- Step 1: Develop your business idea
- Step 2: Carry out market research
- Step 3: Choose a business structure, name and register your business
- Step 4: Research business finance
- Step 5: Build your brand
- Step 6: Set up your business operations
- Step 7: Put your business out there
- Step 8: Launch your business
Perhaps you have an idea for an entirely new product or service, and you’re planning to set off on your first business venture. Or maybe you’ve always dreamed of becoming your own boss, and now you’ve decided it’s time to turn your side hustle into your main hustle. In all cases, starting your own business is a bold, exciting, and potentially very rewarding thing to do.
However, we know there is a long road between having that great idea for a business and turning your vision into reality. Between keeping on top of your business bank account, setting up an online presence, registering your business, obtaining the necessary permits and insurance, and working out a plan to reach your first customers, it’s easy to get overwhelmed when you’re starting out by yourself.
Download our start a business checklist
To help your business journey run smoothly, we’ve come up with a handy checklist for you to download, which should take the guesswork out of starting your own business. From how to hone your business idea to sorting out your business finances, this guide will steer you through the first steps as you get your new business off the ground.
Below are the eight steps in detail of what you’ll need to fill out on NerdWallet’s downloadable new business checklist – a valuable tool to help you get started.
1. Develop your business idea
The first step in your business journey is to work on your business idea. You may already have a clear idea of what your business will offer, but to help refine your business idea, think about the following questions:
- Can you solve an existing problem for customers or businesses?
- Is there a problem people might not know they have yet?
- Do you have a way to provide a product or service that is cheaper than the current market rate, without sacrificing quality?
- Can you do something better than others currently do?
- Do you think you can disrupt an industry that has long been set in its ways?
- Do you have a hobby, interest or other source of expertise that can help you build a successful business?
If the answer to any of these questions is yes, then you may have a viable business idea.
Being able to succinctly describe your business idea in a sentence or two could prove useful later on – for example, if you’re pitching your idea to potential partners or investors. A short summary of your business idea is sometimes called an ‘elevator pitch.’ The aim is to explain your idea in the 30 seconds or so you might spend in a lift with a potential backer.
You may also have heard people talking about a ‘unique selling point’ or USP. This is what will differentiate your business from every other enterprise out there. It’s good to know your USP from the beginning and to bear it in mind as you progress with your business plans.
2. Carry out market research
Here’s your chance to find out more about your industry. You should try to learn about the needs and wants of your potential customers, while also looking at your competitors. What do they already do well? What can you do better?
You can manage market research in several ways, including conducting online research, talking to industry customers and competitors, or going to shops or venues where you can check out the competition. Networking events can also be a good way to test out your ideas and get feedback from business owners.
While conducting market research, the two most important questions to keep in mind are:
- Is there demand for my product or service?
- Who is my target market?
Competitive landscape research involves gaining a better understanding of the market your business will be operating in, so consider these questions:
- Who are your biggest competitors and how are they positioned?
- What differentiates each competitor and what traits do they share?
- How can your USP differentiate your business from your competitors?
- Are there any issues your chosen industry or market is facing?
Target market research involves gaining a better understanding of who your future customers might be. When it comes to your audience or target market specifically, you need to ask yourself:
- Who will buy your product or service?
- What are people looking for from that product or service?
- What pain points have your prospective customers experienced in the past?
- How much are prospective customers willing to pay for your product or service?
- How will you communicate with your target market?
3. Choose a business structure, name and register your business
This is an important step in turning your idea into a tangible, legal business. First, you’ll need to decide which of the following business structures best suits your business. Basically, you’re choosing between operating as a sole trader, a limited company, or as a partnership.
A partnership involves two or more people, known as partners, sharing the responsibilities of running – or owning – a business. This includes sharing the risks associated with the business, any profits or losses, and any bills associated with running the organisation.
Types of business structure
You will need to research the various types of business structure, and find the business structure which is the best fit for you. These are outlined below:
- Sole trader: A sole trader is the exclusive owner of their business, meaning you get to keep all post-tax profits from your business. The flipside is that there is no legal separation between a sole trader and their business, which means you will be personally liable for any losses your business might make.
- Business partnership: Similarly to operating as a sole trader, partners in business partnerships are not legally distinct from the business. Therefore, if one partner resigns, dies or goes bankrupt, the partnership must dissolve. This does not mean, however, that the business has to stop.
- Limited partnership: A limited partnership must have at least one ‘general’ partner and one ‘limited’ partner. General partners manage the business of the partnership and are liable for any debts the business cannot pay, while limited partners contribute money towards setting up the partnership but do not participate in day-to-day operations and are only liable for the money they have contributed.
- Limited liability partnership (LLP): When incorporating as a limited liability partnership, you must have at least two ‘designated members’ at all times, as well as any number of ordinary members. Designated members are responsible for registering the business, keeping accounting records and submitting them to Companies House, as well as reporting any changes to the business. Each member is not personally liable for any debts the LLP incurs.
- Limited company: If you choose to incorporate as a limited company, you will be legally and financially distinct from your business. A limited company will have shares and shareholders, and can keep any post-tax profits.
Name your business
You will also need to come up with a name for your business. If you are planning to operate as a sole trader, you can trade under your own name if you want to.
You might want to think of a catchy name that customers will remember, or you might opt for a business name that clearly describes what services or products you offer. Do not pick a name that is offensive, and do not call yourself a limited company if you are planning to operate as a sole trader or business partnership.
Legally, your business name cannot be the same as another registered company’s name. If your name is too similar to another company’s name or trade mark, you may have to change it.
There are different naming rules for sole traders, partnerships and limited companies. Visit the following Gov.uk links for more information about business naming requirements:
For sole traders: https://www.gov.uk/become-sole-trader/choose-your-business-name
For partnerships: https://www.gov.uk/set-up-business-partnership/naming-your-partnership
For limited companies: https://www.gov.uk/limited-company-formation/choose-company-name
Register your business
Now you have decided on a business structure and picked a name, it’s time to register your business.
Go to the government links below to follow the necessary steps for your type of business. These links also contain more information about the various business structures and how they work, plus information on choosing a name for your business.
For sole traders: https://www.gov.uk/set-up-sole-trader
For partnerships: https://www.gov.uk/set-up-business-partnership
For limited companies: https://www.gov.uk/set-up-limited-company
Register for Self Assessment
If you are not already registered for Self Assessment, you may need to do that now. You will be responsible for filing your tax return and paying tax on profits from your business. To register for Self Assessment, visit gov.uk.
4. Research business finance
You’re almost certainly going to need some money to get your business off the ground. At this point, it’s worth considering how much money you’re likely to need and where that money might come from.
It may be advisable at this stage to create a business budget. Think about all the expenses associated with starting up your business. These are likely to vary from business to business, but think about the following factors:
- whether you need to source raw materials or supplies
- whether you plan to hire any employees
- overheads associated with your business premises
- website and social media costs
- marketing costs
- insurance premiums
- registration costs
Once you’ve worked out a budget, you’re going to need somewhere to put that money. Now is a good time to think about opening a business bank account.
If you’re going to run your business as a sole trader or business partnership, you may be able to use your personal bank account for business transactions (assuming your bank allows it). However, limited companies, limited partnerships and LLPs are legally required to keep their personal and business finances separate.
While this step is optional for sole traders and business partnerships, it may still be a good idea to separate your business and personal finances by opening a business bank account before your business gets up and running. You’ll probably thank yourself when it comes to filing your first tax return.
Once you have a rough idea of how much money you’ll need to get started and have considered opening a bank account, it’s time to think about how you’ll fund your business.
Look into the following funding sources and decide which ones might be an option for your business. You can tick off the relevant funding sources as you go. Bear in mind that you can combine multiple funding sources to get your business up and running.
- Personal savings: Using your own savings to cover start-up expenses will allow you to retain full ownership of your business. Just be careful not to endanger your personal financial health in the process.
- Friends and family: Borrowing money from friends and family can be tricky, but many people use funding from people they know to start a business. If you go down this route, it may be best to draw up a written agreement now in order to avoid any disagreements in the future.
- Small business grants: There are a range of non-repayable and partially repayable start-up business grants across the UK, as well as those specifically for businesses based in Scotland, Wales and Northern Ireland. There are also business grants for women to help you kickstart your business.
- Government business loans: Different government business loans may be available to your business depending on where you are in the UK.
- Business loans: Lenders are generally cautious about providing loans for start ups, and many lenders will want evidence of a trading history before they part with their money. However, it may still be worth looking into start-up business loans to get your business off the ground.
- Angel investors: Angel investors are generally wealthy individuals looking to invest in new businesses in exchange for equity or convertible debt.
- Crowdfunding: This involves securing funding from multiple people in exchange for rewards such as equity in the business or early access to products. Crowdfunding often takes place through an online campaign.
5. Build your brand
Your brand is how your business will define itself in the marketplace, and it’s also how customers will come to recognise you.
Now is the time to think about the visual identity of your business. How will you speak to your customers? What stories will you tell them? What will your business stand for?
Designing a logo to use on your marketing materials or products will help you stand out from the crowd. This brand identity can be further enhanced by settling on a colour scheme, tagline – a memorable motto or phrase – and a value proposition. A business’s value proposition is essentially a promise a business makes to its customers, and it’s also a chance to explain why customers should choose your business over anyone else’s.
These steps are optional, but they will all help to differentiate your business in a potentially crowded marketplace. Thinking about your brand now will also help you down the line, especially when you create a website and marketing materials.
6. Set up your business operations
Before you can launch your business, you’ll need to spend some time setting up all the operational aspects of your business. Think about everything your business will need to run smoothly and get these essentials sorted before you start trading.
Start by thoroughly researching the legal requirements of your business. These will vary depending on which sector you’ll be operating in. Research whether you need any permits or licences to run your business, or if you need to register your business with your local authority. This requirement applies to food businesses, taxi drivers and firms, some beauty and cosmetic businesses, late-night entertainment venues, and others.
Now is also the time to consider business insurance. Insurance may be a legal requirement for your business but even if it isn’t, getting the right insurance is a good idea to protect you and your business in the event that something goes wrong. Research the relevant insurance for your business and make sure you’re satisfied with your level of cover before you start trading.
It may also be wise, at this stage, to register any trade marks relating to your business. Provided they meet the relevant requirements, you can register the name of your product or service, as well as words, sounds, logos, and colours relating to your business. For more information or to register a trade mark, visit gov.uk.
Before you launch your business, you may also need to settle on a supplier, wholesaler, distributor – or any other kind of firm in your supply chain necessary for the smooth running of your business. This depends entirely on your business model, so you’ll need to think about the needs of your specific business when you get to this stage.
If you need to license, lease or purchase business premises, it’s necessary to take that step before you launch your business. The same goes for hiring staff and purchasing or leasing any essential equipment. These steps will not apply to you if you plan to run your business from home and won’t be employing anyone at this stage.
Note that if you do become an employer, there are specific obligations, requirements, and responsibilities which will apply to you. These include taking out employer’s liability insurance (unless you’re employing close family members), registering with HMRC as an employer, and checking whether you need to apply for a DBS check if you’ll be working with children or vulnerable adults. For more information about hiring employees and your responsibilities as an employer, visit gov.uk.
7. Put your business out there
Now you can turn your attention to how your business will present itself to the world. A website is a great way to promote your business, and setting up your own website will make it easier for customers to find you. You’ll need to buy the domain name as well as choosing a hosting service and choosing a website builder to create your website, although these services often come packaged together. Consider hiring a web designer if you don’t want to do it yourself.
These steps are optional, but consider how your business will benefit from maintaining a public-facing online presence. It’s free to set up social media accounts on most platforms, and website fees may pay for themselves if your site drives enough new custom for your business. If your business model involves selling products online, then you’ll need some kind of online storefront. This could involve creating listings on existing ecommerce sites, such as Etsy or eBay, or building your own website with ecommerce functionality, or both.
8. Launch your business
Now the foundations have been laid, it’s almost time to launch your business.
Start by thinking about a marketing strategy to help you find your first customers. Ask yourself how you’re going to get eyes on your new venture: will you take out ads in a local newspaper or industry magazine? Can you use fliers or posters to advertise your services? Will online or social media advertising boost your profile? These questions will help you draw up a marketing plan.
Now you should be ready to start trading. What this looks like for your business will depend on what your business does and who your customers are. Just be sure to make a note of the date you start trading as you will need this information for your business accounts.
If you’re planning to sell items or services online, then list your products or what you can offer customers and set your website live. If you’re running physical business premises, then cut the ribbons and welcome in your first customers.
Here’s another chance to download the checklist – you can then print it and have it handy.
Image source: Getty Images
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