A step by step guide to setting up a small business

Oct 23, 2019 by

In the UK, the idea of starting your own business appeals to many. Recent surveys have discovered that 70% of us have deliberated the idea and four out of five 16-21-years-olds have the ambition to one day become their own boss. In 2017, there were 5.7 million private sector businesses, which represented a representing a four per cent rise from the year before. However, it’s perhaps surprising to find that 80 per cent of new businesses fold within their first 18 months.

There are so many new businesses starting up, whether people take it on as a side hustle or full-time project. But as a huge number are ultimately failing, we’re here to look at the laws you must follow and how to give your business the best chance of success through advertising.

Firstly, you must register the business

You must firstly register your business at the beginning of its life. Most owners will register as a sole trader, limited company, or partnership. While it may be easier to set up as a sole trader, this deems you responsible for any debt the company may build up and leaves you in charge of certain accounting issues.

However, a limited company allows you and your finances to remain independent from your business assets and liabilities. This too is easy to set up yourself, but many prefer to seek the assistance of a professional figure such as an accountant as there are a lot more reporting and management responsibilities involved.

If you’re starting up a business with someone else, it’s advised you go down the partnership route. This is the simplest way to set up your new business if there are two a more people involved.

A license is important

When setting up a small business, licensing can sometimes be overlooked and not set as a priority. Certain small businesses may not require a licence, but you should always check at the earliest opportunity to avoid fines or being shut down before you’ve really began.

If you plan on selling food, playing music or selling in the street then you need a license to do so. Use this Gov.uk tool to find out which licences your concept may require.

Purchase Insurance

To ensure your business and your self are covered against any unexpected losses, it’s important you take out insurance. It doesn’t matter if you run a large multinational company, a small business, or are self-employed, it’s important to find the right insurance for you. For example, insurance for dog trainers will greatly differ from catering insurance or retail insurance, so be sure to properly research your options.

To protect yourself against any mistakes, legal costs and damage then make sure to take out liability insurance. Certain insurances are required by law, such as employers’ liability insurance. This will cover the cost of any injuries or illnesses any employees may suffer due to work. Elsewhere, if your company will be using vehicles, you must have commercial motor insurance, while some professions must also have professional indemnity insurance that has been provided by their professional bodies or regulators.

Depending on the nature of your business, commercial property and cyber insurance may be beneficial policies to take out, although they are not compulsory. If you are going to be working from home, while it’s not a requirement to have business insurance, you should consider updating your home insurance as you’ll need to have the appropriate commercial property insurance.

Switching from employee to employer

There are several points to consider when hiring staff members. Firstly, how much will you be paying? Remember, it has to be at least the National Minimum wage and you must set up their National Insurance payments. It is worth noting here that you’ll be able to claim an allowance to reduce your bill. You must also make sure that they are actually legally entitled to work in the UK, so don’t just presume — be sure to do thorough checks, including a possible DBS check if needed.

For anyone employed for longer than a month, you will need to write them a legally binding statement of employment, thus have employment insurance. HM Revenue and Customs must also be informed via registering as an employer.

Marketing and advertising

If you want to succeed, it’s important to focus on advertisement and promotion once all the legalities have been ironed out. A solid marketing plan is crucial in order to outline where you want your business to go and how you can progress. It will look at how much advertising will cost. A great cost-effective way for any local start-up to take advantage of is door to door leaflet distribution.

Research suggests that 9 out of 10 people remember receiving door-drop mail. Of this group, almost half confirmed that they keep ahold of these leaflets, making it an effective method of advertising if you utilise it correctly. It’s recommended that you keep your content simple, include your business name and logo, telephone number, email address and the service(s) you are offering.

After ensuring they have been properly written, newspaper advertisements are another cost-effective method of marketing. Make sure you don’t neglect your online presence, either. This is a significant area in advertising at present, and social accounts are a great way to promote your business to your intended audience.

If you’re planning to open a new office space, a pop-up banners are a great way to direct the public’s attention towards your business. These relatively cheap and durable displays can be used outside your workspace and research has found that the majority of a local business’s regular customers live within a five-mile radius of where you are based. This means that each potential customer could see your banner up to 60 times each week.

If you want your brand to be remembered for all the right reasons rather than wrong, you must ensure a realistically achievable plan is created first. By fully researching the above points, you will stand yourself in good stead from the offset.