Millions of people work for themselves today in the UK – 4.3m to be exact. From freelancers and contractors to small business owners and innovative entrepreneurs, self-employment is a diverse, colourful and hugely important sector of the workforce and one that contributes over £300bn to the economy every year.
With it widely accepted that working for yourself is fast-becoming the new norm – and the pandemic expected to see self-employed numbers grow even further – the question of how to start a business has never been more relevant.
So cutting to the chase, how do you start your own business? What are the questions to ask? The services you might need? And how should you go about striking out alone?
We’ll run through everything you need to know about starting a new business in this article…
Get clear on your USP and pricing model
First thing’s first, you need to be clear about the service you’re going to provide and be able to articulate this to potential customers. Get comfortable with speaking to people about what it is that you do and how you do it differently (and better) than your competitors.
Then work out how much you’ll need to charge to make a profit – you might want to carry out a little market research to get a better idea of the going rate.
Devise a plan
We’re not talking about a 100 page business plan here, but having targets and defined objectives when you start a business is key.
Ask yourself – where do you want your business to be in 1, 2 even 5 years time? Will you diversify? Expand and hire? Source investment? Having a rough idea of some of the above will give you some direction and a strategy to carry out, which could hold the key to your success.
Choose your business structure
You’ll need to work out if you want to operate as a sole trader or form a limited company and provide your services through this. Your decision might hinge on plans for growth, tax considerations and the image you want to portray to clients.
If you go down the limited company route – a structure that enables more tax flexibility, carries more credibility and makes expanding and bringing others into your company easier – you’ll need to register your business with Companies House.
Come up with a business name
Regardless of business structure, your company needs a name. Something catchy perhaps? A little different to your competition to make you stand out? Or will your own name do the job? It’s up to you, give it careful thought. After all, as you look to establish a reputation, your business name will be the first thing people see.
Get serious about tax
As a business owner, you need to keep on top of your accounts, calculate and pay tax. Whether it’s personal tax (Income Tax and National Insurance) or company tax (Corporation Tax and VAT), it’s crucial that you have a plan in place to manage this side of your business.
You can take this on yourself, but given the time, complex nature of tax and importance of getting things right, many self-employed workers engage an accountant to take care of their finances.
Either way, it’s essential that you’re organised from the word go – part of this includes the need to register as self-employed so HMRC knows to expect tax from you via the self-assessment.
Open a business bank account
If you form a limited company then you’re required to open a business bank account through which you bill clients and pay yourself from – this is because a limited company is legally a separate entity from its owner.
Even if you opt to work as a sole trader, it’s worthwhile opening another bank account – simply to keep personal and business finances separate. It makes keeping track of your income, expenses and profit much easier.
Devise a winning work strategy
Again, we’re not suggesting you pull together a full blown marketing strategy, but every business – regardless of products, service and industry – needs to be able to attract new customers one way or another.
Simple ways to get your name out there, recognised and generate leads include; creating a logo and developing your brand identity, building a website, writing blogs to win traffic, posting from your business social media accounts, advertising and sending emails and newsletters with the aim to engage potential customers.
Protect yourself from risks
The fact of the matter is, all businesses encounter risks when trading – many of which you might want to protect yourself from.
Whether it’s claims brought against you by clients or employees or the threat of a tax investigation, there are a wide range of insurance policies that protect your company’s financial interests.
Insurance might prove to be a shrewd move, should you face any issues further down the line.
More to the point, some companies won’t work with freelancers and contractors who don’t hold certain business insurances.
All of the above should be enough to help you get started, providing you with a solid foundation from which to grow a successful business.