The initial stages to setting up a business can be thrilling, but if it’s your first time, you may feel overwhelmed or uncertain on how to get started. From choosing a company name to doing your market research, there is a lot to consider. Here, we lay out the most important pointers for you to consider when setting up a business.
Do your market research
As with anything, if you fail to prepare, prepare to fail! Conducting market research is crucial to understanding your customer base and the need for your product or service.
Additionally, you need to know what the competition is like, whether in your local area, or as an online business.
Will your business be one in a growing range, or do you have something completely new to bring to the table?
Conducting this research from the outset is crucial to understanding the market and where you will position your business within it. Find out:
- Where your potential clients are located
- Whether your product or service is already available in some form
- At what cost your competitors are pricing their products or services
- How far your business can reach and realistic capability with resources you have
- What you can do to stand out from the competition, i.e. competitive pricing, introductory offers, partnerships, a superior client experience
Market research can be done in a number of ways. You could start by searching online, speaking directly with those who engage with your competition, or encourage people to take part in surveys or focus groups.
Write a business plan
A business plan outlines your business and how it aims to make money.
It helps you to:
- Clarify your business idea and develop a mission statement
- Set aims and objectives that can be reviewed at important stages
- Measure progress at regular intervals
- Identify and rectify any problems
All of your business objectives should be SMART –
Specific, Measurable, Achievable, Realistic (or relevant), Time-bound.
By creating SMART objectives you can measure the success of your business and identify what is going well, areas where you may be struggling, or new opportunities.
Writing a good business plan is crucial to the success of your business. For more information read how to write a business plan on the Start Up Donut website.
There are also business plan templates on the Prince’s Trust website.
If you are looking to develop a business that requires contribution from a range of people, you may wish to consult a specialist who can ensure all important aspects are considered, particularly if you will be looking for funding.
Think about funding
When setting up a business, take a good amount of time to consider funding. There is no one-size-fits all approach so you should consider all options carefully before deciding on a funding type.
There are three main types of funding:
1. Self-funding:
Also known as bootstrapping. This is when you use your own savings or borrow from friends or family. This type of funding means that you retain full ownership of your company, however it comes with risks and may not cover the whole amount that you need. To raise enough funds, you may consider re-mortgaging your house or selling possessions. It is strongly advised that you consult a financial advisor who can discuss your finances with you to decide whether you have enough to start up and run your business while being able to pay your own bills and support any dependants.
2. Investors:
Investors give you money to start your business. Venture capital is normally offered in exchange of joint ownership and an active role within the company. You will have to pitch your business plan to an investor who will make a decision whether to invest. Where multiple rounds of funding are required to progress and grow your business over time, professional advisors will be able to guide you through applications and identify areas you can look for investment.
3. Loans:
If you want to retain ownership of your company but do not have the funds alone to set up the business, you may consider a loan. You may want to have a look at the Government-backed Start Up Loan scheme, or your bank may be able to offer you a business loan if you can provide evidence of a robust business plan, expenses sheet and financial projections for the next 5 years. Remember, a loan is not guaranteed, and rejection may affect your credit score. As a result, it is best to consult with a business or financial advisor before making an application.
Pick a business location
Deciding upon a business location isn’t as easy as it sounds. There are lots of factors to consider. For example, rates may be higher in certain, high foot-fall locations or high-spec offices. You should consider minimum wage laws, property values, business insurance rates and government licenses and fees.
If you are providing a service via an online platform, you may not need more space than a desk.
If you are going to be providing a service to clients face-to-face, or you require office space, you will need to choose an ideal location.
If your business is around the provision of products, whether online-only or in a brick-and-mortar outlet, you will need to consider storage or warehousing. While at the start you may not need a lot of space, as your business grows, you will want to find proper warehousing space that can safely store your inventory.
Choose a business structure
The right business structure is crucial to the future of your business. It affects how much you pay in tax, the paperwork you need to file, your exposure to personal liability and the size and nature of your business.
You have the choice to trade under the following business structures:
- Partnership
- Sole Trader
- Limited Liability Partnership (LLP)
- Limited Liability Company
- Franchise
Each business structure type has its pros and cons, and it is important you weigh them all up carefully before making a decision.
Choose a business name
Choosing a name for your business isn’t an easy task. You need to make sure you are promoting your company in the right way whilst adhering to legal considerations:
- Ensure you do not deliberately mislead customers
- Avoid offensive words and phrases
- Make your business name unique
- Use ‘ltd’ or ‘limited’ if your company is limited by shares
- Familiarise yourself with sensitive words and phrases.
For further information, read our full blog ‘5 Rules for Naming a Company’.
Seek legal advice for setting up a business
Often taking the first step is the hardest part when setting up a business. Our corporate law team will help make the process easier and ensure you have all information available to you before making decisions. Using experienced and reputable solicitors from the offset will minimise your risk of facing problems further down the line. Meanwhile, we offer an outsourced company secretarial service that can alleviate much of the administrative burden of setting up and running a business.
Call our team on 0161 969 3131 or fill in this contact form.