1. Develop a USP (Unique Sales Proposition)
Every start-up is different. That’s what makes your new business unique. So, as a small business owner, it’s important to identify early on what it is that’s going to set your business apart. In ever more convoluted marketplaces, those who utilise their USP - and communicate it effectively to potential clients and investors - stand a far greater chance of achieving success.
You need to distinguish the particular features of your product or service that your competitors cannot replicate. When you demonstrate the benefits of your brand promise, you gain trust from prospective customers. This, in turn, develops more valuable relationships.
Before you start a new business, you’ll no doubt conduct thorough market research. But be sure to also take the time to run competitor analysis on other businesses’ marketing and advertising campaigns too. This will help you understand how other companies use their USP to their advantage. You can then apply these techniques to your own business model. For more on how to develop your USP, check out this free guide from small business portal, Bytestart. Once you’ve done your market research, and have your key selling points nailed down, it’s time to articulate them in a business plan…
2. Create a business plan for your start-up
A business plan is a written document which is distinctive to you and your small business. You’ll need one if you want to secure investment for your start-up, or a bank loan, for instance. Business plans are the foundation of any small business. Your plan should set out in writing the strategy and structure of your new business, and outline your objectives and plans for growth. Your business plan should also cover things like sales estimates and financial forecasts.
Creating a plan will help you clarify your business model and set short-term and longer-term goals. You can also use it to measure progress and to flag up any potential complications. Moreover, better business plans help convince potential clients and investors that it’s worth their while engaging with you.
At this point, it’s also worth considering both short-term and long-term exit strategies too. In the short-term, you need to think about the consequences if things don’t quite go according to plan. Contemplate damage limitation and how you’d vacate the venture if things went wrong. Consider it as pragmatism rather than pessimism.
Long-term exit strategies are far more fun. Ask yourself what you want out of the business, and what you’d like to do once you’ve fulfilled your targets.
There’s plenty of guidance out there to help you create a business plan. You can download templates, such as this one from the Government recommended, ‘Start-Up Loans’ website. It provides free advice on how to write your revolutionary business plan.
3. Do your sums
A comprehensive business plan will help you work out how much capital is necessary to start your small business. Whether it’s through savings, loans, grants, third party investment, or a mix of all four, your plan should give you a good idea of what you’ll need, when you’ll need it, and how you’re going to get it. If you’re unsure how to raise the necessary funds to give your small business the cash injection it requires, don’t worry. Nowadays, there are plenty of ways to find the money to start your own business.
If you’re leaving your current job to start this business, or if you’re funding it with loans or savings, you won’t need reminding of the risks involved. So, take your time and get your figures in order.
- How much revenue will I need to cover my expenses, overheads, and to turn a profit?
- How much should I outlay on stock and/or equipment?
- What are my estimated costs for: staffing, business rates, insurance, utilities, etc.?
- What price should I set for different products and services?
4. Choose a name and location for your small business
Choosing a name for your small business is like choosing a name for a baby. You want something that reflects your culture and identity and captures your spirit. Pick something that sounds good too. However, there’s one crucial difference (well, one main one anyway). Unlike a child’s name, your small business’s name must be completely unique.
As a sole trader, you do not need to register the name of your business. You can even trade under your own name if you wish. Though, you cannot include the following words or abbreviations:
- Limited liability partnership
- Public limited company
When you set up a limited company, you must choose a business name to trade under. If your name is too similar to that of another registered company, you may have to change it. The name you select should not cause offense or contain sensitive words or expressions. Nor should it suggest a connection with local, central or international official authoritative bodies, unless you have the relevant permission. And, unlike above, your name must include the suffix ‘Limited’ or ‘Ltd’. To find out if the name you’d like to use for your small business is already taken, click here.
Furthermore, when you set up a limited company, you must provide a registered office address where communications will get sent. This must be a physical UK address and it must be in the same country that your company is registered in. I.e. an English address for a company registered in England, and so on. This address will be publicly available and you cannot remove it from the online register. However, if you’re using a home address, for instance, and would prefer to keep it private, you can use the address of your accountant, providing they give permission.
Sole traders, meanwhile, do not need to have a registered address. Whilst HMRC will want an address from you, this will not be made available to the public.
5. Find the best small business accountant
Choosing the right accountant for your small business is very important. It’s a choice that can leave a long-lasting legacy - be it positive or negative - on your small business’s future. The very best small business accountants relieve anxiety, increase productivity, ensure compliance, improve tax efficiency, and give you the time and space you need to grow your business.
Your small business accountant should be proactive, contacting you as much you’re comfortable with to make sure you have all the information you need. What’s more, as finance and technology evolve, it’s important that your small business accountant is comfortable in an increasingly digital, data-driven environment.
At Danbro Business, we believe accounting is about more than just tax returns and number crunching. It’s about developing great relationships and overcoming obstacles. It’s about providing swift solutions, and helping your small business achieve its absolute potential.
We appreciate that outsourcing even the smallest part of the financial organisation of your business requires a great deal of trust. After all, we’ve been helping new and small businesses with their finances for over two decades now.
6. Decide on a structure and register your new business
When you start-up a new business, you need to decide whether you’re going to register as:
- A Sole Trader
- A Limited Company
- A Partnership
Your accountant will be able to help you with this.
To become a sole trader, you need to register for self-assessment and file annual tax returns. As a sole trader you are your business’s owner, management, and staff. You’re accountable for your business’s debts. Therefore, you must make sure you keep records of any sales and expenses. As above, you do not need to register your business’s name.
If you’re setting up a business as a limited company, you will require a company name and address. You need at least one director and one shareholder. You’ll also need a Standard Industrial Classification (SIC) code. This is a four-digit code specifying the nature of your business. In addition, the company’s shareholder/s must agree to create the company and its written rules. You can then complete your company incorporation by registering online with Companies House.
For more information on incorporating a business, and sole traders vs. limited companies, check out our free guide, here.
With a partnership, you and another individual share the responsibility for your business and its debts. Each partner pays tax on their share of the business, and profits are shared accordingly. Read more, here.
7. Open a small business bank account
Once you’ve registered your new business, you need to set up a business bank account. To ensure you’re getting a good deal, there are a few things to think about. So, here are four key things to consider when searching for the best bank account for your small business:
- If you can, use a personal bank account or a smaller, community bank (depending on the size of your business, and the relationship you want to have with your bank).
- Be sure to locate the business bank account that has the lowest charges.
- List the fees that apply to your account and minimise the charges you pay.
- ‘Sweep’ cash into a business savings account to maximise your interest.
8. Get insured
With a to-do-list as long as your arm, finding business insurance might not seem like the highest priority as a new business owner. But, it’s crucial that you get this ticked off as soon as possible. Here are some of the more common types of business insurance to consider:
- In the event that an employee, or ex-employee, chooses to sue over an illness or work-related injury, Employers’ Liability Insurance will provide your small business with cover for things like legal fees and compensation costs. Alongside motor insurance, ELI is the only policy you MUST have in place under UK law. Failure to comply can result in financial penalties of up to £2,500 per day. However, it does not apply to small businesses with fewer than two employees.
- As above, Public Liability Insurance provides your business with cover for legal costs and compensation claims if a third party gets injured. Or, if a third party’s property gets damaged; either at your business’s premises or whilst your company is working on their property. You are not under any legal obligation to secure this type of insurance. That said, certain clients may not allow you to operate on their premises without such cover.
- With Professional Indemnity Insurance, you’re covered for the cost of claims made by customers for financial losses suffered as a result of professional negligence committed by your company. Whilst it is not yet a legal obligation, it is common practice these days for businesses to get Professional Indemnity Insurance.
- Another important protection policy for those starting their own business is property insurance. Whether you’re a tradesperson who relies on your tools or a tech firm that’d struggle without IT equipment, property insurance protects both your business’s building and its assets. Remember though, when you purchase this type of insurance, ‘make sure the sum insured on your contents list is equal to or greater than the value of your equipment’.
9. Market your small business
If you’re launching a new business, a strong online presence is pivotal. In the age of the online consumer, digital marketing is crucial to the success of your small business. Even more so since the coronavirus pandemic. Getting this wrong could have huge implications on your ability to engage with your target audience. Getting it right, though, could set you on course for success and save you both time and money in the process. Creating a marketing plan is almost as important as creating your business plan. You need to think about:
- Creating a logo and a brand identity
- Whether you need a company website or social media accounts (the answer is almost definitely: yes)
- Consider how you can utilise blogs, emails and content marketing to enhance conversions
- Think about what your online assets are and how can you optimise them
- Look at what tools, applications and software you’ll need to streamline or automate your digital approach
- Figure out who your customers are, what they look like, where they come from, and how to reach them
In business, what you’re selling is often only as important as how well you’re selling it. A magnificent marketing strategy is a must in the minefield of modern commerce.
10. Don’t lose sight of why you’re doing this
While you’ll no doubt work hard to make your new business a success, make sure you don’t lose sight of why you’re doing this.
A survey published in the Telegraph a couple of years ago found that a third of people who own their own business skipped meals on a regular basis. Many said they found it necessary to stay on top of their workload. Perhaps even more alarming was that around a quarter of those surveyed took no more than five days a year in annual leave!
Starting a small business is a courageous, not to mention life-changing decision. It’s an exciting opportunity for you and the ones you love. But, in this unique, post-COVID landscape, it’s more important than ever to get your work-life balance right. So, find a solution that serves the interests of your small business, your family and yourself.
Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.
His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.
He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.