Entrepreneur launching their own business from a home office

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  1. 1. How do I start my own business?

How to start your own business

July 15, 2021
Starting your own business is one of the most exciting things you'll ever do. You have an idea, service or product that you know, given time and funding, could be a successful business that will support you and your family. You've been dreaming about handing in your notice to your current employer and stepping out on the road to freedom and becoming your own boss. So what's stopping you?Well, probably the fact that launching and running your own business can also be one of the most terrifying things you'll ever take on. Anyone thinking about founding their own company or starting a new business needs to go into it with their eyes wide open. There are plenty of things to take into consideration beyond coming up with a business name. What is your business model? What legal structure will you take on? What laws do you need to follow when you run your own small business? What will the startup costs be? How will you pay taxes as a business owner?Running a successful business is a big step away from deciding to start your own business. However, by setting the groundwork and asking yourself some tough questions, you can ensure that you have all the right tools in place to guarantee the success of your new business venture.Starting a business can be overwhelming, but we have some great tips and advice for those looking to launch their first startup or small business. If you've ever wondered what the legal practicalities are when starting a business, what tax laws you need to be aware of or even if this is the right path for you, we've got you covered.

How do I start my own business?

The first thing any entrepreneur needs to do is to refine their business idea. You have a dream that you're passionate about, and that's great. However, you need to be sure that this idea is viable and can support you. 20% of businesses fail in their first year, and 42% of startups failed because there was no market need for their product or service. Once you're confident that your business has legs, you can go ahead and register your business.The next thing to do when your start a business is to learn everything you can about the market you want to enter. You need to get to know your competitors and your customers and learn everything about them. You can crystallise your ideas by writing a business plan, which will help you envision what your business will look like, and what you need from other people to make it a success. A business plan will help you move your business out of your dreams, and make it a reality. Once you have a clear idea of your market, you're ready to launch your business to the world.Setting up as a small business owner clearly involves more than picking a memorable business name and calling yourself the boss. Read on to learn more about the vital steps involved that everyone thinking about starting their own small business or startup should know.

Is starting a business right for you?

Plenty of people fantasise about starting a business, but a crucial question to ask first is if this is the right step for you. Running a business is a huge responsibility, and there's no shame in admitting that entrepreneurship is not the right path for you.Starting a business will take up a huge amount of your time and energy. If you want your small business to make you enough money to get by, it has to be more than just a hobby.During the COVID-19 pandemic, many Brits turned to side-hustles to earn some extra cash. Around 25% of people in the UK say that they have some kind of side-hustle that they run alongside their day job. These passion projects are great when it comes to earning a little extra, and many small businesses have evolved from side-hustles, but is there enough of a market to support you full time? Do you have the time and energy to find customers outside of your current network? If not, then this might not be the right step for you.Take a look at your financial outgoings. How much does your business need to bring in to allow you to support yourself? Will you pay yourself a salary, or in dividends? You need to work out if your business will keep you financially afloat.We've talked quite a bit about money, but money isn't the only reason that someone starts a business. Your reasons behind starting a business are what will motivate you when things get difficult. Plus, this purpose will run through the core of your business, and companies with a strong sense of purpose connect well with their customers. Simon Sinek said it best when he proclaimed "People don't buy what you do, they buy why you do it."Take time to define your purpose, or your "why" behind starting your business, whether it's an exciting idea that you're excited about bringing to the world, freedom from the usual 9-5 or because you want to create something. Your "why" is unique to you. If you're looking for inspiration, take a look at why these entrepreneurs started their businesses.If you have an idea that has the potential to financially support you, have a clear purpose and are prepared for the mental strains and stresses that a new business can bring, then starting your own small business may be right for you.

Market research

No customers means no business. To make sure that your business is viable, you'll need to do a full market analysis. This will also be an integral part of your business plan (which we'll get to later).When researching your target market, you'll need to consider the following:
    What is the demand for your product or service like right now? Is there any evidence that it will grow in the future?How much will you have to spend to acquire a customer? Think about advertising, marketing and how many people it will take to look after your new customers.How big is the market? Is there enough room for you, your competitors, or any new entrants?How will you protect your business against changes in the market? What will happen if a new disruptive technology enters the market?Who is your target audience? Where are they based, how much do they have to spend, and how will you get them away from your competitors?What data is there available to you? There are various market research firms you can turn to to get market research data, or you can do the leg work yourself using focus groups and online surveys.Who are your competitors? What's their USP (unique selling point)? Think about how your product or service compare to theirs, their strengths and weaknesses and how you differ from them.
Now is not the time to clam up and be shy. Speak to people in your market, find out all you can about your potential customers, do your research and come up with a thorough marketing plan.Starting a business means that there is a slew of new legal realities for you to get to grips with. The legal requirements for business owners are always evolving, and it's a job just to keep up with all the changes. Before starting a business you'll need to learn about your legal obligations and commit to staying on top of changing rules and regulations.If you have employees, then it's not just you that you need to worry about. You also have to make sure that you've got their tax and National Insurance sorted. Worried about how to handle paying all those new joiners? We have a handy tool to help you with your payroll, making the process as simple and stress-free as possible.When hiring, you also need to make sure that you comply with any equal opportunities rules and don't discriminate against someone based on their gender, age, ethnicity. No one wants to discriminate against a perfectly good candidate, but it's all too easy to slip into unconscious bias, so it's a good idea to read up on diversity and inclusion literature and learn about discrimination laws.

Registering your business

Once you've decided that launching a small business is for you, then you'll need to register it with Companies House. You can register as a sole trader or a limited company. Once you've registered, Companies House will contact HMRC, who will then send your certificate of incorporation to your business address.If you need help with choosing a company name (it's not as simple as picking a random name out of the air) and getting your company incorporated, here at Ember we can help you with that.

Tax

Tax laws are notorious for being hard to understand and constantly changing. It can be hard to keep on top of things and many people hire an accountant to make sure that they stay compliant, which is a costly expense for new business owners. If you're a sole trader, you can complete your own Self Assessment tax form. If you choose to form a limited company, things get a little more complicated.Tax is something you can't avoid as a business, and all businesses must register with HMRC and pay tax on their profits, as well as keep up to date with expenses and other tax requirements like corporation tax.If the thought of handling all these tax requirements is giving you a headache, then you can sign up to Ember. We'll give you unlimited accounting and tax support from our team of experts, alongside clever software that optimises and files your taxes. With human accounting experts with smart software you get the best of both worlds, so no need to spend extra money on hiring that accountant.

Business Insurance

If you slip and fall in your home office, it's no big deal, aside from a possible trip to A&E and bruised pride. If an employee hurts themselves when working for you, then it is a big deal. You could face claims for compensation or potential lawsuits.If you have any employees on your books, then liability insurance is a must-have, which will cover any compensation claims if an employee hurts themselves on the job. If you don't have employer's liability cover (and you're supposed to) then you face fines of up to £2,500 per employee for each day without it.If you're part of a professional body, then they might require you to have a specific kind of insurance, so check your paperwork.

Data laws

Hopefully, you're already clued up on GDPR (General Data Protection Regulation). Despite originating in Europe, you're not exempt from these rules just because you're based in a post-Brexit UK.If you're dealing with customer details and personal data of your clients and employees (few businesses can avoid it nowadays) then you're legally obliged to keep that data secure. If you want to learn more about your data responsibilities, then head over to the Information Commissioner's Office.It makes sense to have a robust privacy policy in place to inform your website visitors about how you plan on using their data. Check out our article on writing your own privacy policy with a free downloadable template.

Licensing rules

This will depend on the kind of business your run. If you're dealing with gas appliances like boilers or cookers, then you'll need to be on the Gas Safe Register. If you sell alcohol or food and drink, this will need an industry-specific license.If you're unsure about how to stay compliant, then you can contact your local Trading Standards department. This handy government tool will help you find which license you need for your business.

What kind of business structure will you have?

Will you be a sole trader, a partnership or a limited company? Different types of businesses have different tax and registration requirements.If you're a sole trader, then things are a little simpler. You can file your own Self Assessment and you get to keep all your business profits. However, there is less legal separation between you and the business, meaning you could put your personal assets and finances at risk.If you form a limited company, there are stricter rules for keeping accounting records and paying your taxes (we can help you there). However, since the company is a separate legal entity, your personal finances are protected if the business goes bust.

Can anyone start a business in the UK?

Technically yes, anyone can start a business in this country. You don't even have to be a UK resident. However, the company does have to have a registered address in the UK.You don't have to be an experienced entrepreneur to start a business. There's no right age and you don't have to have a university degree –just the right mindset.You can be banned from being a company director if you fail to meet your legal responsibilities (such as filing the company tax return or keeping company records) or if your conduct is found to be unfit. This also means that while disqualified, you can't be involved in forming, marketing or running a company.

What do I need to start a business?

Depending on the type of business you want to run, you may need certain qualifications. For example, if your business serves food, then you and your staff will need food hygiene training.Can you run your business from a home office? If not, then you'll need to scope out some premises, and budget for rent. If you need more than a laptop to run your business, then you'll also need to think about buying equipment.

How do I get funding for my business?

Banks are usually the first place to go to get funding, but if they say no, then this doesn't have to be the end for your business. You should check out what government grants and business loans are available to your company.You can even turn to crowdfunding platforms to help launch your small business or startup.

Create a business plan

Show investors that you're serious and can give them an ROI (return on investment) by sharing a well-thought-out business plan with them.A business plan is a document that details the goals, aims and objectives of a business. It gives readers and potential investors a roadmap of how you aim to achieve your business goals and make your enterprise a success.Check out our article Business Plan Template for loads of handy hints and tips for writing your own business plan.

Open a business bank account

It's not a legal requirement to have a business bank account if you're a sole trader, but it is recommended. It will help you keep track of your spending and expenses, which will be invaluable when you come to file your taxes.If you run a limited company, then a business bank account is a necessity. You will have to pay fees for this kind of account, but it will make your business look more professional, and can even make it easier to apply for loans. You can get started by signing up with Tide through Ember, and get £50 on us!

Build a website

Start to build your brand by creating a slick website, or pay a professional to do it for you if your coding skills aren't the best. Make sure you get the domain name before someone else snaps it up!Once it's ready, don't make the mistake of abandoning the site. Perform regular updates, create fresh content, launch SEO campaigns and leverage your social media, so that your brand can stand out from your competitors. You should also consider utilising e-commerce for your business, as it can open you up to a whole new audience, and expand your customer base.

Summary

Starting a business isn't for everyone, and takes a lot of hard work. However, anyone can open a business as long as they have the right mindset and determination. There's a lot to take on when starting a small business or startup, so let us take some of the strain off your shoulders by handling your tax and accounts for you. Sign up today!
Daniel Hogan
Daniel HoganCOO & Co-Founder

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