What Do You Need to Start a Business?

min read

Why do you want to start a business?

So, why do you want to start a business? What are your motivations? From financial independence, to simply sharing your passion with the world, having a reason for your work can give you the motivation to succeed. After all, starting a business requires you to step into the unknown and take a risk, so having a purpose can help you push through obstacles that may come your way.

Some possible motivations for starting your own business include:

Following your passion: Forget working a 9-5 for a company that doesn’t interest you. By starting your own company you can work in a field that you care about.
Support non-profits: You may choose to set up your company to support non-profits, charities or the local community.
Achieve financial independence: While getting your business off the ground can take hard work and patience, the financial rewards are potentially huge. With determination, you can build a valuable asset that continues to grow.
Gain work-life balance: Say goodbye to the regimented working week. Starting your own business can give you a super-flexible lifestyle. You may choose to work from home, say no to meetings on Fridays or work a four-day week.

As well as focusing on the reasons to start your own company, it can be worth acknowledging the potential risks and challenges you could face too. What could go wrong with your business and how would you resolve it? From financial struggles to employee retention, anticipating potential obstacles with a plan for how you’d resolve them can help you prepare for the unexpected.

Things you need to start a business

You can’t rush into the practical side of things like registering your company until you understand the legal requirements to start a business. Here, we’ll cover everything you need to have ready, from coming up with an idea to brushing up on your industry knowledge.

A solid concept

It all starts with an idea. Maybe you’re the artistic type and have been told your graphic design skills could easily make you money. Or perhaps you’ve found a gap in the market for a product you’re sure will be a hit. It’s important to know what business you want to run and why you want to run it.

If you like the sound of being your own boss but you’re struggling for ideas, try bringing it back to basics. What interests you? Note down your hobbies and passions and brainstorm potential business ideas from them. For example, if you’re an animal lover you may want to start a dog-walking service, or open a cat cafe. Or maybe you’ve recently come across a business that you felt could be doing things better.

To get yourself in the right headspace, try immersing yourself in the business world. You could read biographies from inspirational entrepreneurs to see where their bright ideas came from. Or you could ask your family and friends what they think you’re good at, to see if your strengths are something you could build on. Inspiration is sure to strike when you least expect it!

A foundation of knowledge

You can’t jump head-first into managing your own company without knowing the ropes, right? A great way to prepare for starting a business is to brush up on your knowledge. Read up on the legal terms often thrown around like limited liability so you aren’t left feeling out of your depth when your company is formed. You could attend seminars from business experts, take a management course to broaden your knowledge and even reach out to entrepreneurs through platforms like LinkedIn to ask questions. Alternatively, there are a wide range of free resources across the web to help you develop your expertise.

An understanding of your chosen industry

Depending on the type of business you choose to start, you may have to adhere to certain legal requirements, so it’s important you understand the ins and outs of your industry beforehand.

For example, if you’re looking to start your own restaurant and are planning on serving alcohol, you may require an alcohol licence. Want to start a hairdressing business? There’s certain legislation that hairdressers must adhere to, including the Control of Substances Hazardous to Health law which applies to the use and storage of hazardous substances, such as peroxide.

Being clued up on the legal requirements surrounding your chosen industry means you won’t be caught out or left unaware of certain regulations in your field. For example, as soon as you become an employer you need to take out employers’ liability insurance. This is to cover your business should a staff member claim they’ve suffered illness or injury from working for you. If you weren’t aware of this and weren’t insured, you could be fined £2,500 for every day you go unprotected. With this in mind, it’s important to be aware of industry regulations to avoid a fine or prosecution.

A plan for financing

It may be early days, but having an idea of how you’re going to fund your business can save you some stress further down the line. There’s no denying that starting a company can be expensive, but you shouldn’t let that stop you from chasing your dream. Planning ahead can help you work out if your business idea is affordable.

Here are some options to consider to help you finance your company:

Business loan: A business loan works similarly to other types of loans. You’ll apply for it through a bank and repay the amount through regular, usually monthly, repayments - with interest added. It’s important to make sure you can afford to take on the debt and that you’ll be able to keep up with your repayments.
Start Up Loan: You could apply for the government-backed Start Up Loan of £500 to £25,000 to help you start or grow your company. You’ll be charged for your borrowing at a fixed interest rate of 6% per year.
Crowdfunding: You could try crowdfunding to raise money for your business. This involves you getting others to fund your business. Different types of crowdfunding include donation-based funding where contributors donate money without receiving anything in return. With debt-based funding, your contributors will be repaid with interest.
Your savings: Financing a business with your own money may sound impossible, but with time and determination, it can be achievable. Set yourself a savings goal, hold yourself accountable and cut back on your spending.

Check out our guide on how much it costs to start a business for more information.

An idea of who your audience is

Understanding your ideal customer can help you grow your business and retain your customers long-term. To do so, you’ll need to identify your target market - the specific group of customers who are most likely to interact with and buy from you. They’re likely to share certain characteristics such as age, income, behaviour and gender. And they’ll usually have a problem that your business can help them solve.

As you haven’t yet started your business, identifying your target market may feel tricky. A great place to start is looking at your potential competitors. What brands would you like your company to mirror? Where do they advertise and what messaging are they using? From there, you can understand who your competitors are targeting, to then go on to target the same group in a better way.

Plan for the future

You’ve not even started your business yet, so us telling you to think about what will happen to it in the future may sound irrelevant right now. But having an idea of the future of your new venture can help you feel prepared.

Is this new business your planned career for life, or are you aspiring to start multiple companies? How will you measure success? Are you looking to eventually gift your business to your children? Try to break down your goals by time. Where do you want your business to be in two years time? Then map out your goals for the next five and ten years. Having an idea of what your company’s future will look like can keep you motivated to succeed.

What are the easiest types of business to start?

Some types of business are naturally easier to start than others. Those that have low startup costs and require little training are easier to get going than a company that needs a lot of investment and supply management, for example.

While starting any business isn’t a walk in the park, using a platform like eBay or Etsy (or Business Support Club if you’re looking to sell to other businesses) to get your venture going can keep costs down and give you less to think about. Using an online marketplace costs very little upfront so if you decide your business idea isn’t working out, you won’t be left out of pocket.

Looking to test the waters before you commit to your business full time? You could consider trialling your idea as a side hustle alongside your current job. This could mitigate the risk of failure further down the line, as you’ll be able to see if you’re making enough money to commit to it full time. Once you know your business is performing well, you can make the move to expand it by hiring employees, growing your brand and being your own (full time!) boss.

Ready to get started?

Once you’ve ticked off all the above, chasing your dream shouldn’t feel too far away. Feel ready to get your company off the ground? Our guide to starting a business will cover all the next steps you’ll need to take.

Starting your own business is a lot to get your head around and it’s easy to be left feeling overwhelmed. But you don’t need to do it on your own. Our company formation service can take care of the tricky stuff, like forming your business with Companies House, so you can focus on your exciting new start. Apply to form your company with us today.