How to start your own business – a step-by-step guide

The drive to grow, the ability to identify opportunities, the ambition to be the winner, the courage to take risks, the talent to attract supporters – these and many more comprise the definition of entrepreneurship. Are we born with these qualities or can we gain them?

Even scientists have their take on the question. Some think that genetics overstates the role of the entrepreneurial spirit and underestimates human potential. We tend to believe that entrepreneurship and leadership can be the products of both.

If you feel you possess the described traits and have cultivated a refined sense of taste, are open to experimenting, making mistakes, and drawing conclusions to progress, you may be among the ones who can make it into business. It’s easy to say, but how is it done? This how–to–start–your–own–business guide will let you know the basics.

Before you start

Patience is an ability not so far mentioned, yet essential to not only business but to every aspect of life. It is the capacity to remain peaceful in difficult situations. The unexpected often comes in our ways. The business makes no exception, and it’d serve you well to get accustomed to this idea. Work on yourself to embrace change and you’re halfway there.

The other half involves work, too. If you’re about to embark on the journey of setting up and running your own enterprise, work is not a thing that should scare you. In fact, work and business are synonymous. You may have heard Steve Jobs – one of the greatest visionaries and entrepreneurs of our times – say that the thinker-doer people are the ones who bring change to the world.

Start your own business step-by-step

Starting a business, whether an online store or a brick-and-mortar venture, requires in-depth planning, preparation, and precise execution.

Many business owners fail to acknowledge the importance of planning in advance, which often leads to unexpected situations, opportunity loss, and other negative consequences. 

In the next sections, we offer a step-by-step guide to taking your small business idea to a realised new business with tremendous potential.

Research and Plan

Anything we’re about to start requires research and planning. This is the process of collecting information and first organizing things in our heads.

The launch of a business involves much of these, as well as much chaos. It’s a good idea to start with some self-exploration to help clear up your true drive and goal.

Ask yourself some questions:

• Why do you want to start a business?
• What are your strengths and what are your weaknesses?
• What your day-to-day life will be like?
• What are you prepared to sacrifice as a small business owner, and to what extent?
• What skills and knowledge do you possess?
• What industry are you most familiar with?

Be honest and realistic. All these will guide you to streamlining your initial business idea.

Choose your business model and determine your business concept

To start, here are some business model examples: manufacturer, distribution, retail, franchise, subscription, and crowd-sourcing. These are suitable ideas for both small businesses and large corporations. There are many more, and they constantly change with the overall business dynamics.

The business model lays out the way your business will make money.

To decide for yourself, you can again answer several questions.

• Will you be making a product or delivering a service, or both?
• How do you intend to market it?
• What will it cost you to start?
• How do you expect to make profits and encourage repeat business?

We know taking is the outcome of a process, which starts with giving. It’s true that a venture needs to be accumulating income to sustain and grow, yet income results from the value an establishment offers.

Here are things to consider:

• The features that will make your product attractive and help it stand out;
• The specific group of people who would be interested in it;
• The resources your business will need to function (inventory management, small business accounting software, personnel, and other assets);
• The criteria to measure the success of your enterprise.

These and many more will help you understand how to structure your company. It’s good to research your competitors. Knowing what solutions they’ve found may also give you insights on how you may differentiate.

Name your business

It’s your business and, like with your child, you can give it the name that you like. Yet, it’s useful to know the good naming practices. Let your imagination loose, but before that, review any regulations or governmental guidelines that you have to take into consideration.

Whatever you’ll be doing, chances are players already exist in your particular market. Pick a name that sounds nothing like theirs. This will help you differentiate yourself from other small business owners, regardless of whether you run an online business or a physical store. 

Have your target customers in mind because you will want them to spell and pronounce your name with ease. This may also be of help when you remember that your business should have a web presence.

The more descriptive the name is of your activities, the easier it will be to brand. Have in mind, though, that as your business grows, you might want to expand its scope.

As with nearly everything else around a startup, it’s important to validate. Generate several ideas, spread them among your close people, and take notes on their feedback.

Create business structure

When setting up a new business, determining the best business structure is key for future development. 

Understanding the different options available to business owners is fundamental to selecting the right one. 

Here are the main business structures you need to know about:

• Sole proprietorship – One of the most basic business structures in which the business owner holds full control over the business. However, it’s key to understand that there’s personal liability involved here, as the owner is also responsible for all business debts. 
• Business partnership – When a company is registered as a partnership, two or more individuals share ownership of the business. 
• Limited company – Limited companies protect the business owners as it goes hand in hand with liability protection. This structure also stands out with more flexibility when it comes to handling tax and management. 
• Corporation – Corporations are considered complex business structures, with a range of regulations to consider and tax implications to evaluate. 
• Cooperative – Popular for industries like retail and agriculture, cooperative businesses are created for the benefit of those using its services. 

When choosing the right business structure, don’t forget to evaluate factors like taxation, investment requirements, complexity, control, and liability protection. 

Once you’ve made your decision, you’ll need to register your business with the Companies House in the UK.

Think marketing

In short, marketing is both finding the people that are willing and capable of paying for your product or service and persuading them to do so. There are plenty of instruments that will help you collect facts and insights on the matter.

One is the Marketing Mix, which aims to help make fundamental decisions. In its traditional form, the Marketing Mix features the 4 Ps: Product, Price, Placement, and Promotion.

The product may be a tangible, physical thing, or a service. For convenience, from here on in this guide, let’s use a product for either. The decisions we need to make are the brand name, functionality, styling, quality, packaging, warranty, and support. Of course, neither this nor the below lists can be exhaustive.

The decisions around price include our pricing strategy, retail price, seasonal pricing, volume discounts and bundling, whether we’ll be able to offer price flexibility, etc.

There are various pricing strategies. Examples include Cost-plus – the cost of production plus a percentage of profit. Skimming is selling high to break even fast. Penetration is the opposite – selling low to grab market share. A product’s pricing strategy may be at-a-loss or market-oriented, premium, predatory, pay-what-you-want, or freemium.

Placement decisions are about the distribution channels and channel intermediaries. Other factors here are coverage – mass, selective, or exclusive, as well as whether your business would need a warehouse, any inventory, logistics, and transportation.

Promotion decisions are also subject to strategy. Will you inform, create desire, or differentiate? Advertising, sales force, public relations, and marketing budget go here, too.

The Marketing Mix’s recent development now adds 3 more Ps – Physical Evidence, Process, and People.

Well, with so much to get your head around, how do you decide what will work best for your business?

Find the right business tools

Starting a business is not just about registering your business name and creating your products or services.

It’s also about identifying the right business tools to help ensure smooth operations and processes in customer service, data storage, analysis, accounting, and other areas.

To determine what the right tools are for your business, make sure you fully understand your processes from start to finish. Think about what your business needs on a daily basis in order to function properly.

Some of the core tools to consider here include:

• Project management;
• CRM solutions;
• Accounting software;
• Marketing tools;
• Sales management systems. 

You can use a range of free online websites and comparison tools to research potential options. In addition, it’s highly recommended to evaluate industry recommendations. This will help you select solutions that are specifically designed for your niche. 

Last but not least, gain insights into these tools’ pricing structures and ensure that they won’t harm your budget in the long term.

Conduct market research

When discussing how to start a small business, it’s fundamental to acknowledge the importance of in-depth market research.

Market research provides priceless intelligence. Getting to know your market is an essential process of information gathering that may take weeks or even months. It may involve talking to people, conducting surveys, organising focus groups, collecting public data, and scrutinising your competitors.

It is a way to define your niche and understand its opportunities and constraints. It will help you familiarize yourself with your customers – who they are, how they live, their needs, behaviours, preferences, and tendencies. Thus, you’ll get insights into how to craft your product to make it appealing and help it stand out from what the rest of the market players do.

Following your market research, you might develop an entirely new product idea. Alternatively, you may decide to offer the same old product, only better, faster, or cheaper.

Whichever road you take, here are several steps it is advisable to follow when shaping up your idea:

1. Determine your customer
2. Identify your customer’s underserved needs
3. Define your value proposition
4. Specify your minimum viable product
5. Develop your MVP – a Minimum Viable Product
6. Test it with customers

Testing is an iterative, continual, and important process. It will give you invaluable feedback on how your ideas match your potential customers’ needs – the notorious Product or Market Fit. The more you validate with the people who are expected to reward your efforts, the more chances you create for yourself to succeed.

In addition to what your customers truly need, the validation will let you know how they prefer it delivered. This is yet another essential topic for you to consider.

Prepare your business plan

Compiling a business plan is imperative when starting a venture. It is a document detailing your business activities and objectives and your roadmap to achieving them. It is a powerful instrument for several reasons.

First, it brings your ideas from your mind right into reality. It compels you to get to know your industry close to perfection. The business plan will be a guide you can come back to as many times as you need – even in the first years after you’ve already started. Furthermore, when you approach investors with your business idea, they’ll expect you to have prepared the document, even if they never want to explore it.

Traditionally, a business plan is a lengthy report. Yet, it may also come in a leaner startup form. It includes an executive summary, the product you plan to deliver, your marketing analysis and subsequent strategy, your financial plans, and a provisional budget.

It offers insights into some of the following components:

• Business name and details;
• Business finances;
• Legal structure; 
• Target audience;
• Products or services provided;
• Marketing plan;
• Forecasts into how much revenue you expect to generate; 
• Business partner information (if applicable).

A good business plan would include an exit strategy, too. In general, there are two scenarios here. One is to limit losses in case things do not follow your positive plans. The other is to sell your successful business for profit. The exit strategy is another demonstration that you are viable for investment.

Curious to learn more? In this article we dive in how to pay yourself as a business owner in the UK.

Register your business

Ask a random person their idea about how to start a business and you’ll find that in the common opinion, the process begins here. It’s among the reasons many business ideas have failed. Many are either unaware of the path ahead or give up on the amount of work to be completed before they reach their goals.

Registering your business is the first official step in your business journey. As per the type of formation, your business may be:

• Sole-propriety;
• Cooperative;
• Limited Liability Company;
• Partnership;
• Corporation.

You don’t want to rush into decisions here.

Get well-informed about the different business entities and all the formalities that go along with each. This is among the few areas where you’d want to experiment and make mistakes. Use the services of legal and financial consultants and explore the upsides and downsides of each.

Find funding

Of course, you’ll need money to start your venture. Before being ready to look out for it, make an estimation of how much you need. To make the right decisions regarding funding, evaluate your venture’s projected size and its goals. It’s always a good idea to overestimate both the business debts and the time it’ll take you to reach the break-even point.

Small and medium-sized businesses often use personal savings and borrow from relatives and friends. In case none of these is an option for you, you may approach angel investors. Such people may put a significant amount into your start-up and, in return, they’d expect to play an active role in running the business.

Banks rarely finance business startups, so you can at best apply for a small business loan. Similar to these are business grants. Their upside is that you don’t have to pay them back. The downside is that they come with conditions that your business has to meet.

Crowdfunding is another option that business professionals can explore. Many backers donate small amounts. It may be a tad slow, yet depending on your business, you may use the time to organize some of its other aspects.

Your business plan is still relevant even when you use your own savings or borrow from a relative. Brace yourself for the case where you’d be looking for funding, for as much as it is a must, your business plan is not all you’ll be asked for.

An investor would first want to hear your pitch. Fret not, as the good news is that a pitch comprises a few sentences with which you’d initially present your business idea. Though short in form, the pitch – and the way you deliver it – is utterly important as it makes your potential backer decide whether they want to invest.

Set up your business account

Opening a business bank account is highly recommended and sometimes indispensable, especially if you’re gaining external investment. The funds you’d receive need to be settled into a merchant account. Even when you’re using your personal savings or those of your family, separating your business from your personal funds is the thing to do.

Mixing personal and business expenses brings chaos in keeping track of what goes in and what goes out. There are bookkeeping, taxation, legal, and even psychological implications of such a decision. Simply put, to be well managed, and be able to grow, a business should better have an account of its own – or several. And use them correctly.

Little relates to tradition in our lives today, and this goes for the way we exchange payments. There are many alternatives to the financial institutions and the accounts a business can have. And some of these turn out to be much faster, far more convenient – even more secure and cheaper. Sometimes, the traditional counting-house could be your best option.

Don’t forget to perform thorough research to find the best solution for your business.

Consider insurance

We can hardly live well expecting the unexpected. Yet, a dose of respect for what can’t be predicted is a healthy attitude towards life, and this is the purpose of personal liability insurance for non-business owners.

Unless you’ve already had to deal with hazards, it may look like an overhead to pay for small business insurance, especially in the starting phase. Chances are, law regulations or your investors have already required you to have one.

Your specific business activities may require some specific insurance or a bundle.

Here are several examples of basic business insurance to help you initialize your research:

• General liability – to cover legal proceedings arising from property damage, physical injury, or even company name defamation.
• Property insurance – leased or owned, commercial property insurance covers your business’s physical assets are against vandalism, fire, hailstorms, and similar events. Floods make an exception, though, falling under Flood insurance.
• Business Owner’s Policy – this one protects your business against all the above. A combination of general liability and property insurance, it often comes as the best choice in terms of both price and coverage.

Build a team

Unless you plan to be a one-man show, you will need people to assist you with your business operations. You may have already hired your key-role players before you started your search for investment. The business structure you went for will serve you as orientation about the positions where you’ll need people.

Start from the top, then expand your team when your business has generated sufficient resources. Take your time and select your people carefully. You’ll be spending time together – and so, your business will be their responsibility, too.

You need to trust them and it’d be better if they’re gifted with flexible thinking. Since you’re just starting, you may want people with diverse skills. And, of course, their background in terms of education and experience counts, yet a knack is gained. So, look out for passion – it’s a powerful drive.

If you already have shaped at least part of your company culture, watch out for whether the people you’re hiring naturally fit in or can easily learn to contribute to it. Remember to keep your employees motivated to achieve better results.

Find your B2B partners

Your connections with external entities are as important as your internal relations. For all that you’ll be executing in-house, there’ll be a lot more you won’t be able to handle without using the products or services of other organisations.

Besides the fact that your business will, in part, be in other companies’ hands, engagement with partner businesses may require you to disclose information. So, be as attentive to getting involved with partners as you are to hiring personnel. Trust should be crucial here again.

Rest assured – you are free to ask as much as you need before making your decisions. All questions are allowed as long as they’re related to your potential suppliers’ industry experience, their achievements with existing clients, how they helped other businesses grow, and so on.

Receiving payments from your customers

It is valid for non-profit organisations, too – money keeps an enterprise going. It’s what allows it to sustain and grow. A for-profit is a business established and conducted to make a profit, and it usually comes from sales.

Offering quality products and services is equally important as providing your customers with a variety of payment methods. Once you know what people find accessible or preferable, do more thorough research and compare the choices. Finding the right payment processing service provider may be key to the best deal for the type of business you operate.

Create your brand

You’ll be selling your products under a brand. Your brand is your business’s identity and relates to its image and reputation. Like reputation, building a brand is an ongoing process that lasts throughout the lifetime of your enterprise.

Thinking about your brand, there’s a lot to consider. For instance, creating a website for your business is more of a must these days. With it comes to its search engine optimisation – to help your target audience discover it easily.

Equally important are your business’s social media presence, responding to customer reviews, and timely handling of negative comments or complaints. These and many more will allow you to strengthen your brand image.

Logo

One knows a good logo when one sees it, even with no artistic background. Your logo is your company’s coat of arms. It communicates so much in just a glance – who you are, what you do, and how you do it.

Your brand could be your venture’s identity, but your logo is the identity of your brand. And again – depending on your activities, you may need an in-house designer, hire an agency, or a freelancer. There are many platforms where you can see the work of corporate design artists.

Be clear in your presentation and requirements. Expect up to 3 different versions. Pick the one that brings a smile to your face, and show it to your team and closest people for feedback. When you’re completely happy with it, use your logo on all platforms and channels. This is how your business and brand will get established in people’s minds.

Company website

You’d hardly need convincing that a website is a necessity in our days, although a business may use other channels to sell. Even the smallest venture needs an online presence, at least as validation for its existence. Of course, according to your business activities, your website may serve many more purposes, including as a means of interaction with your current and potential customers.

Social media

While you need to advertise your website so that anybody would know about it, your social media accounts are an easier, less expensive way to spread the word about your undertaking. Not to mention that social media platforms like Instagram, Facebook, TikTok, and others free business tools for monitoring your campaigns.

And they’ll take potential customers to your website. Your target audience will guide you on what platforms to focus your resources on.

Customer Relationship Management

There are plenty of choices when it comes to CRM (Customer Relationship Management) software solutions. Such a system stores important information about your customers and their preferences, giving you a better chance of creating a stronger bond with them while efficiently developing a customer loyalty program.

Digital marketing

Digital marketing is an essential way to build a following. It may be summarized as continuous online advertising efforts, which are of the essence, especially at the start of a venture.

Email marketing

Everybody’s inboxes are full of marketing emails. While we’re all busy and scarcely have time to read these, sometimes prospects spend a moment now and then checking out an offer that comes at the right time or with the right message. It’s mostly about targeting the right people and knowing how and when to present the information you want to reach them.

An effective email marketing campaign can do miracles in reaching your audience and communicating what you want to say and what they want to learn. Think out the strategy to build your contact list. Of course, you need the permission of your customers to send them your newsletters, product offers, discount notifications, etc.

One good way to achieve this is through consent forms on websites. Apart from the fact that the law requires both mass and commercial electronic communications to allow their customers to opt-in or out, one good thing about such forms is that you build trust in your establishment.

Challenges of starting your own business

Starting your own venture and becoming a business owner is incredibly exciting. It empowers individuals to step out of their comfort zone, create their dream products or services, and achieve both personal and professional growth simultaneously.

However, starting a business is not always as thrilling as it sounds. There are several core challenges to consider and be prepared for.

Financial implications 

Depending on the type of business you plan to create, you may require substantial funding in order to get the process running. For those who don’t have access to enough capital, it may be difficult to secure the initial resources for investing in things like equipment, inventory, marketing, and staffing.

Even if this first step is successfully completed, you’ll need to ensure that there’s a healthy cash flow management system in place. This is one of the weakest zones for most startups, especially during the early phases of development.

Regulations and legal challenges 

Another serious obstacle to consider is regulations. 

Navigating the regulatory environment and making sure you’re fully compliant with local and national laws can be a challenge, especially for new business owners with less experience.

Keep in mind that rules and regulations can be on an industry and location level. Make sure that you carefully research the laws surrounding your specific business type or products and services. 

Obtain all essential licences and permits before starting your business to make sure you’re on the right side of the law.

Staffing challenges 

A commonly neglected challenge of starting a new business is that related to human resources.

In order to run a successful business, you’ll need qualified, trained, and motivated employees. However, oftentimes, it’s extremely difficult to find the individuals you’re looking for.

In addition, team management can also be a pickle, especially during the early stages of the business, when your management style and processes will likely change frequently.

Conclusion

Setting it up and making your first sales is just the beginning of your entrepreneurial journey. Should you stay on top, make and increase your profit, you – and your team should incessantly work to grow your establishment and keep it up-to-date.

Collaborate with brands that have already earned the acclaim of the public and your industry – that’s a great way to grow. Work with other companies and strive for good deals in exchange for your product samples. Engage in charity, offer your time or products for a good purpose, and gain popularity for your company or brand.

Embrace strong preparation as an imperative, along with the fact that no plan is perfect. See the unforeseen as a challenge – as grounds to adapt and become stronger. Summon your problem-solving – that’s among the powers that will lead you out and up when times are difficult.

Starting and maintaining a business is not exactly a breeze. Yet, it may be rewarding, allowing you to be your own boss and add value to the world.

Now that you know the basics of starting a business, it’s up to you to accomplish your dreams.

Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.