First Steps

So, how do you start your own business?

Now that you have decided that you have the skills and attributes that are needed to make a success of setting up a business, what comes next?

How do you view yourself?

  • Are you the sort of person who makes things happen?
  • Do you like taking the initiative and are you comfortable working independently to develop your own ideas?
  • Are you willing to listen to others with an open mind and make a rational judgement on what is needed to meet your objectives?
  • Are you really willing to make personal sacrifices and work long hours and are you able to persevere despite the setbacks you will face along the way?
  • Do you know what your legal obligations are and the deadlines (National Insurance, Taxation, Data Protection, VAT, Public Liability, Health and Safety, etc.)?
  • Do you have an understanding of the core business skills you will need, such as financial management, project management, marketing and sales and people management (including managing relationships with suppliers and customers)? And if you don't have all the necessary skills do you know somebody who does?

What is your business going to be about?

The first thing is to consider exactly what you want to do. You may already have the perfect idea, or you may need to go through a creative process to come up with something that will suit you. Remember it doesn't have to be something brand new. Replicating what is already out there and adding a unique twist has formed the basis for many successful businesses. If you really are stuck, and the usual creative processes (for example brainstorming, word association - a classic here is chilli/chocolate - checking out current and future trends, etc) haven't worked, then why not look at Springwise for some inspiration?

Once you have your idea, a quick assessment of its potential will help you decide whether you are thinking along the right lines. For example, will your product or service be something that people want (and need) that you can sell at a price that generates enough profit to cover your costs and give you enough to live on? If the answer is yes, then you will need to do some serious research to clearly identify your target market, find what is already available to them, and who your competitors are and what they are offering (so that you can decide how you are going to differentiate yourself from them).

Developing a business plan

If you are still feeling positive you will need to write a proper business plan. This will take time and effort – but will be worthwhile. The business plan is not just a document you produce when you need to seek investment, it is the articulation of your ideas and dreams and the steps you need to take to make them a reality (remember: if you fail to plan, you plan to fail!).

The business plan must explain clearly and concisely the nature of your business and your target market. It should provide financial forecasts and details of any financial requirements you might have, as well as details of how you intend to manage your business. Writing the business plan will help you to crystallise your thoughts and will show you whether or not your idea is feasible. Often, once written, business plans are discarded along with the original idea – this seems like a waste of time, but if it has made you re-evaluate what you want to do or, perhaps, decide that setting up a business is not for you after all, you may well have saved yourself a great deal of money and grief.

There are loads of sites on the web offering free advice (and templates) on writing a business plan - to start you off, why not look at the information on the Business Link site?

Sources of finance

The next problem, of course, is how you finance your business. You may be fortunate and have some savings or your family and friends may be able to help you out. You can make use of equipment you have already, you can beg, borrow and buy second hand, but if you do have to raise finance there are a range of options available in the UK (if you are thinking about setting up a business overseas, you will need to research the funding opportunities available to you in that region):

  • If you are thinking about setting up a social enterprise, UnLtd offer small to medium grants;
  • You can apply for a discretionary grant - such grants are usually in specific industry sectors or geographical areas, again these are particularly appropriate to social enterprises (you can start by searching the Business Link directory or the Smarta database to identify the grants and support schemes that are most relevant to your business needs);
  • You can consider a bank loan - but you may need a business track record, and the bank will often ask you to come up with a share of the capital;
  • Finally, you could consider investment from business angels - although you must be prepared to relinquish some control over your business and its profits.

Page last updated: Tuesday 18 January 2011