Step 1: Start with an idea

Every business begins with an idea, so you’ll need to come up with a realistic one that you can turn into a product or service.

It might help to think about your skills, experience and what you're passionate about, or to consider the needs of your future customers and how your business' offerings will meet them.

Step 2: Research your markets

You will need to identify your potential customers and research the market you want to enter to see if there’s a demand for what you’re planning to offer.

Don’t be afraid to change your business idea based on what you find when researching. The feedback you get from potential customers will enable you to hone and perfect your ideas before you’ve spent too much time and money. Keep honing your idea and testing it with potential customers until you’re sure they would be willing to pay for it.

Step 3: Consider funding

You might want to think about getting external funding to help with your start-up costs. You can do this through banks, crowdfunding schemes and angel investors.

Another popular route is to apply for a Start Up Loan, a government backed loan scheme with a free mentoring service support provided. Start Up Loans offer of up to £25,000 at a 6% p.a. fixed rate over a 1-5 year loan term, providing a predictable repayment plan. 

Step 4: Develop and plan

A business plan is essential as it will help set out your proposition, map out your long term objectives, and give you a feel for the various elements that will determine your success, from cash flow, to sales forecasting to your personnel structure.

A good business plan will let you structure your finances efficiently, show potential investors the strength of your business, and focus your efforts on developing your business.

A business plan isn’t written once; it’s a living document that you return to periodically to help you spot potential pitfalls before they happen.

Step 5: Set up your business

First, you'll need to pick a name and logo for your business that matches your brand and offerings. You can test out business names with potential customers as part of your market research, before checking with Companies House to see if your preferred business name is already taken. The name must be unique to ensure you don't run into legal trouble.

Consider registering a domain name that matches your business name. Your business will need a website that is identifiable as yours and easy for customers to find.

You’ll now need to decide on what legal structure is most suitable for your business.

• Sole trader - self-employed with personal liability for all business debts. You must register for Self-Assessment with HMRC and pay Income Tax on your earnings at the end of every tax year.
• Limited company - must be registered with Companies House and for tax with HMRC and can be owned and operated by more than one person. It exists as a separate legal entity so owners are not personally liable for business debts other than what they agree to contribute to the business.

You may wish to trademark your company name to ensure no one else can use it. As soon as your business starts to earn over £90,000, you must also register for VAT. Unless you are confident in handling your tax affairs, it is often sensible to take on an accountant, especially when filing tax returns.

You'll need a business bank account to deposit payments into and to pay suppliers and staff from. Sole traders can use their personal bank account, but you may find it easier to keep personal and company finances separate. It is a legal requirement for Limited companies to have a dedicated bank account.

If you plan on employing staff there are certain things you need to do, including getting employers’ liability insurance, register for PAYE with HMRC. Even if you won’t be employing anyone, you still need business insurance. Depending on the type of activities your business is involved in, you might also need to get certain licences and permits.

Step 6: Find partners, suppliers and premises

Your business is likely to involve working with other people in order to develop and sell your idea, so you will need to know how to approach and work with partners, suppliers and distributors. Always put a contract in place with the help of a solicitor, and cultivate relationships with multiple suppliers so your business is not dependent on only one or two.

Unless you want to work from home, you will need to find suitable premises. Consider the size and location of any potential sites and take the time to learn about buying, leasing and maintaining business premises before you make any decisions.

Step 7: Marketing and messaging

Deliver key messages about your business' products and services using the channels your target customers are most likely to encounter.

Create a marketing plan to set out what it is you expect your promotional activities to achieve. Focus on how you'll position your offerings in the market, your prices and any marketing channels you'll use.

Don’t be afraid to make changes to the plan when needed. Many economic and market factors can influence the success of your marketing efforts, so being able to adapt is essential.