Starting a business may not be easy, but in the UK, there is plenty of information available from both government and private sources, along with high-quality education that can easily be accessed both in person and online. If you’re in the first stages of starting or planning a new business, it might be more straightforward than you think. However, there are a few things to consider.
Legalities
There is less red tape than you might imagine when setting up a business in the UK. The UK government clearly sets out the types of business you can run, what structure to choose, how to register your business, and what your reporting and management responsibilities will be. There are clear rules about the licences or permits you will need, and how, for example, you should proceed if you are selling goods online, or importing and exporting goods.
You will, of course, be liable for tax as a business, but UK tax laws are fairly straightforward and business-friendly, especially for small businesses. If your business has a taxable turnover of less than £85,000 a year, for example, you will usually not have to pay VAT.
In addition, sole traders and partners with a low turnover can choose to use simplified cash basis accounting, rather than traditional accounting for tax reporting purposes. You will want to consult a tax advisor to make sure that you are doing everything required, but most of the information you need to know is clearly laid out on the UK government webpages.
Human resources
It is often said that men, material and money are the three most important resources in any enterprise, and it is true that unless you are setting up as a sole trader, manpower will likely be your first concern. Recruiting staff, training them, running payroll and fulfilling all your duties as an employer can be complex and, depending on your sector, competitive.
Some employers are dealing with this by outsourcing tasks to freelancers at home or overseas, but this requires, if anything, more careful coordination than running an in-house team. How you will find, train and manage the human resources needed for your success will therefore be a critical part of your business plan.
As the business owner, you are, of course, part of the human resource pool that will ensure your company’s success. Do you have all the skills, knowledge, training and contacts you need? Do you need to expand on any of these areas before set-up? Do you need more education, whether that is a specific workshop or a business degree? It is now possible to study for a part-time master’s in business management online in the UK, via Aston University, with no physical attendance required – so there are great opportunities to build your education and knowledge base, potentially at the same time that you build your business.
Material
The term material can be seen as a general term for all the non-human, non-cash resources you need to run your business. Material management is a crucial part of running a business and a core function of supply chain management. Good material management involves the constant monitoring and management of supply chains to ensure that the material requirements of the business are met consistently.
Whatever materials are necessary to the functioning of your business, there needs to be a failsafe system for the control and regulation of the flow of these materials, along with a constant and ongoing assessment of important variables that will impact the business, such as demand, price, availability and quality of all the necessary resources.
Money
The money needed to start a new business will, of course, depend on your business model. When drawing up a business plan, be careful to cost everything out accurately so that you have a realistic idea of the level of finance you need to get your new business off the ground. Sources of finance for a new business may include personal investment; investment by family, friends and other investors; various business loans (including peer-to-peer loans); business grants; and crowdfunding.
In the UK, you can also apply for a government-backed Start Up Loan of anything from £500 to £25,000 to start or grow your business. Unlike a business loan, this is an unsecured personal loan, so you will need to pass a personal credit check, but it is also part of a government scheme to help small businesses, so it comes with free support and guidance aimed at helping you put together your business plan. Successful applicants will also get up to 12 months of free mentoring to support their business success.
Mode
The type of business you are building will dictate a lot of other aspects of the business, such as the business structure, the premises, and, of course, the manpower, material and money needed to make it work. Brick-and-mortar businesses that require physical premises are generally more complicated to plan, set up and run, usually requiring you to think about the venue, staff, supply chains and delivery of physical materials.
Online businesses are increasingly common and include a range of business models, from software-as-a-service (SaaS) businesses to dropshipping e-commerce businesses. Some online enterprises require little more than a computer and a relevant skill set, while others will still require a lot in the way of materials, money and human resources. The need for a solid business plan is just as crucial when running an online business, though the plan itself may be less complex for some types of companies.
Growth prospects
Lastly, you will want a long-term plan for your business. What are the company’s growth prospects? Will you expand? Will you diversify? Will you open other venues? What sort of turnover can you expect five years from now, and 10 years from now?
When looking at long-term prospects, you will also want to consider your potential exit strategy. Is the business one that can be sold in the future? Could it potentially go public, or be acquired by another company? If you needed to leave the business but were unable to sell it, could you liquidate the assets and sell the premises? Knowing the end of the story is just as important as knowing how it begins.
