estimates put the figure at around £12,601. To demonstrate that your business idea is financially viable, your business plan needs to include a cash forecast.
A cash forecast is a thorough plan of your expected startup costs (how much you’ll spend getting set up) and business overheads (how much you’ll spend when you’re up and running).
What are startup costs?
Startup costs – also known as sunk costs – are the fees associated with launching your company. No matter if your firm succeeds or fails, you can’t get them back as they will already have ‘sunk’ into the business venture.
Your startup costs will differ depending on your operational model (online firms won’t need to pay for office space), but here are the most common for new business owners:
The financial analysis section in a business plan should also outline a company’s expected sales revenue. This can be calculated based on how much you expect to make from any products or services – also known as your pricing strategy.
Subtract this from the total of your cash forecast and you’ll be able to find the point at which you’ll start making a profit – also known as the break-even point.
Top tip: Complete a business continuity plan to outline how your business will stay afloat in the event that you run out of money.
🚀 Marketing and sales plan
The business plan should also provide details on how you plan to stand out from competitors through your marketing strategy. Mention what your USP is, where and how you will advertise it, and any associated advertising costs.
For example, your strategy could detail whether you intend to use social media to reach customers through Twitter or Instagram. We’ll go into more detail on marketing tips and tricks in the ‘Branding’ section below.
Step 4. Choose your business structure
Selecting a business structure that best fits your growth plans
To register your business, you’ll first need to choose your company structure.
You can either start as a sole trader, a partnership, or as a limited company. All of these have different tax rules and liability considerations. The most suitable option will depend on how quickly you plan to scale up your business.
- Sole trader. You’ll own the business exclusively and be entitled to all profits – but also liable for any losses.
- Partnership. Similar to the option above, but profit and liability are split between all founders.
- Limited company. A private company where your liability is only tied to the amount you have invested.
Register as a sole trader if you are:
✔️ Not sure how profitable your business will be
✔️ Prefer simplicity
✔️ Don’t want lots of admin.
Register as a limited company if you are:
✔️ Sure your business will be profitable
✔️ Sure you will grow quickly
✔️ Wanting to work with agencies
Which is cheaper? Sole Trader vs. Limited Company
It is important to note that the startup costs for a sole trader are much less when compared to a partnership or corporation.
All you need to become a registered sole trader is your national insurance number. Partnerships need to cover the legal cost of drafting a partnership agreement and other registration fees.
However, there is a tax incentive for registering as a limited company. Sole traders pay 20%-45% income tax, whereas limited companies pay upwards of 19% corporation tax.
Top tip: You can always change your business structure down the line but don’t make the decision too quickly. The differences between your business structure are substantial and are worth proper consideration.
Step 5. Get funding
Funding your business using grants, loans, and private equity
Unsurprisingly, funding is often cited as one of the biggest barriers to setting up a new business, which makes it a very important step to get right when starting up.
According to analysis by CB Insight, 38% of ex-startup owners cite running out of cash as the main cause for their firm’s closure.
How can I fund my business?
There are a lot of different sources of business finance. Among the most popular for startups are:
That said, the startup funding world is a big place to conquer. We’ve come up with a detailed list of the 10 best alternative ways to fund your business, helping you explore every possible financing route.
📞 How do I find an investor?
Talking to peers, such as friends or family members, is a good source of small grassroots funding. In fact, successful business owners have told us it was the key ingredient to starting a business.
More ambitious, limited company owners should look to private investment, like an angel investor. They can provide businesses with larger amounts of growth capital.
Making a strong impression at small business networking events is probably the best way to capture the attention of funders and get them interested in your business idea. Search online for relevant events that industry leaders might attend.
If you have already secured a meeting with a potential investor, read our guide to putting together a funding pitch.
🤝 How do I take out a business loan?
Business loans allow you to retain business ownership, protect your credit score and personal wealth, and – most importantly – get your business off the ground.
- Startup loans – the Startup Loan is a government-backed scheme that lets first-time business owners borrow up to £25,000 with a fixed interest rate of 6% p.a.
- Business loans – business loans are similar to startup loans, except that they are not just for new businesses and don’t have the same caps.
Be wary that some loan providers can charge hefty interest rates. Loans can also put your credit score at risk if you don’t pay them back in time.
Don’t take out a loan unless you are 100% certain that you’ll make the money back. Speak to a third-party accountant or financial advisor if you’re still not sure.
Victoria Coe grew KinKind to profitability off the back of a £25k Government backed Startup Loan. The business has since won multiple beauty industry awards and featured in the Startups 100 Index – twice.
🎁 How do I apply for a small business grant?
Small business grants differ from a business loan as there are no repayments or interest fees. Plus, you won’t have to go through as many checks to apply for one.
Our full guide to applying for a small business grant has more information on the schemes available based on your specific industry.
💻 What technology do I need?
Although funding is vitally important, it is also essential that you are able to effectively track and manage your money further down the line. That’s where the below business finance tools come in handy:
🥾 Can I fund myself?
Yes! Also known as bootstrapping, many entrepreneurs choose to fund their venture using personal savings. It is a popular method for those who find it harder to apply for large amounts of capital, such as full-time workers.
Carol Lathbridge and Lola Cawood bootstrapped their vegan hair extensions brand, Tiwani Heritage, while being new mothers and working 9-5 jobs.
Step 6. Register your business
Registering on Companies House and trademarking your name
Now that you’ve got a company name and a company structure, you need to register and trademark them to ensure that rival entrepreneurs cannot steal your design.
📝How to register your business name
Our full guide to registering a company name has more details but the process can be done easily online.
Simply make an account on the Companies House website and use the Company Name Availability Checker to make sure your ideal name isn’t taken or too similar to an existing company’s name.
Once that’s confirmed, you’ll need to input some basic information, like a business address, SIC code, and director names.
💳 You’ll be charged £12 by Companies House to register the company online.
How to register for corporation tax
An important part of registering a limited company is signing up to pay corporation tax. This must be done within three months of trading or you will receive a penalty from HMRC. Sole traders do not need to register for corporation tax.
™️How to trademark your business name
Many entrepreneurs incorrectly assume that registering a business on Companies House – or even owning a domain name – means that their brand is protected. In reality, without a trademark, it is easy for another business to come along and claim your name or logo.
Our guide to applying for a business trademark breaks down the process into simple, actionable steps, including what paperwork is required.
Top tip: Once registered, you can use the ® symbol to show that your brand and logo are protected. Registered trademarks can also be sold, traded, and even used as security on loans and mortgages.
💳 First timers will be charged £170 for a standard trademark application done online (£200 by post).
How else can I protect my intellectual property (IP)?
While a trademark protects brands, logos, and slogans, a patent protects new inventions, processes, or scientific creations.
Innovative entrepreneurs that want to stop anyone from using their unique product should also look to file a patent application through the government website.
💳 Patents cost around £300 in the UK, but you have 12 months from the day of filing to settle the bill.
Step 7. Set up shop
Purchasing a business premises, equipment, and/or software
If you’re launching a business that you can’t really offer as an online service, then you’ll need to rent or lease a commercial property. To decide on the location and size of the property, you’ll need to consider five key areas:
1. Customer base – If your customers are based in a particular geographical area, or travelling via a particular mode of transport, it makes sense to locate your business where they can easily find you.
2. Competitors – Where are your competitors? Do you want to be close to a cluster of competitors that already attract customers, or to have exclusivity in your area?
3. Supply chain – Think about proximity to suppliers. If you’re a fish and chip shop offering fresh scampi to your customers, it will shorten and cheapen delivery to base yourself near the coast.
4. Layout – Think about internal layout and access limitations – you may need to provide access for employees, customers, and deliveries outside working hours.
5. Planning permission – Seek advice from a property law expert to see if future expansion is possible. Failing this, local authorities now have online planning portals to find the planning history for a building.
👀 How do I find a commercial property?
- Search property websites, like Zoopla, and arrange viewings independently
- Speak to universities and other public institutions
- Search local council websites for nearby business parks and knowledge districts
- Compare coworking costs for flexible workspace
🖊️ Should I licence, lease, or buy?
Licensing your property = maximum flexibility, but minimum security. It typically suits smaller businesses and startups as it covers a short period of time – usually a few months.
Leasing your property = less flexibility, but security of tenure for the term of the lease, which is generally between three and 25 years. You’ll also be responsible for internal maintenance of the property.
Buying a property = zero flexibility, but maximum security. You’ll own the freehold and will be responsible for all maintenance and upkeep. Few business owners buy their premises unless they have large amounts of spare cash and want a long-term investment.
Top tip: Consider how the decision to licence, lease, or buy your premises affects your pricing strategy. The more expensive your upfront costs, the more you’ll need to charge to stay in profit.
Do I need to rent a commercial property?
If you reach a point where you have a team and require an office space but you don’t want to fork out tens of thousands on an annual rent bill, coworking spaces and managed offices are a good alternative.
Alongside lower costs and more flexible contracts, these can also provide an added benefit of networking potential with your fellow tenants. Learn more about the benefits of flexible work spaces with our handy guide to coworking – all you need to know.
🏠 What about a home office?
It’s not always vital to rent a business premises. Many entrepreneurs set up a home office, starting out with just a website, to save money.
This will save you money in the long run. Remember, you will still need to pay insurance to start a business from home.
Amelia Christie-Miller launched Bold Bean Co. in a basement flat in Madrid. In one year, the startup has won listings in Planet Organic, Selfridges, Gorillas, and Waitrose.
💳 What are the associated costs when renting a commercial property?
- Rent or mortgage costs
- Business rates (similar to council tax, this is a fee paid to local authorities)
- Contents insurance (for leasing or buying a property)
- Utilities (gas, electricity, telephone connections, and internet)
Step 8. Build your team
Developing a senior leadership team and recruitment strategy
Depending on your industry or specialism, hiring might be put off until later, or it might be a fundamental step that needs to happen immediately. However, any entrepreneur wanting to scale their business will eventually need to hire staff members to delegate tasks to.
How to develop a hiring strategy
Making a bad hire can have expensive repercussions – particularly if you’re a startup with a limited budget available.
One of the most important parts of building a team is to know in advance what you want so you can hire strategically, not randomly. Think about:
1. Business objective and mission statement. What roles will you need to get there?
2. Location and working model. How closely will you work together?
3. Leadership style. How well do you work with others? Do you want to make all the decisions?
👩 Example: Jane is an ex-journalist who wants to launch a remote PR agency in Sheffield. Her customer base is in London. She has no experience managing clients.
1. Jane hires a sales manager to onboard clients and grow the business.
2. To enable in-person networking, Jane recruits a Londoner who she can manage remotely.
3. Jane chooses a coaching leadership style to develop the sales manager’s PR skills.
Top tip: In the early stages, you may want to use a recruitment consultant to help fill roles. This can be expensive, but you are paying a premium for experience and connections that may be difficult to replicate.
Another option is to hire an apprentice. Training apprentices is known to be more cost effective than hiring skilled staff, as it tends to require lower overall training and recruitment costs.
You can also adapt their training according to the needs of your business, so you’re essentially investing in the business’ future, as well as that of the employee’s.
How (and when) to outsource talent
There are a lot of benefits to outsourcing talent to freelancers. This flexible contract option allows you to ‘try before you buy’ if you’re not sure whether you need a full-time employee just yet.
That said, if you’re hiring any contract employees, we recommend purchasing HR software. Essentially an automated HR manager, this tool removes pressures on employee management and admin – helpful if you have a big team of gig workers.
How to run a business on your own
There are currently 2.9 million sole proprietorships in the UK (companies that do not employ anyone beside the owner). Instead, they rely on software apps to stretch out their resources and play the roles of multiple departments.
Business technology costs can quickly add up, which is why downloading a free version of the top software brands is a good short-term option – until you’re ready to upgrade.
Here are the best free systems for startup owners:
Step 9. Choose your suppliers
Finding and analysing your supplier list
When you sell a product or service, you become a part of the business supply chain. It should go something like this: Manufacturer > Distributor > Vendor > Customer.
It’s important to focus on sourcing a good, high-quality supplier you can trust to get a job done. Should a supplier make a mistake and disappoint a customer, for example, if your chosen courier loses a parcel, this could severely affect customer satisfaction.
Suppliers will also inform several other key areas, such as the quality and pricing of your sales offering.
🔍 Supplier analysis
When researching a supplier to partner with, you should think about these four key aspects:
- Supplier cost – prices between suppliers can vary dramatically, so it’s important to look for the best deal.
- Quality – the quality of any purchased products will determine how much you charge customers.
- Reliability – when choosing a new supplier, you’re entering into a long-term business partnership. It’s wise to ask for references from any previous or existing customers.
- Location – you’ll likely want to find a local supplier based near your premises or your customers. This will help to reduce shipping and delivery costs.
- Working culture – find out how they like to work and what they value. Are they a company you can build trust and loyalty with?
👀 How do I find a supplier?
Reaching out to vendors can be as simple as sending a quick message via an online channel or handing over a business card at a networking event.
If they’re a particularly sought-after supplier, you might need to organise a more formal meeting and design a business pitch to get them on your side.
📦 Business-to-consumer (B2C) startups most typically partner with a wholesaler. They will provide the products and resources you will need to complete your product lines. Our ultimate guide to wholesaling has more information on how they work and how to find one.
Want to start a dropshipping company? Our guide to the best dropshipping suppliers has more information on who the best providers are for new startup owners.
The Modern Milkman, which came in fourth in this year’s Startups 100 Index, utilises a local supply chain of farmers to deliver on its promise of fresh groceries, sold sustainably.
Step 10. Launch your business
Building your brand and marketing to customers
Branding your business
How you choose to brand will depend on various factors, most of which can be informed using your market research:
- Who is your target audience?
- What is your product?
- What is your unique selling point (USP)?
- What platforms should you use to advertise?
- What platforms do competitors use to advertise?
What branding elements do I need?
Materials – eg. a logo, brand colours, font, and promotional imagery.
Tools – check out our marketing tools guides for more information on available software.
Channels – where will you advertise? eg. what social media channels are you using?
Across every channel and marketing tool, ensure that all aspects of your brand – font, colour, design patterns – are consistent. Choose one style and stick to it throughout any campaigns, so that it’s clear to customers who you are and how you are appealing to them.
In such a competitive landscape, having attractive imagery on pages like Instagram is crucial to ensure your brand’s ‘voice’ is seen as well as heard on users’ screens.
👷♂️ How do I build a website?
It’s almost impossible to have zero online presence in today’s business world. While lots of startups begin with social media pages and business listings, these alone aren’t enough to showcase your brand and build trust with customers.
In fact, research by YP and LSA found that 30% of customers automatically strike a business from consideration if they don’t have a website.
There are three basic approaches to building a website:
🧱 Use a small business website builder – Wix and Squarespace are both simple and efficient tools for web creation.
🧱 Build it yourself using open-source software – we only recommend this route for those who are very experienced with coding and software development.
🧱 Hire a website designer to build one for you – this is a good option if you’re not at all confident about building a website. However, remember that the more complex the site, the more it will cost.
Available on mobile and desktop, our number-one rated small business website builder is Wix
Marketing your business
Good planning will start you in the right direction when launching your business, but it’s customers that will ultimately generate sales
There are several ways to attract customers. We’ve touched upon launching a website above, but to find success it’s also important to focus on increasing local awareness. In Salesforce’s latest customer survey, 48% of respondents said they were keen to support small businesses in their nearby community.
🖥️ How do I develop an online presence?
Unless your target audience is specifically based elsewhere, concentrate on directing advertising and networking to localised channels, like:
- Sending a press release to newspapers or business directories
- Community groups on Instagram, Twitter, TikTok, or YouTube
- Local entrepreneurs on LinkedIn
- Local Facebook and Google advertising
Read more about:
⛰️Top tip: Most early-stage marketing is a process of trial and error. You may need to test a number of methods and approaches before seeing results.
Step 11. Grow your business
Identifying opportunities for future growth and scale-up
Once you’ve completed all of the above steps, you’ll have laid the foundations to get your business idea off the ground. Now, it’s all about building upwards.
Identifying growth opportunities
According to a 1957 article by acclaimed business manager, Igor Ansoff, there are four recognised methods for developing your business strategy, product, or service offering. These are:
| Strategy | What is it? | Example |
|---|---|---|
| Market penetration | Improve sales figures by digging into an existing customer base | A restaurant introduces a special discount offer for local customers |
| Market development | Improve sales figures by advertising to a new customer market | A small clothing store opens a location in another region with a younger audience base |
| Product development | Developing a new product, or improving an existing design, to bring to market | A software brand upgrades their app to be compatible with Android phones |
| Diversification | Expanding into a new market by offering an alternate revenue stream | A local cake shop decides to also sell branded aprons |
Building your network
Almost all successful new businesses rely upon partnerships made along the way. They can be the key towards finding like-minded businesses and referrals that accelerate your growth, providing opportunities in areas like:
- Knowledge-sharing: Established companies can advise or give feedback on your ideas.
- Logistics: Company partners might be able to give you access to professional equipment and tools.
- Hiring: You’ll meet other, qualified professionals in your industry who may be right for a future role.
Networking with others in your industry will help you to build brand awareness, which could also grab the attention of potential investors.
Managing customer relationships
Strong client or customer relationships are the lifeblood of any business. That’s why startups need to stay on top of changing customer demands to ensure they feel engaged and looked after by the company and its employees.
Investing in Customer Relationship Management (CRM) tools and tricks is the straightest path to developing an effective customer service strategy.
Among others, small business CRM software assists with:
- Email marketing and outreach
- Storing customer information
- Coordinating campaigns
- Complaints and enquiries
- Customer data and insight
- Converting leads into sales
Customer needs will differ depending on the sector you are based in. For industry-specific CRM systems, read our CRM software guides.
Streamlining your operations
Another important growth step is to identify the areas where you can save resources to minimise costs and maximise profit.
🤖 Look for any processes that a business can automate, like completing payroll, helping to free up management time.
🕒 Look for low-level skills that are taking up management time. Simplify these tasks by giving them to a cheaper, junior employee to increase efficiency.
📁 Look for inefficient processes to fix or eradicate. For example, poor file storage leaving staff members unaware that their work was already done (recently or in the past).
Tips for scaling your business operations
1. Develop an action plan as a first step
2. Keep goals SMART (Specific, Measurable, Achievable, Realistic, Time-Bound)
3. Stay on top of market trends
4. Don’t rush into big decisions – be slow to hire
5. Know when to delegate
6. Build a strong management team
7. Make sure to connect with customers
8. Don’t forget about profitability!
Haris Pylarinos bootstrapped the cybersecurity firm Hack the Box. Despite raising $70m across three funding rounds, Pylarinos has prioritised profitability to ensure the business’ survival, as well as growth.
Conclusion
This guide has covered all 11 steps involved in starting a business, including researching and planning your business idea, registering your business, sourcing funding and fostering business relationships, and finally – growing your business!
At this point, you’ll know your company better than anyone, and will be best-placed to control the direction of travel. But while we’ve made it all sound easy, we know the reality of getting started can be a bit daunting.
The most important part of setting up a successful company is to get stuck in when you’re ready. You will likely make mistakes as a new business owner, but true entrepreneurs can appreciate the importance of failure: an opportunity to learn from your mistakes.
It took Wild cofounders Charlie Bowes-Lyon and Freddy Ward nine months and multiple failures to create the UK’s first plastic-free deodorant.
Useful reading:
- How can I start my own business with no money?
The good news is you have complete control over much you want to spend. Starting a business can be expensive – but if you make use of free tools like a website builder or project management software, and work from home instead of an office, you can keep spending to a minimum. All owners will need to spend £12 on registering their business, as a starting cost.
- Can I start my own business from home?
Yes. Lots of successful entrepreneurs have developed a home-grown idea into a multi-million pound company, as a useful way to save on premises and utility costs when starting out. Dropshipping and other remote business models are also ideal for starting a business from the comfort of your home.
- How much does it cost to start a business in the UK?
Generally speaking, startups should budget at least £5,000 to get started, but the total cost will depend on your business model and what you are planning to sell.
- When should you start a business?
Whenever! There is no exact ‘right time’ to start selling a product or service. While it’s a good idea to be aware of the market you’re selling in and the current challenges, as long as you have the key ingredient – a good idea that you feel passionately about – you can start a business at any time.