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- Starting a business
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How to start a small business
Starting your own business is an opportunity to change your career and become your own boss. In this helpful guide, we’ll provide you with practical steps and guidance on how to start and register a small business.
What is a small business?
What do I need to start a small business?
What small business can I start?
Step-by-step guide to starting a small business
Getting a small business loan
Opening a small business account
Getting new business insurance
Paying your new business taxes
Plan your small business marketing strategy
Create a small business bookkeeping system
To start your own business, you may need to consider funding, marketing, and legal requirements. With careful planning and research, it can be possible to transform your business idea into a successful venture.
What is a small business?
Small businesses play a vital role in the UK economy; helping create jobs, build wealth, and drive innovation. There’s no set framework for a small business – it can be a single artisan selling handmade goods, a hairdresser, coffee shop owner, or a retailer with multiple employees.
What do I need to start a small business?
Every business is different so here are some steps to consider when starting your small business:
- Research the industry and market you want to enter to understand how much demand there is for your idea/offering and who your main competitors are.
- Choose a company name, decide on the structure and register your business if applicable, then obtain any licenses, permits or insurance you may need.
- Write a business plan that outlines your goals, budget and marketing strategy and tells your story in a compelling way that might resonate with investors.
- Set up your website and any social media accounts if required.
- Secure any funding you might need by approaching investors, taking out loans or tapping into your personal savings.
- Set up your physical space if required. This might involve hiring office, studio or factory space and buying or leasing equipment. You may want to hire employees at this stage or wait until you have grown your operations.
- If you require the services of an accountant, they may be able to support you in the creation of your business plan.
- For further support, consulting with a business advisor or legal expert is another way to discover the best way to start a small business. Likewise, chambers of commerce, networking groups, online courses and webinars may be a way to meet other business owners for tips on starting out.
What small business can I start?
There are many different types of small businesses out there; consultancy services run from home, design studios, caterers, beauty salons, food trucks, and online and high street stores. The options are endless.
Take the time to identify your area(s) of expertise and interests, as this can help guide you towards a business that you’ll enjoy running.
Another factor to consider is how much demand there is for your business idea in your chosen market. Researching the current trends and needs of your potential customers can help you determine what type of small business could be successful in your area.
By carefully evaluating your options and taking a strategic approach, you can start a small business that not only provides you with income but also fulfils your passions and goals.
Step-by-step guide to starting a small business
Step 1. Discover your business idea
The first step in starting a small business is to identify your business idea. This should be something you’re passionate about and understand.
To develop and research your business idea, consider your interests, skills, and the needs of your target market or potential customers. Identify a unique selling proposition (USP) that sets your business apart from competitors. This could be an innovative product, exceptional service, or a unique approach to solving a problem.
Step 2. Choose your business structure
The next step is to decide on your small business structure. You may choose to set up as a sole trader, create a partnership, or set up a limited company (Ltd).
Each type of structure has its benefits and considerations regarding liability, tax, and regulatory requirements. You should choose a structure that best fits your business needs and personal circumstances. Consulting with a business advisor or legal expert might help clarify the best option for you.
Step 3. Register your small business
After deciding on your business structure, you need to register your business. This process varies depending on your location and business type.
Generally, it involves registering a small business name, signing up for an online VAT account and acquiring necessary permits and licences. Familiarise yourself with the legal requirements for your sector and business type to avoid potential complications down the line. For more information, visit www.gov.uk/set-up-business
Step 4. Write your business plan
A comprehensive business plan is essential for outlining your company’s vision, goals, target market, marketing strategy, and financial projections.
It serves as a roadmap for your business and can be crucial when seeking funding. Your business plan should be clear, concise, and convincing and demonstrate the viability of your business idea.
Step 5. Secure funding and finance
Securing funding is a critical part of starting a business. There are many ways to finance your business, including self-funding, loans, grants, venture capital, and angel investors.
Consider your business's needs and your financial situation when exploring these options.
Be prepared to present your business plan and demonstrate the potential profitability of your business to prospective investors.
Remember, these steps provide a general guide, and the specific requirements may vary based on your industry, location, and the nature of your business. Always seek professional advice when necessary.
Getting a small business loan
Whether you are investing in new equipment, expanding your team, or launching a marketing campaign, obtaining a small business loan is a common method for many entrepreneurs to turn their business ideas into reality.
To get a small business loan, there are a few steps you can take:
1. Determine how much funding you need:
This will help you to narrow down your search for the right type of small business loan. Consider if you might want to contribute any of your own savings as an initial stake in the business.2. Check your credit score:
Lenders will typically review your credit score when considering your application for a small business loan.3. Prepare your application:
Once you've identified a lender, gather the necessary documentation for your loan application. This may include financial statements, tax returns, and business plans.4. Apply for the loan:
Be prepared to answer any follow-up questions from the lender as they review your application.5. Review the loan terms:
If your loan is approved, carefully review the loan terms, including the interest rate, repayment schedule, and any fees associated with the loan.By following these steps and working closely with your lender, you may be able to secure a small business loan that meets the growing needs of your business.
Opening a small business account
Most providers will require you to apply for a small business account online or in an app, however it may be possible to do so in person at a local branch in some cases. Necessary documentation to open an account can vary between providers, and the account opening processing time can vary, with some providers offering same-day decisions.
If you are opening an account with HSBC UK, you will need to provide certain documentation, such as proof of identity and address, photographic identification, as well as company registration details if your business is registered.
HSBC UK offer a range of business current accounts for small businesses, including our app-based HSBC Kinetic Current Account for sole traders and single director shareholder businesses, and our Small Business Banking Account which can be managed in-branch, online or via mobile app. Terms and conditions and eligibility criteria apply.
Our customer support team may help answer any questions you may have on the account opening process.
Getting new business insurance
Business insurance is an essential item for any size or type of company. It’s important to get insurance in place as early as possible, to help safeguard your business against unexpected events such as property damage, liability claims from customers or employees, or loss of income due to unforeseen circumstances. Find out more: https://www.gov.uk/set-up-business
Our business insurance solutions are designed to meet the unique needs of small businesses, from cyber risk to business interruption. We can work with you to assess your risks or help identify solutions that fit your business requirements.
Paying your business taxes
As a business owner, you need to stay on top of tax obligations to avoid penalties and fines that can negatively impact your company's finances. You will need to register with HM Revenue & Customs, keep accurate records of all financial transactions, and file tax returns on time.
It can be helpful to use accounting software so that you can focus on growing your business, while ensuring that your tax payments are up-to-date. Integrated accounting services can also help you minimise errors, reduce the time needed for manual data entry and streamline finance and tax management.
HSBC UK provides accounting software integration that simplifies the process of managing and paying taxes. Connecting your business bank account with your accounting software means you can monitor your finances in real time and automate the recording of transactions.
Plan your small business marketing strategy
As a small business owner, your marketing strategy is what helps you reach out to potential customers and grow your business.
To create an effective marketing plan, you should:
1. Identify your target audience:
Determine who your ideal customer is, what they value, and where they spend their time on and offline.2. Set achievable goals:
Determine what you want to achieve with your marketing efforts, such as increasing website traffic, generating leads, or improving sales.3. Choose your channels:
Consider which marketing channels are most effective for reaching your target audience and fit within your budget. Social media, email marketing, content marketing, and paid advertising are just a few examples.4. Create a content plan:
Some businesses spend time and/or money in content creation, whether that’s videos, social media updates, articles, blogs or any other format to connect with audiences. It can tell your buyers about your business, why you created it, what issues it solves, and strengthen a reason to purchase. You should develop a content plan that aligns with your marketing goals and resonates with your target audience.5. Measure results:
Track metrics such as website traffic, click-through rates, and conversion rates to determine the effectiveness of your marketing campaigns. Use this data to optimise your strategy and improve results over time.By following these steps, you can create a solid marketing strategy that may help you reach your goals and grow your business.
Create a small business bookkeeping system
A small business bookkeeping system helps you keep track of finances and make informed decisions about your next steps. Here are some useful tips to follow:
1. Separate business and personal finances:
You may want to open a different bank account for your business to keep personal and business finances separated.2. Record all transactions:
Use accounting software or a spreadsheet to record all financial transactions, including income and expenses.3. Categorise expenses:
Group expenses into categories such as rent, utilities, supplies, and travel. This helps you identify areas where you can reduce costs, or where you may need to allocate further funding.4. Invoice customers:
Set up an invoicing system to ensure timely payments from customers and keep track of accounts receivable.5. Reconcile accounts:
Regularly reconcile your bank statements with your bookkeeping records to ensure accuracy and identify errors.6. Prepare financial statements:
Use your bookkeeping system to generate financial statements such as balance sheets and income statements. These statements help you assess the financial health of your business and make informed decisions.7. Get professional help:
Consider hiring an accountant or bookkeeper to assist with complex financial tasks and provide advice on tax planning.HSBC Kinetic Current Account
Keep on track with cashflow insights and categorised spending. Apply in-app in minutes*.
*T&Cs and fees apply. Subject to application, eligibility and credit check.
Disclaimer
This article is intended as general information only and does not constitute advice in any way. For any specific questions, you may wish to consult a qualified accountant.
