How to Start a Business in 2024

Becoming an entrepreneur and shaping a business that aligns with your values and goals can be the journey of a lifetime.

Small businesses play a vital role in the UK economy, with 99% of all companies being small or medium-sized enterprises (SMEs) and employing around 16.3 million people. 

However, starting a business in the UK is fraught with risk. Startups require careful planning, research, and resources to have any chance of success. Without these, you could become one of the 40% of businesses that don’t survive beyond the five-year mark. 

It is essential to have a solid understanding of your market, a thorough business plan, and an actionable strategy for finance and launch. It is also crucial to familiarise yourself with the legal and regulatory requirements for your particular business niche.

In this article, we’ll cover the critical steps involved in the process, from conducting market research and creating a business plan to choosing a business structure and securing financing.

Do Some Research on Your Business Idea

Before writing a business plan, you must ensure your idea has merit. Conducting market research is an essential step in the process of gaining clarity on how your business will fit into the current marketplace.

1. It can help you pinpoint your target customer. By understanding your ideal customer, you can tailor your products or services to meet their needs and ensure you’re reaching the right people.
2. It can help you understand the competition. By analysing your competitors, you can learn from their strengths and weaknesses and find ways to differentiate your business from theirs.
3. It can help you identify market trends and opportunities. With research, you can understand what products or services are currently in demand and identify market areas ripe for growth or expansion.
4. It can help you make better financial projections. With knowledge about the market, you can make realistic projections about revenue and growth, which can help you secure funding and plan for the future.
5. With research, you can also learn about your competitors’ pricing strategies and the prices at which you should sell your products or services.

Methods of Market Research

1. Surveying potential customers: Conducting business surveys provide insights into their needs, preferences, and buying habits. 
2. Analyzing competitors: Identify opportunities and threats by researching competitors’ products, pricing, marketing strategies, and customer reviews.
3. Running Focus groups: Focus groups involve bringing a small, diverse group of people together to discuss a specific topic or product. It can be a helpful way to gain insights into customer attitudes and behaviours.
4. Online research can include searching for industry reports, analyzing social media and online reviews, and using tools like Google Trends to gather data on customer search patterns.

Tip: Run a SWOT Analysis on your business idea or plan,

Write a Business Plan

A business plan is an essential document that outlines your company’s strategy, operations, financial projections, and other helpful information. Writing a business plan can help you in several ways:

1. It will clarify your ideas and help you focus on the most critical aspects of your business.
2. If you are looking to secure funding from investors or lending institutions, a business plan is necessary as it demonstrates that you have a method for generating revenue and making a profit.
3. You can use your business plan as a guide for making strategic decisions and measuring progress.
4. It can help you evaluate the potential of new products, services, or markets.
5. Your business plan provides a roadmap for success and is an effective communication tool.
6. It can help you to secure partnerships and recruit key employees.

These don’t have to be huge documents, but they should be clear, logical, precise and professional. Whether or not you need to show it to anyone, it is an idea to number it, put a cover on it, and include a contents page.

Traditional Business Plan Format

A business plan typically includes the following key elements:

1. Executive summary: This is a brief overview of the business plan, including the company’s mission, products or services, target market, and financial projections.
2. Market analysis: This section includes a thorough analysis of the market in which the business will operate, including an overview of the industry, the target market, and the competition.
3. Business and management structure – Choosing the right management structure for your business is an important decision that can have long-term implications for how your company operates and grows.
4. Product or service description: This section describes the products or services the business offers, including their features, benefits, and target market.
5. Marketing and sales strategy: This section summarises the business’s marketing and sales plan, including the channels used to reach potential customers and the pricing strategy.
6. Financial projections over five years: This section includes financial projections for the business, such as projected income statements, balance sheets, and cash flow statements.
7. Appendix document

Use a Business Plan Template: We recommend the excellent template on the Princes Trust website.

Choose a Business Structure

Choosing the appropriate business structure is a significant decision for an entrepreneur. It will have the following implications:

1. Legal and financial liability: The structure you choose for your business can significantly impact your personal legal and financial liability. For example, if you decide to set up your business as a sole proprietorship, you will be personally liable for all debts and legal issues. On the other hand, if you set up your business as a limited company, your liability will be limited to your investment in the company.
2. Taxes: Different business structures are subject to different UK tax laws and regulations. For example, a sole proprietorship or partnership will generally be taxed differently than a limited company. 
3. Fundraising: Depending on your chosen structure, it could be easier or harder to raise capital or attract investors. Some structures, such as corporations, make it easier to issue stocks and bonds and attract investors, but others make it harder to achieve this.
4. Paperwork and compliance: Every business structure comes with paperwork and compliance requirements. A limited company

You must choose the proper business structure for your company to avoid significant legal and financial problems down the line.

The main types of business structure in the UK are:

Sole Trader

A sole trader (also called sole proprietorship) is a business owned and operated by a single individual.

It is the most straightforward type of business structure in the UK. The owner is personally liable for all debts and obligations of the business.

Pros	Cons
1. Easy to set up and operate	1. Unlimited liability
2. Complete control over the business	2. Limited access to financial resources
3. Flexibility in decision-making	3. Difficulty in transferring ownership
4. Potential tax benefits	4. Lack of continuity beyond the owner’s involvement

Partnership

A partnership is a business owned and operated by two or more individuals. Partnerships can be either general or limited. In a general partnership, all partners are personally liable for the debts and liabilities of the business. In a limited partnership, there are both general and limited partners. Limited partners have limited liability, while general partners have unlimited liability.

Pros	Cons
Shared financial and managerial responsibility	Potential conflict between partners
Ability to pool resources and expertise	Shared liability for business debts
Potential for increased credibility and access to a larger network	Difficulty in dissolving the partnership
Potential tax benefits	Limited control for individual partners

Limited company

A limited company is a business that is incorporated and operates as a separate legal entity from its owners. The owners, or shareholders, have limited liability and are not personally responsible for the debts and obligations of the business.

Pros	Cons
Limited liability protection	Complexity and cost of setting up and running a limited company
Potential tax benefits	Increased regulatory requirements
Ability to raise capital through the sale of shares	Personal finances and business finances are separate, which can make it more difficult to obtain financing
Professional image	Directors have legal duties and can be held personally liable if the company fails to meet its obligations
Potential for increased credibility with customers and suppliers	Higher administrative burden, including the requirement to file annual accounts and hold annual general meetings

Cooperative

A cooperative is a business owned and operated by a group of individuals who work together to meet shared economic, social, and cultural needs. Cooperatives are owned and controlled democratically by their members.

Pros	Cons
Shared ownership and decision-making among members	Complexity of setting up and running a cooperative
Potential tax benefits	Limited ability to raise capital through the sale of shares
Ability to pool resources and share risks among members	Limited ability to attract outside investment
Potential for increased credibility with customers and suppliers	Limited liability protection may be less than a limited company
Potential for increased employee commitment and motivation	Higher administrative burden, including the requirement to hold regular meetings and follow specific decision-making processes

When selecting a business structure, it is essential to consider the specific needs and goals of your business. Factors to consider may include the size and nature of the business, the level of personal liability you are willing to assume, and any potential tax implications. It is always recommended to seek the advice of a professional, such as a solicitor or accountant, to determine the best business structure.

How to Finance a Start-up Business

There are several options for financing a start-up business in the UK, including:

1. Startup Loans – Various types of loans are available, including term loans, lines of credit, and government-backed loans. Although bank finance for start-ups is more difficult to come by these days, other organisations, such as local authorities and small business associations, may provide funding.
2. Grants: The UK government offers a range of grants for small businesses, including the Small Business Grants Scheme and the Start-Up Loans Scheme.  Grants are an excellent source of start-up finance as it’s money that doesn’t have to be repaid. You can also investigate initiatives such as InnovateUK, Horizon2020 or British Small Business Grants.
3. Investment: Investment can come in the form of equity investment, where investors provide capital in exchange for a share of the business, or debt investment, where investors lend money to the company and receive a return on their investment.
4. Angel funding – Angel investors are experienced individuals who inject capital into start-ups in exchange for equity in the business. They may invest through crowdfunding platforms or investor networks that pool money from many angel investors. They tend to be experienced entrepreneurs who can add value to your business through support and guidance. However, in return, you will relinquish some control of your business. The UK Business Angels Association is an excellent place to start your search.

Where Can Startups Find Support and Mentorship

The following organisations offer business accelerator programs, adivce, training, mentorship and coaching. We’ll update this resource regularly.

Resource	Description
Entrepreneurial Spark	Funded by private capital, this not-for-profit social enterprise is now the world’s largest free business accelerator.
Federation of Small Businesses (FSB)	The Federation of Small Businesses focuses on helping small businesses through advice, insurance, banking, networking, and lobbying. Their Business Creation package offers a wealth of benefits for startups for £133.
New Entrepreneurs Foundation	This program combines training, mentoring, and coaching and selects only 30 individuals per year to receive intensive training for success.
Unltd	This accelerator is specifically aimed at socially focused entrepreneurs. Their website provides information on funding, mentoring, investment, and support.
Chambers of Commerce	Local chambers of commerce are a great resource for advice, networking, and training support. They are well connected to local business communities.
Mentorsme	Operated by the Business Finance Taskforce, this website is a portal to connect with mentors in your region. It has over 27,000 listings of people who have committed to giving one hour of their time per month for 2 years.
The Institute of Enterprise and Entrepreneurs	The Institute of Enterprise and Entrepreneurs is a learning institute for entrepreneurial support that was established in 2010. Affiliate membership, which costs £5 per month, gives access to online mentoring.

Building a Team for Your Startup Business

When identifying the roles and responsibilities that need to be filled to run your business, it is important to consider the following:

• What tasks need to be completed regularly?
• What specific skills or experience are required to perform these tasks?
• How much time and resources are needed to complete these tasks?

Based on these considerations, you can then determine the positions that need to be filled and the qualifications that candidates should have.

Some typical roles and responsibilities for small businesses include:

• MD/Founder: responsible for the overall strategy and vision of the company
• Sales and Marketing: responsible for bringing in new customers and promoting the business
• Operations: responsible for managing the day-to-day operations of the business
• Accounting/Finance: responsible for managing the finances of the business
• IT/Tech: responsible for maintaining and updating the company’s technology

Once you have identified the roles and responsibilities that need to be filled, the next step is to find and hire employees or partners who can help you launch and grow your business. This process can involve:

• Posting job listings on various platforms and websites
• Networking and reaching out to potential candidates
• Conducting interviews and evaluating candidates based on their qualifications and fit with the company
• Extending job offers and negotiating terms of employment
• Orienting and training new hires to ensure they are set up for success in their roles.

It is important to find the right people for the job and people who align with your company’s culture and values.

Launching and Marketing Your Business

Launching a business in the UK typically involves the following steps:

Choose a Memorable Business Name

Here are a few key considerations to keep in mind when selecting a business name:

1. Make it memorable: Your business name should be easy to remember and pronounce. A catchy and unique name will help customers remember your business and make it more likely that they’ll recommend it to others.
2. Make it unique: Conducting a name search through the government’s trademark database is an excellent way to ensure that the name you’ve chosen is not already taken and that you can register a trademark for the name you choose.
3. Make it Future-proof: Think about your business’s potential growth and expansion, and choose a name that can accommodate it. A name that is too specific to a product or service you offer may not be the best option if you plan to diversify in the future.
4. Keep it simple: Avoid long and complex names. It will take more work for people to remember and spell.

Register Your Business for the First Time

In the United Kingdom, companies that are limited by shares or guarantee have to register with Companies House, the official registrar of UK companies.

If you’re operating as a sole trader you won’t need to do anything.

Here’s how you register a company with Companies House:

1. Choose a unique company name: Your company name must be unique and not be the same or too similar to an existing company name. You can check the availability of a name by searching the Companies House register.
2. Obtain a registered office address: This is where official communications and legal documents will be sent. It must be a physical address in the UK, and it can be your business premises or a third-party commercial address.
3. Appoint directors: Appoint at least one director for your company. Directors are responsible for managing the company and making important decisions on behalf of the company.
4. File the necessary documents: You must file the Memorandum of Association, the articles of association, and the appropriate forms with Companies House. The memorandum of association is the document that sets out the company’s name, its registered office and the fact that the subscribers agree to form a company and to take shares in it. The articles of association set out the internal management rules of the company.
5. Pay the fee: There’s a fee for registering a company with Companies House, which varies depending on the type of company and how you file your documents.
6. Wait for the registration process: Once you’ve filed your documents and paid the fee, Companies House will process your application. You can check the progress of your application by searching the Companies House register.
7. Once your company is registered, you will be issued a certificate of incorporation, proof that your company is registered and officially exists as a separate legal entity.

Open a Business Bank Account

If you are opening a limited company, limited partnership or LLP, you will legally require a separate bank account for your business. As a sole trader, you are not required to, but separating your personal and business finances can be very useful. It makes it easier to track your income and expenses and manage your cash flow.

After comparing the fees and services of different banks to ensure that you are getting the best deal, you will need to provide the bank with certain documentation, such as your business registration papers, articles of association, and proof of address. Banks may also require identification from the directors or shareholders.

When you have selected a bank, you will be required to complete an application form and provide the necessary documents. The process may take a few days to complete, although some of the newer challenger banks pride themselves on quick set-up times.

Obtain any Necessary Business Licenses and Permits

Depending on the business you’re starting, and where you’re located, you may need to obtain specific licenses and permits to operate legally.

Here are a few examples of the types of businesses that may need licenses and permits in the UK:

1. Food businesses: Any business that produces, processes, packs, or sells food must register with the local authority and comply with food safety regulations. This includes restaurants, cafes, bakeries, food trucks, and businesses that sell or distribute food products.
2. Alcohol and tobacco businesses: Any business that sells alcohol, tobacco, or other age-restricted products, such as electronic cigarettes, must have a license from the local authority. This includes pubs, bars, nightclubs, off-licenses, and businesses that sell or distribute alcohol and tobacco products.
3. Transport and logistics businesses: Any business that operates vehicles for the transportation of goods or passengers, such as taxi companies, delivery companies, and logistics companies, may be required to obtain licenses and permits from the local authority and the Department for Transport.
4. Construction businesses: Any business that carries out building work, such as builders, architects, and engineers, may be required to obtain licenses and permits from the local authority and professional regulatory bodies.
5. Health and beauty businesses: Any business that offers health and beauty treatments, such as hairdressers, barbers, beauty salons, and tattoo parlours, may be required to obtain licenses and permits from the local authority and professional regulatory bodies.
6. Sales and marketing businesses: If your business is making calls to potential customers and processing payments, you may need to be registered with the Financial Conduct Authority and/or the Information Commissioner’s Office.

Set up Your Business Location

Depending on the nature of your business, you may need to find and set up a physical location where you can operate. This could involve leasing, buying commercial space, or setting up a home office if your business can be run there.

Here are some key considerations to keep in mind when picking a location for your business:

1. Accessibility: Is the location easily accessible by car, public transportation, or foot? Is it located in a central area that is convenient for your target market?
2. Visibility:Is it located on a busy street or in a busy shopping centre? Having a prominent location can help attract customers.
3. Building suitability: Check for adequate power, water, heating and cooling systems, internet connectivity, and safety features that meet your business’s needs.
4. Demographics: Are there any businesses nearby that are similar to yours? 
5. Cost: Consider the cost of renting or buying the location, as well as any additional expenses such as utilities, property taxes, and insurance. 

Don’t Forget Business Insurance

You’ll need to research your particular business needs, based on the sector you’re operating in. Insurance is about protecting you from loss, either in cases of theft or damage, or legal action against you.

Some common business insurance types include:

1. General Liability Insurance: This type of insurance protects against claims of bodily injury or damage caused by your business operations.
2. Property Insurance: This insurance covers damage to or loss of your business property, including buildings, equipment, and inventory.
3. Business Interruption Insurance: This type of insurance covers losses from a business interruption, such as loss of income or extra expenses, resulting from a disaster or other covered event.
4. Professional Liability Insurance (errors and omissions): This insurance protects against claims of negligence, errors or omissions in professional services.
5. Workers’ Compensation Insurance: This type of insurance benefits employees injured or who become ill due to their job.
6. Cyber Liability Insurance: This insurance protects businesses against financial losses and legal liability resulting from a data breach or cyber attack.
7. Automobile Insurance: This type of insurance covers your business vehicles and any damage they cause in case of an accident.
8. Product liability insurance: This insurance protects against claims of injury or property damage caused by a product you have manufactured or sold.

Create an Actionable Marketing Plan

Once your business is up and running, you’ll need to start marketing it to potential customers to generate sales. This could involve creating a website, advertising in local media, or using social media to reach a wider audience.

Here are the basic steps you need to take to create a marketing plan for your new business:

1. Conduct market research: Understand your target market, including demographics, psychographics, and buying habits. Identify your competitors and their strengths and weaknesses. Understand the size of your potential market and the key trends that may influence it.
2. Define your unique selling proposition (USP): Identify the unique value that your product or service provides to your target market. This will help you differentiate your business from competitors and create a strong brand identity.
3. Set marketing objectives: Define specific, measurable, attainable, relevant, and time-bound (SMART) marketing objectives that align with your overall business goals. Examples could be increasing website traffic, generating leads or sales, or increasing brand awareness
4. Develop a target audience: Identify your ideal customer or target audience, and create buyer personas to better understand their needs, pain points, and decision-making processes.
5. Create a marketing mix: Develop a combination of strategies and tactics that will be used to reach your target audience. Your mix may include traditional and digital marketing strategies, such as online advertising, search engine optimization, content marketing, email marketing, public relations, and social media.
6. Implement and manage: Develop an action plan outlining how you will execute your marketing strategies, including budget, resources and timelines, and then create a monitoring and reporting system to track the results.
7. Review and adjust: Regularly review your marketing efforts, and make adjustments as necessary. Use analytics tools, surveys, and customer feedback to measure the success of your marketing campaigns and continuously improve them over time.

Business Launch Checklist for 2024

You’re almost ready to go! But before you start, print out our handy checklist and ensure you’ve covered all your bases.

	Task	Completed
1	Is your business registered?
2	Did you get the necessary licenses and permits?
3	Did you register with HMRC (Her Majesty’s Revenue and Customs)?
4	Did you set up accounting and bookkeeping systems?
5	Did you open a business bank account?
6	Did You Get Insurance?
7	Have you engaged an accountant?
8	Did you create a website?
9	Did you create social media profiles?
10	Is your marketing plan primed for launch?

Starting a Business FAQs