The First 5 Steps To Starting A Business
Having a business idea and a product to sell is a great first step to becoming your own boss. Unfortunately, there is more to starting a business than having a product you think will do well in the open market.
If you want to have a successful business, there are steps you need to take and plans you need to have in place. Without taking these steps, your business could be doomed to fail before you even start selling your product.
Step 1: Conduct market research
After having your initial business idea and thinking about the products you will sell, it’s tempting to dive straight into setting up a business. However, you first need to ensure there’s a market for your products.
Without market research, your business plan could fall apart. You need to know:
- The target market
- Any competition within the current market
- Whether there is demand for the product
The research carried out in this step will help inform your future decisions about the direction of the business by identifying potential opportunities and threats.
Step 2: Choose the right business structure
Once you’ve made sure there’s a market available for your product, you need to choose which business structure best fits your goals. There are three main business structures you can choose from: sole trader, limited company or partnership.
Each business structure has its own legal and tax implications, pros and cons. So you need to carefully choose which one meets your needs. However, your business structure isn’t set in stone and can be changed in the future if your business changes direction.
For more information on the different business structures you can choose from, as well as some of the considerations you have to keep in mind, check out our post: Starting A New Business - Which Structure Is Right For Me?
Step 3: Register your business
Once you’ve chosen the business structure that best suits your needs, you need to register with the relevant authorities before you can start trading.
You need to register with:
- HMRC - this is where you pay your taxes, including, but not limited to, Income Tax and National Insurance. You will also have to pay VAT and PAYE, if applicable.
- Companies House - if you’re registering as a limited company, you need to make sure your details are held at Companies House; once registered with Companies House, your company will automatically be registered for Corporation Tax.
- Regulatory bodies - depending on the type of business you are starting, you may need to register with regulatory bodies and obtain licenses and permits before you can start operating.
Once you’re registered in all the right places, you can start looking into the systems you need to have in place to keep your business running smoothly.
Step 4: Set up your accounting and bookkeeping system
Before you start taking money from your customers or paying any invoices with your suppliers, you need to know how you’re going to handle the transactions when they happen. The easiest way to do this is to find a bookkeeping system that you find easy to use and that you can keep on top of.
If you start to slip with your bookkeeping, your transactions and invoices can quickly begin to pile up, and before you know it, you’re months, if not years, behind, which is something to avoid when you need to stay on top of your taxes and statutory reporting.
Step 5: Obtain the right insurance
Businesses take on all kinds of different risks, and having the right insurance in place can help protect your business from these risks.
Whether you need employer liability insurance, property insurance, professional liability insurance or business interruption insurance, make sure you’re covered for whatever eventuality might come your way.
If you’re unsure what type of insurance you need, talk to a professional and ensure you have at least the minimum requirement for the type of business you’re running.
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