It turns out that we’re living in a golden age for entrepreneurs.
Research shows that a record 770,000 new businesses were created last year (that’s 30% more than in 2019), in what has been named the ‘Year of the Start-up’
We’re now seeing the buds and shoots of recovery in the wake of a tough time for the country. While HMRC statistics revealed that almost 10 million jobs were furloughed between April and December last year, Brits didn’t wait around idly: instead, many turned their attention to side projects that quickly turned into full-time gigs.
And the majority of them are now making their money via online stores.
How online shopping has transformed future UK businesses
Government figures show that there were more online retail businesses created in 2020 than in any other sector.
And it’s no wonder: setting up an online shop has never been easier. Online platforms like Shopify and Etsy have streamlined the process to help entrepreneurs get going within a matter of hours.
So why do people still procrastinate when it comes to starting their own company?
“We speak to a variety of businesses every day about their needs and concerns — many of whom are just starting out,” says Paul Galligan, CEO at business comparison experts Bionic. “What’s clear is that while many people have a desire to start a business, the perceived difficulty of doing so makes them put it off.
“In reality, it’s never been easier to set up a business. Services like ours and other online platforms effectively remove the complexities of finding insurance, finance or energy.”
Don’t want to miss out? Here’s how easy it is to set up your business in 2021.
How to set up a business in 7 simple steps
- Pick a name
Your business name is important. It should be something that captures the essence of your brand: what you do and why you do it.
The team at Bionic understands better than anyone the power of a name. “When we rebranded from Make it Cheaper to Bionic in 2019, it helped us clearly redefine what makes us different,” says Paul Galligan, CEO at Bionic. “We’d evolved from just being a comparison site that gets you the cheapest service to one that makes everything else easier too.”
Make sure your name is memorable: you’ll struggle to grow your brand if no one knows what you’re called.
When choosing a name, bear in mind that HMRC stipulates three clear rules that you must comply with:
- It must not be offensive
- It most not end in ‘Limited’ or ‘Ltd’ (this applies to limited companies, which we cover in the next section)
- It must not be the same as another business’s name
You can check to see whether your chosen name is available on the government’s website.
- Decide your legal structure
You have three options when it comes to how you want your business to be legally established, each with different implications regarding who is held accountable for what.
- Sole trader — This is the simplest way to set up a business. The only catch is that you’ll be personally responsible for your business’s debts, as well as for the accounting.
- Limited company — A little bit harder to set up than sole traders, but with one major benefit: you’re not personally liable for business debts. If you want to set up a limited company, get in touch with an accountant first: they’ll help you understand the additional reporting responsibilities that come with it.
- Partnership — If you want to set up your business with someone else, registering as a partnership is a good option. In a business partnership, you share responsibilities for debts with your co-founder.
- Check the rules
Each type of business has some specific rules it has to follow. If you’re setting up a bar, for example, you’ll need an alcohol licence; you’ll also need a licence to play recorded or live music.
If you’re setting up an online store, you legally need to provide certain information about your products to potential customers. This is called ‘distance selling’. You can learn more about distance selling on the government website.
You’ll also need insurance. Other than sole traders, all businesses are legally required to have employer’s liability insurance in place. Employer’s liability insurance covers you if one of your employees makes a personal injury claim against the company.
- Get registered
This is the legal bit. Registering a business used to require a lot of paperwork and take a while to go through, but now you can do it all online in a matter of minutes.
Registering as a sole trader is pretty straightforward: you just have to tell HMRC that you pay tax through self-assessment.
If you’re starting a limited company or a business partnership, you’ll need to register at Companies House.You’ll need some personal information about yourself and shareholders; things like your town of birth, national insurance number and passport number. Be sure to have these to hand before you start your application.
Registering only costs £12. You can pay via credit or debit card, or alternatively through a Paypal account. Once you’ve paid, your company will normally be registered within 24 hours.
- Write your business plan
Writing a business plan can sound like a daunting task. Thankfully, there are loads of resources out there to help you get started — and once you do, it’s far easier than you think.
A business plan helps you check if your idea makes sense, identify problems with your approach, and work out what financing you need. It’ll give you an outline of what you need to do over the course of the next year or two to get you where you need to be.
You can find a helpful business plan template on the Prince’s Trust website.
- Bag some funding
Not all businesses will need to secure funding to start up, but for those that do, there are a few options.
One of the best ways to kickstart your business financially is with a start-up loan. Start-up business loans are unsecured government-backed personal loans of up to £25,000. They’re used to help start a new company or grow an existing one, as long as it’s been trading for less than two years.
Alternatively, you can get funding from investors in exchange for a stake in the business. You can ask family or friends if they want a piece of the pie, but if you need someone with deeper pockets, find some private investors. There are several online networks that connect new businesses with angel investors looking to contribute.
Finally, you can turn to a crowdfunding platform to get your business off the ground. A great way to incentivise is to offer tiered discounts on your products in return for contributions.
- Promote your brand
Once you’ve planned how you’re going to launch your business and you’re registered, you need to get some customers. And thanks to the power of social media, that’s easier than it ever has been before.
If you’re selling tangible products like clothes or homeware, Instagram is one of the best platforms to showcase your brand. Nail your photos to make sure your goods look as good as they possibly can. You should also plan content ahead of time and decide on a posting schedule.
Taking the first step
Paul Galligan, CEO at Bionic, urges on-the-fence entrepreneurs to take advantage of a thriving new era. “There’s never been a better time to set up your own business. The only person that’s stopping you is yourself.
“Take the plunge: the data shows that the water’s just fine.”