Flexible monthly business insurance
Setting up a business is exciting, but not for the faint-hearted. It’s not enough just to have a great idea, you also need know-how, funding, a great team, and the ability to jump through tonnes of hoops before you can start trading. Our Ultimate Guide will help you to understand what you need in place to get your business off the ground, breaking down the process into manageable steps. Of course, the precise route will be a bit different for every business, but this will guide you through the basics.
Is a business really for you?
First, and most importantly, you need to establish whether or not starting a business really is a good idea. Running your own company is a huge commitment, and it will inevitably cause a lot of stress at one point or another. It’s not something you can just dip in and out of! However, if you’ve got the savvy, the time, and the skillset, setting up a business can be massively rewarding.
Knowing yourself will help you a lot in determining whether or not you’d be good at running your own business. Ask yourself some questions:
- Why do you want to start this business?
- How much time can you devote to the business?
- Do you have ‘business’ skills and qualities (for example: good financial management, good time management, resilience, and perseverance)?
- Would you be a good leader?
There is no set format for what makes a good business leader. However, it is worth thinking hard about the kind of person you are, the kinds of challenges you might face, and whether or not you’d be able to cope with the stresses, strains, and demands of business leadership.
What’s your big idea?
So you’ve done a bit of soul-searching, and you’ve decided that you definitely want to start your own business. Great! Now, if you haven’t already, you need to come up with an idea.
Business concepts vary widely, but if you’re struggling to find one (or to make your idea fit in with a business model), here’s a bit of advice:
- Solve a problem. What issues or problems can your business help to address? How can you improve the lives of your customers? For example, Uber set out to provide a simple solution to urban transport problems, and Steve Jobs wanted to create ‘hassle-free’ computers.
- Be engaged by/with your idea. If you do make a business out of your idea, you’re going to be eating, sleeping, and breathing that idea for a long time. Your idea has therefore got to have more than market potential! It’s got to be something you’re passionate about, something you can engage with enthusiastically, and something you’re not going to be really sick of five years down the line.
- Innovate. You don’t have to reinvent the wheel – but coming up with something a bit different from what your competitors are doing is important. What’s unique about your idea? If the idea itself is not unique, how can you implement it in new and innovative ways? It’s innovation which will give you the edge over your competition.
Research the market
Speaking of competition, it’s essential to get deep into some market research before you start writing out any business plans.
- Identify and analyse your target audience. Who’s going to buy your product or service? Where do they hang out? What are their likes, dislikes and behavioural quirks? The more you know about your target audience, the more effectively you’ll be able to position your product in a way that catches their attention.
- Identify and analyse competitors. ‘Competitor’ does not necessarily mean ‘enemy’. Others working in the same area or industry can provide valuable insights and support. However, you don’t want to flood the market with a lot of samey stuff. Check out the brands who are already doing what you want to do (or similar). Analyse what they do well, and what’s not working for them. Then construct your own, unique and improved take on the idea.
- Scrutinise demand for your product/service. Market forces and the interplay of supply and demand will exert a huge influence over your business in the future. Before you set up your business, look into the demand for your product, and the ways in which that demand is currently being met. Can you find a better way of delivering your product to the market? If there’s no demand, can you create it?
Building contacts, a network, and a team is massively important. No business is an island. While you don’t necessarily need a ton of people sticking their oars in, a network of people to lend their experience, introduce you to other useful contacts, and to offer support when needed is incredibly useful. Even if you don’t think that you need a lot of outside input right now, it’s still worth cultivating a network – you never know when you might need your contacts in the future! Here are a couple of things to think about:
- Do you need a partner/co-founder? Not all people work well in a partnership situation, and not all business ideas are suited to dual input. However, there are all kinds of partnership styles, so even if you’re very much the ‘lone wolf’ type, don’t dismiss the idea out of hand. You could bring on board a ‘silent partner’, for example, who contributes resources like funding or office premises in exchange for equity but doesn’t get involved in business decisions. On the other hand, you may find it extremely helpful to have a partner or co-founder on board to help share some of the load.
- What kind of people could be helpful for your business? And where would you find them? Think about the resources you’re going to need, the customers you’re seeking, the funding you’ll require to get your idea off the ground. A good network can help with all of that. Industry events, networking events and so on are all great for seeking out the kind of people who’d make great employees, partners or mentors, now and in the future. Social media can also help here – it’s surprising how much you can gain from the right LinkedIn and Facebook groups.
Write a business plan
Now that you’ve got an idea, you know who you’re aiming it at, and you have a burgeoning network forming around you, it’s time to turn to the nitty-gritty of getting this business off the ground. That means writing a business plan.
What is a business plan?
A business plan is a formalised, strategic document which summarises your business goals and outlines a roadmap towards achieving them. To write a business plan, you have to start thinking hard about the practical things you’ll need to do in order to make your vision a reality. Costs and funding plans will inevitably play a big part in this (if you’re not sure what you need to budget in, take a look at our Ultimate Guide to Start-Up Costs, so be prepared to crunch some numbers at this point!
What should your business plan contain?
There’s no set template for a business plan. Every business, after all, is different! However, most business plans should include:
- An executive summary. This is basically an overview of what’s to come. It gives readers an idea of the key points you’ll be covering later in the document. You may be showing your business plan to a number of important people – including investors and potential partners. The aim of the executive summary is to whet their interest and to prep them for strategies you’ll be going over in more detail later. The main thing to get across at this point (as snappily as you can) is what your idea is, how you’re different to others’ in the industry, and how you’re going to bring it all to life.
- A company analysis. This should provide a high-level overview of your company – who you are, what you do, and how your business fits together. Here is where you can go into a bit more detail about what you’re offering, your products and services, your goals, your mission, your milestones, your team and so on. However, it’s important not to get too bogged down in details. Remember - investors and other readers may only be skim-reading your business plan, so stick to big-picture stuff.
- A market analysis. This is where all that market research comes in. Give your reader a picture of where you’re aiming your products and services. Who are your target audiences? Why do they need what you’re offering? What’s the problem your company is solving? Who are your competitors? How strong is the market you’re entering? What are the prevalent growth trends in your industry? Don’t fudge this bit – firm stats and solid facts here will demonstrate that you really do know what you’re talking about.
- Descriptions of proposed ops and management structure. This is where you go into the day to day running of your business, and how your team members contribute to that. What operations need to be carried out to ensure that your business runs smoothly? Who is going to carry them out, and to whom will they report? What’s your management structure (if any) like, and how will a team of employees interplay to manage your ops efficiently and get the best results? In this day and age, it may be that some of your operations are ‘managed’ by automated processes. That’s OK – state this in the plan, and explain who’s going to be responsible for maintaining and updating the technology involved.
- Proposed marketing and sales strategies. How are you going to grab the attention of your target market? How are you going to convince them to opt for your products and services? How are you going to engage with them, and maintain their loyalty on an ongoing basis? There’s a lot to think about here, and it’s vital to your success. Consequently, it may be worth working out a marketing strategy in full before you tackle this portion of your business plan.
- A financial plan. This is the clincher: is all of this financially viable? This is the component which often makes or breaks investor interest. In this section, you should include any financial statements you have so far, any funding you’ve already obtained, how you propose to finance any expansion, growth forecasts, your net worth and so on. Crucially, if you’re aiming this business plan at investors, you need to explain how you’re going to pay back or otherwise return any investment in your business over the next few years. Valuing your business can be tricky in the early stages, but there are a few methods which can help when valuing an early stage business. You might also find our Ultimate Guide on Business Funding helpful when planning your finances.
- An overall summary. Wrap it up! This may seem similar to the executive summary, but its purpose is to seal the deal rather than to intrigue the audience. Again, pick out the key points from what you’ve just outlined, and explain how they’re going to make your business a success.
Throughout the process of writing your business plan, remember to keep it snappy, and make it flexible. Your readers need to be able to skim through and pick out the main points at a glance. And chances are that you’ll have to alter your business strategy a few times before you hit on the right formula, so it’s really important that your plan has built-in adaptability.
Develop a prototype/MVP
The costs, time, and effort required to build your prototype or Minimal Viable Product (MVP) will vary depending on what you’re building a business around (for example, if you’re setting up an advisory service, your MVP is likely to be a lot less resource-intense than if you’re building, say, a robot).
Don’t just focus all your attention on the product or service itself. Remember, you’re not just designing the end product. You’re also designing your business’s operational structure. If you’re getting the right results but the process is devouring your budget and driving your team mad, you need to refine that process until it’s working as it should.
Test your prototype
You will probably have to run the ‘design’ and ‘test’ stages a few times with your prototype/MVP before you get it right. It’s important at this stage to view ‘failures’ as educational. Whenever something goes wrong (or doesn’t go as ‘right’ as you’d hoped), try to work out why, and make alterations to the design accordingly.
Think hard about the most appropriate testing methods. Remember, you’re not just looking to measure what’s doing well, but also what’s not doing so well. The more testing data you can gather, the better able you’ll be to refine and improve your design or process. Be rigorous, be precise, and analyse your results in depth.
If you’ve not already secured funding (and if you need it), now is the time to go cap in hand to investors. If you’ve got a good business plan, have done your market research, have promising testing data, and can draw upon a good network of contacts, there are plenty of funding options out there for you. Business investment is a pretty big topic, so you may want to flip over to our Ultimate Guide to Startup Funding at this point. We’ll wait!
If you’re a bit more pushed for time, here’s a basic run-through of a few investment options:
- Small business grants: Organisations and institutions with a vested interest in the kind of product or service you’re offering may sometimes bestow grants to help with your business development. Getting a grant will probably mean fighting off a lot of competition, so keep your ear firmly to the ground within your industry for likely openings, and refine your pitch to the highest standard when applying.
- Angel Investors: Angel Investors are individuals who invest their own money in business ventures, usually in return for equity or a controlling interest. They’re great when you’re just starting out, as they’re more likely to take a punt on an untested idea.
- Venture Capitalists: Venture Capitalists usually operate from within bigger firms. They invest their clients’ money in promising businesses, in return for dividends (and, possibly, equity). Venture Capital investment is usually for reasonably well-established startups looking to move up into the big leagues.
Do The Paperwork
Licences and registration are a tedious but essential part of setting up and running a business. Think about:
The kind of registration you need to undertake with HMRC depends a lot on the structure of your business and the amount of money moving through your accounts.
- If you’re a sole trader (i.e. you are the only person working for your business), and you earn £1000 or more per annum from your business, you must register for Self Assessment and file a tax return every year.
- If your business has an annual turnover of £85,000 or more, you must become VAT registered.
- If you wish to set up as a Limited Company (which will ensure that, legally, your company and its owner will be considered separate entities), you need to register as such with the government.
- If you have employees, you must register with HMRC as an employer. You also need to register as an employer if you decide to trade as a Limited Company – even if your only employee is yourself.
Membership of industry associations such as guilds, unions and so on may be essential to ensure your future in the field you’ve chosen. Even if membership to these kinds of things isn’t compulsory, it’s always a good idea to keep a toe in the pool of industry news and gossip. It’s the best way to pick up on bright new innovations, to make great contacts, and to hear of opportunities. Look into the associations open to you, and register to join any which leap out.
Licences and certifications
All or some of the work you’re planning to do may require licences or qualifications. You can find a list of occupations requiring licences.
In general, where a job is illegal to perform without qualifications, gaining those qualifications will result in receiving a licence. However, sometimes you’ll only receive a certificate of competence without ending up with an actual licence. Food hygiene laws, for example, mandate a certain amount of training, but you don’t need to do a full licence course before serving food commercially.
And even if your job doesn’t need you to have any certificates, qualifications, or licences, gaining these can lend credibility to your business. So don’t totally forget the idea of certificates if you’re in a non-licensed profession.
If your business employs staff, then you are legally required to take out Employer’s Liability Insurance. You would be well-advised to look at other forms of insurance as well, such as:
- Public liability insurance
- Professional indemnity insurance
- Cyber insurance
- Business contents insurance
For the full rundown, check out our Ultimate Guide to Startup Insurance.
Take On Employees
The team you have around you will play a formative role in taking your company forwards and ensuring its success. Hiring the right skills and personalities will help to win over investors, partners and prospects, while bringing additional benefits that you hadn’t even thought about. However, as an employer, you also have a big responsibility towards your employees’ well-being and their futures. So staffing your business is not something to be undertaken lightly.
When seeking employees, think about the following:
- Choose people with skills you don’t have. You want people to fill in the gaps where your business model is lacking, not to provide more of the same.
- Don’t be blindsided by either personality or experience. A shining personality can blind you to the fact that its owner really doesn’t know what they’re doing. Likewise, an impressively full CV can influence employers to take on someone who won’t actually fit in with their team. A blend of the right personality and skill set is ideal.
- Choose doers. Some people talk a good talk, but don’t actually get much done. Look for people who demonstrate that they are proactive and capable of completing the work you need them to. In startups, everybody has to get their hands dirty.
- Look for a startup mindset. It takes a certain kind of person to thrive in a startup, and to help that startup to thrive. People who are used to coasting in an established office won’t cut it. A startup mindset is creative, moves fast, is innovative, learns from failure, and is prepared to muck in wherever and whenever needed.
- Offer benefits to pull in the best talent. Pay peanuts, get monkeys, as the saying goes. To attract the best of the best, you need to offer something different. You might not be able to compete with the big boys on pay, but think about how you can make up for that with extras, such as company discounts, gym memberships, social events, even a share of equity, so they feel fully invested in the future of the company.
And for more on the ins and outs of hiring, read our dedicated blog on growing your team.
Beat The Competition
With your team in place, your product working, and your funding secured, it’s time to start taking on the market.
Your main competitors aren’t your enemies, but they are influential forces within the market you want to join. You can learn a lot by keeping tabs on them (they’ll be doing the same to you!) So shameless snooping is absolutely fine.
- Google your competitors. Follow their social media accounts. Watch what they’re up to, and take notes. Keeping an eye on their activity ensures that you won’t be putting anything too samey onto the market. It will also give you a good idea of the kinds of things your target audiences like and don’t like in content, product, and services.
- Check their reviews. Customer reviews are massively influential in modern markets. Scrutinising the reviews left about your competitors will show you what to emphasise and what to avoid in your products and services. It will also keep you up to date with the desires and behaviours of your target market.
- Hire their people. If you really admire any of your competitor brands, remember that it’s their employees who make them what they are. If the opportunity arises, hire competitor team members, and bring all that brilliance over to your brand.
Time to take the first step
You won’t necessarily have to do everything we’ve outlined here. And you won’t necessarily be doing it in this order! Every business is different, and every founder must make their own way, navigating the ups and downs, and the trial and error involved in getting themselves established. But as they say, the first step is always the hardest, so by getting the basics in place, and with the right attitude, energy and passion for your new mission, you’ll soon be well on your way to startup success.
We wish you the very best of luck!
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
We've made buying insurance simple. Get started.
- 08 March 20234 minute read
Five leading incubators at the heart of UK tech
The UK tech startup space is in rude health. Let's meet five of the most significant tech startup incubators helping fledgling UK startups break new ground.
- 24 October 20228 minute read
Small business grants in the UK
Looking for a business grant to get your venture off the ground? We take you through the basics and answer some common questions about grants for small businesses.
- 01 August 20223 minute read
Digital marketing tips for small businesses
From SEO, social and influencer marketing, small businesses need digital/online marketing. Get started.Trends /Lists /