How to start a small business

Published: 22/03/2021

So you’re thinking of starting your own business? Firstly, let us say congratulations! Having the drive and passion to follow your dreams and turn them into a reality is no mean feat, and for that, you deserve an almighty pat on the back.

But taking that leap into the world of business ownership isn’t as straightforward as some might think, and there’s plenty to think about before you can embark on this exciting new journey.

Here at takepayments, helping small businesses thrive is our mission, and that’s why we do everything we can to support and assist their success, so here we’ll take you through everything you need to know to start your own business.

We’ll start on a personal level, discuss business ideas, and move onto the essentials, looking specifically at the government’s guidelines for entrepreneurs and take you through what you’ll need to do. So, without further ado, let’s get stuck in.

Start with self-reflection

What are your strengths and weaknesses?

Regardless of whether you have the most innovative business idea in the world, it’s important you start by looking inwards and working out what your personal strengths and weaknesses are, to ensure it succeeds.

The idea is to figure out whether you’ve got the skills and competencies needed to succeed in your industry, so for example:

  • An extrovert would do well in a customer-facing, sales-driven role.
  • Someone with top analytics skills is likely a good fit for the online arena which requires a lot of tech know-how.
  • An individual who always shies away from the limelight might struggle if they ever needed to pitch or had to deal with consumers on a regular basis.
  • And so on and so forth.

If you find your skillset doesn’t cover all the areas you need, don’t panic! It just means:

  1. It might be wise to bring someone else on board who can fill the gaps, so together you’re an unstoppable force, or
  2. You need to broaden your skillset with some additional training, education, qualifications, etc. 

What’s your motivation?

Do you want to make heaps of money? Create a business you can pass down to your children? Have an environmental impact?

Work out what it is that’s driving your decision to start your own business before you get the ball rolling, so you can ensure your business is set up to achieve it.

What are you passionate about?

It’s a fact that entrepreneurs who are passionate about their business are more likely to succeed. Why? Because they work harder, are more driven to succeed, and can ride the highs and lows of business ownership long-term with their passion as a driving force.

Starting a business purely because you think it’ll get you rich quick is unwise. Business ownership is hard work, it’s a big commitment, but it’s super rewarding when it pays off. So, take the time to work out what your passions are before you take the plunge.

Your business idea

For some of you reading, you’ll have had your business idea nailed down for many years, but for others, you might be sure you want to move into the world of business ownership but not 100% sure on the business just yet, and that’s okay.

If you do know exactly what your business is going to be, we suggest you move onto the next section - ‘Research’, as here we’ll take you through the process of generating a business idea.

Business ideas

How can you be sure your business is going to be successful? Unfortunately, there’s no definitive answer, but there are areas you can consider which will help you on your path to success.

Solve a problem

If you can solve a problem consumers face, even if they haven’t even realised they need it solving yet, you’re onto something from the get-go.

So, spend some time in your day-to-day life thinking about what would make your life easier, and consider solutions that would do just that. 

Do better

Are there businesses out there providing goods or services but you think you could do a better job? Provide a better solution? Offer a better customer experience? Then what’s stopping you?

Be cheaper

Let’s be honest, we’re nearly all driven by price when it comes to deciding where to spend our hard-earned cash. If you can come up with a business idea that offers a great product or service cheaper than anyone else on the market, you’re onto something good.

Innovate

Can you think of an industry that’s barely changed in years, or even decades? Often these slow-moving markets offer a tremendous opportunity for entrepreneurs looking to disrupt them. Take Uber for example, who rapidly changed and innovated the taxi industry by bringing it into the 21st century.

If you can come up with a business idea that disrupts and improves the status quo, you might be onto a winner.

Cash in on hobbies

If you’ve got a hobby that you’re already super passionate and knowledgeable about, then considering turning it into a business might be a logical next step.

Research

Once you’ve got your business idea nailed down it’s time to do some research into the industry to:

  1. Define your target audience - Who will you be trying to sell to? Is the market big enough to meet your goals? 
  2. Scope out competitors - Who will you be going up against? What are their strengths and weaknesses? What can you offer that they can’t?
  3. Come up with a marketing plan - How are you going to grab the attention of your target audience? Which channels will you use?

Business plan

Top-notch planning from the get-go can be the difference between small businesses succeeding and failing, so we’d recommend putting together a concrete business plan before you take the plunge.

Your business plan should outline the objectives of your small business and how you plan on achieving them, and include the following sections:

  • Executive summary
  • Contents
  • Your business model and the goods or services you’ll offer
  • Your customer, market, and competition
  • Your marketing and sales plan
  • Your current finances and projections
  • Details of your team or planned employees
  • A summary.

Top tip: you’ll find heaps of useful and in-depth resources to help you write your business plan online.

The essentials

Register your business

Next up it might be time to register your business - however, it’s worth bearing in mind that not every small business must be registered, and it depends on whether you’re a sole trader, limited company, or partnership. 

Even though it’s not mandatory for some, there are perks involved with registering your business such as a more reputable image and paying less tax.

You can find out all about registering your company including how to do it in our how-to guide.

Good to know: while it’s not a legal requirement to register your company as a sole trader you must register with HMRC to inform them they’ll be receiving a tax return from you each year. 

Licenses and permits

If you plan to do particular activities as part of running your small business, such as playing live music or selling alcohol, you’ll need to have the correct licences and permits in place.

You can use the government’s ‘License Finder’ to work out whether any of these will apply to your small business. 

Insurance

There are all sorts of business insurance available on the market, but which one you need will once more depend on the nature of your business - some are essential and others are optional, so you need to work out what fits your venture’s needs.

Common types of business insurance include:

  • Public liability insurance - this can protect you against compensation claims made by customers, clients, suppliers, or other third parties.
  • Employers’ liability insurance - if you employ staff you’re highly likely to be legally required to have a policy like this, as it covers claims made by staff members.
  • Business buildings insurance - much like your home insurance, this covers your business premises.
  • Business contents insurance - this will cover the likes of equipment, machinery, tools, etc.
  • Stock insurance - if you’ll have stock lying around this will cover the cost should it get damaged or stolen.

Top tip: you can find a full break down of business insurance types here.

Online and distance selling

There’s quite a hefty list of additional measures you’ll need to bear in mind before you’re allowed to sell products and services online, by mail order, telephone order, or text message.

We won’t go through each and every one here, but the rules include:

  • What you’ll need to have in place before accepting orders
  • Rules for ‘rights to cancel’
  • What you must do once an order is placed

You can find a full breakdown of these rules over at gov.uk.

Data protection

Any business that stores or uses personal information must follow data protection rules - this includes information kept on customers, staff, and account holders, which you must ensure is kept safe, accurate, and up-to-date.

You can read up on all the dos and don’ts here.

Accepting payments

Before you open your doors and start accepting customers you’ll need to sort out your payment systems, after all, the aim of any business no matter its goal is to bring in revenue.

There are a couple of things you’ll need to be aware of, so let’s start by taking a look at each.

PCI compliance

If your business accepts card payments, whether online or instore, you need to be PCI compliant.

PCI DSS compliance (to give it its full name) is a list of standards relating to the handling of sensitive card data and exists to protect both you and your customers’ details.

You can find out more about PCI compliance and get help becoming compliant here.

Merchant account

Another must for any small business wanting to accept card payments is a merchant account. They’re specialised accounts that act as a holding pen for funds between your customer’s bank account and your business’ bank account.

You can learn all about merchant accounts here.

Good to know: here at takepayments we have a PCI compliance team who’ll hold your hand through the process and we also set our small businesses up with a merchant account free of charge as part of our service. 

Equipment

The payment equipment you’ll need to set up ahead of your grand opening will depend on the nature of your business.

Conclusion

We’ve covered a lot here today in our overview of how to start a small business, so let’s summarise the key takeaways:

  1. Spend some time self-reflecting to help you work out your goals, strengths, and weaknesses.
  2. Nail down your business idea and do research on your market and competitors.
  3. Create a business plan to help you meet your goals.
  4. Clue yourself up on the policies, licenses, and/or permits you’ll need to have in place.
  5. Get your payment equipment sorted before your big launch.

Once you’re up and running you’ll find heaps of resources to help your business grow over on our blog, including:

For help with your payment systems - whether that’s getting set up or just some friendly advice - reach out to our experts today. 

Bryony Pearce

Bryony Pearce

Copywriter

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