The Beginners’ Guide to Starting a UK Business
It is always challenging to set up your own business, but in today’s economic climate, it can be particularly tough. In this guide you will find advice and links to a broad range of useful information on getting your new business up and running.
What should I expect to gain from this guide?
The Beginners’ Guide to Starting a UK Business will help you determine whether you have what it takes to be your own boss. It will also provide you with the basic information you need to get started.
Only you know your ideas and plans. We aim to help you question your own assumptions about how to prioritise your tasks and use your available resources. We will also ensure you get started on the right track with access to helpful information, resources and expert advice.
What kind of person makes a successful entrepreneur?
The fact is anyone can become an entrepreneur. Each individual needs to determine the scale and ambition of their proposed business to be sure they have the right skills and resources available for their particular idea.
For example, the business skills, knowledge and capital required to start a small retail business are very different to those needed to open the first branch of a planned multi branch franchise.
Similarly, buying a franchise from a well-known brand with a proven business model requires a very different approach to starting a completely new business under an unknown brand name.
How can I determine if I am capable of starting a business?
The challenge is not just finding the right business for you, the right location or the finance (although these are all important). The biggest challenge is your own lack of experience.
Ask a seasoned entrepreneur and they will tell you there is so much to learn that most people just don’t know where to start.
Many people never make it past the dreaming stage, which is understandable since finding all the right resources and information you need from a standing start can feel like a huge task. Often people worry about the wrong things and can get lost and forget about the bigger picture.
Every business has a different set of boxes to tick to make it a success, but you can summarise the minimum requirements needed in four words:
As many as one in three UK businesses fail in the first three years. So it is not easy.
It can be lonely and it can put a severe strain on personal relationships. Even worse, if you get it wrong you can end up financially worse off than you were before you started. However, you can mitigate the risks if you follow a common sense approach and make sure you have all the facts and have answered a few simple questions before committing any resources to a business:
Is there a market for my proposed business?
Can I get access to the right resources?
Am I the right person, not just to start the business, but to build it up into a successful enterprise?
Most people starting a business have skills and experience they can draw on. Typically, most will work full time in their new venture doing what they previously did for an employer for themselves.
It is important to be sure you know what commitment is needed to run a particular type of business - many that look like fun from the outside are very different when you’re working at the sharp end.
For example, if you are starting a small retail shop or restaurant building based on experience you have gained from employment in the sector you will know what to expect - long hours, hard work and a possible seasonal sales cycle - and will plan accordingly.
If your planned business is outside your sphere of knowledge be sure you do your research very thoroughly. You might even consider work experience in a similar business to be sure
you like it.
Starting a business without the proper resources is like trying to climb a tree with one arm tied behind your back; hard, often impossible. In today’s global economy access to funding is harder than ever before and advice on how to access it varies tremendously. To help you cut through the noise we cover possible routes to raise the funding you need in Chapter 8 of this guide.
The old saying goes ‘you make your own luck’, but luck is the indefinable something that can control how things work out or, what opportunities come your way.
Some businesses fail not because the leadership was poor or the product was wrong but simply because they had a run of bad luck.
Hoping for luck to fill in the gaps of your Business Plan is not sensible, but you can make sure you are ready to grab hold of an opportunity when you see one.
Here is a simple example: If you run an umbrella shop you can’t make it rain, but you can make sure your business is properly stocked and ready so that when it rains you are well positioned to reap the rewards.
Always be ready to exploit an opportunity when it comes your way. Great businesses are always looking for ways to exploit new ideas and are often led by people who think this way. Such insight might come from an unexpected customer enquiry, a new technological development or a change in the market.
Get Started with Your Business
Over 99 per cent of UK businesses are, as defined by the Department of Innovation and Skills, small businesses (under 49 employees). Small businesses are, therefore, the major job and wealth creators in the UK - run by the people whose personal ‘get up and go’ underpins our economy.
Starting your own business can be both fun and daunting at the same time. It is always hard work and requires a lot of planning, research and effort.
Remember, the more you can do in advance of starting a business and the more certain you are you have ticked all the right boxes before you start spending money, the better.
Once a business is running you will inevitably have fixed costs, things you have to pay for regardless of whether you are earning any money or not. The smaller these are and the longer you can delay incurring them the more of your start-up capital you’ll protect.
There are a number of common sense rules to follow before getting started.
• Be sure you understand the commitment and are ready for it.
• Know what resources you need and be certain you know where you can find them.
• Identify your fixed costs and make sure you can cover them. Be realistic in estimating how long this might take. If in doubt add weeks or even months into your planning process so you know what the likely worst case scenario could be.
• Continually question your assumptions, be honest with yourself and be prepared to make adjustments. There is nothing wrong with making changes as you learn. Starting a business is a process and the more flexible you are the more likely you are to see problems coming before they do damage.
• Have a written business plan and update it as you go. Keep earlier versions in a file so you can refer back and track your thinking processes. You’ll be surprised how much of what you think changes.
Don’t ignore critical business factors. Unlike being an employee with a pay cheque at the end of the month, failure for a business owner can be a serious threat to your lifestyle and future solvency.
Why start a business in the UK?
What are the benefits?
The UK offers a relatively benign location to start a business, which is one reason so many multinationals choose to invest here.
The UK has a dense population in a small area with many of the major urban areas close together. Its population is also relatively affluent making it a good place to get business started with access to large numbers of customers. Additionally, easy access to Europe and across the Atlantic to the US and Canada make it an attractive proposition for export markets.
The UK is a mature market with a wealth of information available to the aspiring entrepreneur. It is a good location to launch products or develop new concepts.
The UK has a well-educated workforce, many with specialist training or degrees and you are likely to find a good pool of skilled labour within easy reach.
Costs & Tax
UK company set-up and running costs are lower than in some countries and there is relatively little red tape. Anyone who is not disqualified as a director, or bankrupt can set-up a company and open a bank account in less than a day - often with little or
no working capital.
More detail on registering a company in the UK, tax and Employment Law can be found in the following chapters.