When looking at starting your own business, it can be daunting. But the potential rewards can be incredible.
Learning how to start a new business can be confusing, so we have put together these 3 key points to follow when considering the task. From whether it’s right for you, to which type of business to register.
So, let’s take a look…
1. Confidence is key
Running a business isn’t for everyone. Some people prefer the security of a regular, guaranteed payslip.
When starting a new business there is no space for apprehensiveness and doubt. Starting a business takes guts and confidence breathes success.
When making the step to becoming a business owner you need to determine whether it will really suit you and your lifestyle. Can you afford to take the risk? Do you have the confidence to speak to clients? Can you deal with the stress and anxiety of the uncertain times to follow?
Determining whether or not you have the right qualities to start your own business, will allow you to determine whether or not you should make the leap.
Building a business can be extremely rewarding if you can make it a success, but it is always important to fully understand what is required when setting up a business to get the best odds.
2. Research your competitors
Competitor research when looking at starting a new business is three-fold. Firstly, it will allow you to determine how likely you are to make a success of a business within the existing marketplace.
Long standing marketplaces with strong established competitors can be much harder to enter. Many customers are likely to have experience with the existing big players, and therefore, have built-in loyalties.
Whilst upcoming, new marketplaces may have a larger amount of new businesses, making your potential client base more diluted.
That said, neither type of marketplace is impossible to enter, it’s simply a case of being clever about how. Carrying out competitor research will allow you to see gaps in the market, existing pains of customers and allow you to establish a unique selling point (USP).
This will ensure that your business stands out from your competition and increases the likelihood of drumming up new business.
Secondly, competitor research can help you to determine important aspects about the running of your business. For example, how much you charge for your services and the processes you use.
This can ensure you are well-priced, and provide a service to rectify any existing pains your potential customers may be experiencing from competitors.
Lastly, competitor research will allow you to see what it is your competitors are doing well and replicate them. For example, is there a particular element of their marketing strategy which works really well?
3. Register your business accordingly
When registering your business, there are 3 different options you can take. These are;
- Sole trader
- Limited company
A sole trader is the easiest type of business to register. With this type of business, your personal finances will be tied to the business, meaning that if your business goes into debt, your personal possessions can be taken to cover the value.
A limited company comes with financial advantages, in the sense that it separates your personal finances from your business. Whilst it can require more paperwork and ongoing management, it does mean that if your business goes into debt, your personal finances will not be at risk.
When choosing to open this type of business, you may benefit from employing an accountant to manage your finances.
Similar to being a sole trader, a partnership involves joining forces with another person whereby both of your personal finances are tied to the business. It means that the liability for business debts are shared between the two of you, however, it is essential when entering into this business type that all parties are aware of what is at stake.
Choosing which business type to register as is an important decision. Whilst it is possible to switch from one business to another, it is not the easiest process. Therefore, for ease, you should consider where you see your business in it’s future years.
For example, becoming a limited company is harder to register and requires more transparency when filing your accounts. However, limited companies are more tax efficient, protect your personal possessions and tend to be more trusted by other companies.
Setting up as a sole trader, on the other hand, is much simpler, completely free and protects your privacy as you are not required to register your details with Companies House. But as a sole trader it does mean that you are personally liable for company debts, less tax efficient and may not be seen as professional by potential clients.
Registering your new business doesn’t have to be difficult, and whilst it can be done through the Gov.uk website directly, there are also helpful apps that can register your company for free.
Whilst there are many other elements to consider when starting your business, following these three points will help point you in the direction. So, good luck and get started.