Guide to starting a new business

Starting a business is an exciting opportunity, but there are some important steps to take beforehand.

Setting up a business takes a lot of planning and research. You will need to consider what type of business you want, what services or products you will provide, and how you will fund it. While it might seem daunting, understanding the basics will help make the process much smoother.

If you want to start a new business, this guide will provide an important overview of everything you need to know - helping you get it right the first time.

Why Should I Start a New Business?

In the corporate world, you are often limited to the scope of your job. You may have a good company idea, but when you work for someone else - it can be hard to make this small dream a reality. So, if you start a business, it is a good way to become your own boss and pursue something you're passionate about.

Owning a business also allows you to build something that is entirely yours.

 You can create the best products or services, which are directly tailored to your customers' needs. In addition, a specific power comes with being an entrepreneur - you get to work on your company idea and be on the cutting edge of new decisions in your field.

Not to mention, if your business idea is successful, it could also provide you with financial independence. Unlike when you work for someone else, the only limit to your earning potential is your creativity, hard work and products/services.

Anyone can start a business, no matter their personal circumstances. Whether you want to travel the world or work around your children's schedules, having a business is a good way to do just that.

How Do I Start a New Business?

Starting a business is no easy feat. There are several steps you'll need to take to make sure your business is legally compliant and set up for success. Here we have outlined the main steps you should take:

1. Decide on a Business Idea and Research Your Market

Before you start, it is important to decide which type of business you want to create. Take the time to do proper market research to ensure your company offers something people want or need.

1. Create a Business Plan

Any successful business needs a well-thought-out plan. Set your goals, objectives, and strategies for achieving them so you have a clear roadmap. A business plan provides good guidance and structure when starting a new business.

1. Determine Your Business Structure

You will need to decide which business structure best suits your needs. Popular structures for both large and small businesses include limited companies, sole traders and partnerships. Depending on the country you are operating in, other options may be available. Let's look at the criteria for each:

• Limited Companies: A limited company is a corporation that is separate from its owners, meaning the directors and shareholders are not personally liable for any debts, losses or tax issues incurred.
• Sole traders: A sole trader is an individual who runs a business independently, with no other partners or shareholders. A sole trader must file annual personal self-assessment tax returns. They will be solely liable for tax demands or debts accrued.
• Partnerships: A business partnership involves two or more people working together to run the business. All profits are split between the partners, and each is personally liable for any losses, tax demands, or debts incurred.

1. Set Up Your Business

Once you have decided on a structure, it's time to register your business. This involves registering with HMRC, creating a business name and completing other paperwork related to your chosen structure. When setting up a business in the UK, you must:

• Register with HMRC
• Choose a legal structure
• Set up a business bank account
• Pick a business name
• Get any relevant permits and licenses for your industry
• Register for VAT if earnings exceed £85,000pa
• Set up a business address
• Promote and Market Your Business

After you are set up, you'll need to start promoting your business. You can do this through digital marketing, print adverts, word of mouth, and more. You should create a strong brand image and find ways to get your name in front of potential customers.

What Should You Study When Starting a New Business?

The required qualifications and experience depend entirely on the type of business you plan to start. 

You do not always need to study to start a new business. However, it is best to have at least a basic understanding of accounting and marketing principles. Additionally, depending on the nature of your business, you may need specialised knowledge such as legal or technical expertise.

For example, if you want to set up an accountancy firm, you must have a relevant accounting qualification. Whereas, if you wanted to sell clothes online, you wouldn't necessarily need to don any specific qualifications. You would just need to understand the best practices of running an eCommerce business.

Having expert guidance and advice can also be invaluable when starting a new business. It may help to network and build connections with other established businesses/mentors that can provide insight into the industry.

How Much Does This Job Pay?

The amount of money you can earn depends on the success of your business. Many new companies take a while to get off the ground and establish themselves, so you must be realistic about how much you can expect to earn.

Businesses often involve additional costs such as tax, utilities, property, and insurance. Therefore, when setting your pay rate, you will need to factor these into your calculations. As a business owner, you must also be prepared for earnings fluctuations and plan for your business's long-term success.

The average earnings for self-employment are around £36,000pa. But this can vary significantly depending on the industry and size of your business.

Should I Start My New Business With a Partner?

As we previously mentioned, it is possible to start a business with another individual or group of people. Working in a partnership allows you to benefit from additional skills, knowledge and resources. The workload is split between the partners, and profits are generally shared.

However, you should be aware of the potential risks of a business partnership. 

You must agree to clear terms and financial arrangements from the outset. Deciding on the roles and responsibilities of each partner is also recommended. 

Ultimately, ensuring the partnership has a solid foundation and the right team is very important.

There is always the risk of the partnership not working out, so you must consider carefully before making such a commitment. So long as you choose your partner wisely and take the time to plan effectively, there can be many positive aspects to starting a new small business with a partner.

How Can I Obtain Business Funds?

Most businesses will require some form of funding to get started. It is very unlikely you can start a business for free. You may need to purchase stock, create a website, rent premises, and hire staff. Depending on the amount you need, you may be able to save enough capital on your own. Although if this is not a viable option, there are various methods to obtain business funds, such as:

• Government funding
• Startup loans and grants
• Private or small business bank loans
• Loans from family or friends
• Charities or other organisations
• Crowdfunding
• Investors

What Are the Advantages and Disadvantages of Starting a New Business?

If you want to set up a business, it is important to consider the advantages and disadvantages of this decision. 

The advantages of starting a new business include the following:

• Good flexibility and control over career decisions
• Ability to drive innovation and creativity
• Opportunity to make a substantial profit
• Chance to become an expert in the field
• Benefit from increased job satisfaction

The disadvantages and risks of starting a business include the following:

• Risk of failure or loss of funds
• Potentially long hours and stress
• Difficulty in obtaining finance or investment
• Challenges associated with setting up a business
• Income is not guaranteed

Conclusion

Starting a business is not for everyone. However, it is possible to set up a new and successful business with the right resources and support. Being realistic and prepared for any potential challenges along the way is key.