1. Establish a solid business idea

Your business idea should solve a problem for people. While starting a business doing something you love is the dream, you also want to make sure it’s profitable and sustainable.

Finding the balance between something you love and something you’re good at is a great place to start. Once you’ve coined your idea, you can start researching growth strategies and building the foundations of your business plan.

2. Conduct research on your idea

Good business ideas come from doing plenty of market research.To identify whether your idea is viable, you can start by running SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It’s a great technique to help you analyse your business idea in more depth, and develop the right strategy.

In addition to your SWOT analysis, you can also conduct primary and secondary research to help you answer certain questions.

Primary research involves testing your business idea on your target audience using questionnaires, interviews and product trials to answer the following:

Who will buy your product or service

How much people are willing to pay for your product or service

What people think of your competitors

What potential problems your business faces

Secondary research involves looking at existing data to gather information on your potential market. Examples of this data include:

Government data

Recent surveys and studies

Newspaper reports

Recent company data

Top Tip: To learn more about why market research is valuable and the various types of market research you can do, read our guide on how to conduct market research for your business idea 🌟

3. Create a business plan

Your business plan serves as a roadmap – it outlines what your business is going to do along with your current and future goals of how you��ll achieve success.

Your business plan doesn’t need to be incredibly long, but it does need to be comprehensive. It should show that you understand the market, your target customers and your financial plan/funding strategy.

An effective business plan should include the following:

Business summary: An overview of your business and what you plan to achieve.

Business description: A brief description of what you plan to offer, why and who to, along with why your idea will be a success.

Marketing and sales strategy: Details on your customers, competitors, pricing, distribution and marketing tactics.

Products and/or services: A detailed description of the products/services you offer and how they’ll benefit your customers.

Organisation structure: Details on your professional credentials, those of your team and the people you plan to employ.

Business operations: Details on business location and premises, production and IT systems.

Financial projections: Details on cash flow forecasts, accounts and balance sheets. Key aspects of your financial plan should include income and revenue sources, amount of capital needed, how you plan to repay borrowings and what security you can offer lenders.

4. Register your business

Once you’ve conducted your research and your business is market-ready, it’s time to figure out the legal structure for your business.

There are three main types to choose from when starting a small business in the UK – sole trader, limited company or partnership.

Sole trader: A self-employed person who owns and runs their own business individually. Registration with HMRC is free and you keep all of the business profits after tax – which is paid through the Self Assessment tax system.

Limited company: A company with a legal identity separate from owners and directors. It limits personal liability as company finances and tax are kept separate. This usually requires onboarding an accountant to help manage this, but it’s not mandatory. Your limited company must be registered with Companies House and HMRC.

Partnership: Similar to a sole trader setup but the partnership, as well as the individuals, must be registered for Self Assessment. A partnership must dissolve if one partner leaves.

For your business to be official, you need to register with HMRC or an approved formation agent of Companies House, like we are.

At Tide, we have a business name checker where you can check your company name availability for free.

Once you have a business name, you can easily register your business with Tide for £14.99 and benefit from opening a separate business current account at the same time.

5. Organise your finances and funding

A business bank account is a key starting point as it separates your business and personal finances.

It makes you look more professional and keeps your finances more organised. As a result, bookkeeping and tax preparation will be easier to manage.

If you’re wondering how you can start a small business with no money – don’t worry, there are many ways to fund your business and cover start up costs. These include:

Small business start up loans: You can get a start up loan or small business loan from a range of lenders to use for working capital, inventory, equipment and more. Use our business loans calculator to see how much you can borrow (this will depend on your revenue and credit score).

Start-up grants: There are several government and EU-backed initiatives offering business grants including British Small Business Grants, InnovateUK and Horizon Europe. Grants are issued on a case-by-case basis, and if you are successful, money doesn’t have to be paid back.

Angel investments: Angel investors are investors who give new business owners capital in exchange for equity. While they lend entrepreneurial experience to help you get ahead in the market, they will become a stakeholder and therefore will gain partial control of your business.

Crowdfunding: This method of sourcing business capital has become increasingly popular, and traditionally involves a large number of people donating small amounts of money to finance a business venture. Alternatively you can ask friends and family to invest in return for equity or a reward.

6. Insure your business

To ensure a safe and protected working environment, you’ll need business insurance.

Your chosen type of insurance policy will depend on your business operations, but it’s likely you’ll require one or more of the following:

Business contents insurance: Covering all stock and materials in the event of damage, theft, fire or natural disaster. This is required even if you work from home and have home contents insurance.

Commercial property insurance: Covering your business premises in the event of damage, theft, fire or natural disaster.

Professional indemnity insurance: Protecting you from claims made by unhappy clients.

Small business public liability insurance: Protecting you against claims from members of the public who have been injured or suffered property damage due to carelessness.

Employers’ liability insurance: The same as public liability insurance, but for employees.

Business car insurance: Covering any vehicles used for business purposes.