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7 essential steps to starting your own business
Read time: 5 mins Added date: 27/10/2023
Starting a business is exciting but also quite overwhelming. This guide sets out the key considerations so you can turn your dream into a successful and sustainable start-up.
1. Start with the big idea
When starting a small business, you need to dream big. Right now, with so many business ideas going online, there are plenty of ideas for start-ups out there. The sky's the limit if you can combine an existing passion with a new business idea. But first, you must find a way to beat the competition.
That could mean doing it:
- cheaper
- better
- faster
- more conveniently
- more sustainably
- to new markets
A business bank account to get you off the ground
Get free day-to-day UK banking for your first year when you stay in credit. Benefits include:
- No monthly account fees
- Free electronic payments
- Borrow up to £5,000 across a Business Overdraft or Business Credit Card*
After your first year, it’s £8.50 per month. Apply for an account online. Sole traders can apply within minutes by downloading our app.
2. Check the idea works
Market research is essential when setting up a business. Don’t invest time and energy into your idea only to be undercut by an obscure competitor. Go online and make sure you fully understand what you’re getting into.
Identify your customer
Think about your target customer’s age, gender or likely profession. How many of them are there? What drives their buying behaviour? Why might they choose your business?
Estimate demand
Get out and talk to people. Head to a shopping centre, a cafe or a trade fair and ask people what they think – or organise a focus group. If you have a prototype, watch people interact with it. But most importantly of all, listen out for valuable insights.
See our guide to Understanding your market.
Consider sustainability
This is an issue of growing importance as the UK moves towards its 2050 Net Zero target. Your customers may be aware of it and partner businesses may demand it if you’re part of their supply chain. What's more, it could give you more control over your energy costs.
You’ll find more information about Net Zero here.
3. Start making plans
Refine your business model
Will your sales minus costs provide a healthy profit now or in the future? How long can you keep going if demand starts slowly? Can you scale up if things go well? What about seasonal demand, weather trends and the overall economic situation? Have you considered sustainability in terms of products, suppliers and marketing communications?
A good marketing plan is vital
You must be in the right place with the right offer for the right people. If you’re selling artisan foods, that could mean a well-located market stall with enticing leaflets. If it’s online courses, you could try social media posts that drive prospects to a website. Find out what works for your business – and don’t be afraid to try something new.
Get it all down on paper
Every business needs a formal business plan. You can use it to raise funding, get a business grant, sign up suppliers and negotiate with potential customers.
See our guide to writing a business plan.
Seek funding
Once you have your business plan, you can look for funding. But remember that many successful businesses started on a shoestring.
4. What's in a name?
Take the time to find a name you feel comfortable with. It can be helpful if it summarises what the business does, but that won’t always work in, say, a premium sector. Sometimes it’s good to have a name that sits well within a sector, but not if you’re looking to disrupt it.
Ideally, your business name should be:
- memorable
- easy to pronounce
- scalable
- searchable.
Check that the name you want is available by searching through Google and Companies House. And, if possible, choose something with an attractive and available domain name.
5. Location Location Location
Some businesses require premises, but you should explore all options before committing to long, expensive leases. Pop-ups, co-working spaces or market stalls can help you test your concept while keeping costs down.
It’s also fine to run your business from home when starting out. You won’t need planning permission, providing:
- you don’t need to make significant alterations
- it remains primarily residential
- you don't inconvenience your neighbours.
Also, check that running a home business doesn’t invalidate your home insurance policy.
6. Choose the right business structure
There are several business structures to consider, so you should seek professional advice about which is the best option. The most common are:
Sole trader – the simplest option with the lightest tax and regulatory burden. However, you will be responsible for any debts.
Partnership – you’ll share financial responsibility, including losses, but are taxed individually.
Limited company – more complex, but a good option if you want to scale up. The business is legally separate from the people running it, so you would not be personally liable for any debts.
Find out more about setting up as a sole trader, partnership or limited company.
7. Ready to go? Make sure you inform the following organisations
Your bank – because you’ll need a business account from day one. It’s best practice regardless of business type, but if you have a limited company, the finances of the business must be kept separate from your personal accounts.
Lloyds Bank Business Current Account has the tools you need to grow your business. You’ll get expertise and resources tailored to your needs, plus 12 months of day-to-day business banking fee-free*. Plus, our Business Finance Assistant tool will help you keep on top of your business finances, and help manage your returns to HMRC.
An accountant – as well as keeping your finances in order they can advise you on dealing with HMRC.
Companies House – every limited company or limited liability partnership (LLP) must register. Your accountant can help with this.
HMRC – you may need to pay tariffs or get permission for certain types of import/export trading. Again, your accountant can help.
Specialist registrations and permits – for example, food businesses must register with the Food Standards Agency.
The Information Commissioner – businesses that process or store personal information must register with the ICO. Complete their self-assessment to find out if you are exempt.
Your local council – if you have moved into new premises, you must register for business rates, if applicable.
Important legal information
Lloyds Bank is a trading name of Lloyds Bank plc, Bank of Scotland plc, Lloyds Bank Corporate Markets plc and Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH.
Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Lloyds Bank Corporate Markets plc. Registered office 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 10399850. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278, 169628 and 763256 respectively.
Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH is a wholly-owned subsidiary of Lloyds Bank Corporate Markets plc. Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH has its registered office at Thurn-und-Taxis Platz 6, 60313 Frankfurt, Germany. The company is registered with the Amtsgericht Frankfurt am Main, HRB 111650. Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH is supervised by the Bundesanstalt für Finanzdienstleistungsaufsicht.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS). Please note that due to FSCS and FOS eligibility criteria not all business customers will be covered.
While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.