How to Start a Small Business:
The Beginner’s Guide

What’s your vision?

Who’s your ideal customer?

How can you bring this vision to life and serve your customers?

These are just three questions of many that you should ask yourself when putting together your business plan. You can keep these questions pretty high-level in the beginning and ask your team, if you have one, to help you sort out the details. From there, you’ll want to consider the following when developing your plan:

• Goals: What do you need to accomplish to achieve your vision?

• Methods: What are the steps you need to follow to get you there?

• Measurements: How will you determine when each objective has been met?

• Obstacles: What could throw you off course along the way?

A business plan is your roadmap; it helps guide you as you start and grow your company. It’s also an important marketing tool that can help persuade people to invest in you and your business. You can download a template of a business plan so you have something to guide you.

You will want to consider the two major types of business plan categories: traditional and lean startup. The former tends to be comprehensive, detailed and dozens of pages long. The latter is usually more direct, focuses on key points and may only be a page long. 

Regardless of which plan you develop, you want to get clear on several items. In her article for Fundera, Meredith Wood writes that you need to address these 10 questions:

1. What does your small business do?

2. Who is your small business for?

3. Who are your competitors?

4. What is your unique value proposition?

5. How will your customers find you?

6. What resources will you need?

7. How will your small business make money?

8. How long will it take you to make a profit?

9. What values will you never compromise?

10. What’s your endgame?

These questions can be answered by doing an internal audit. Think about what you want from your business and where you see it going. Once you have an idea and a plan in place, it’s time to think about what business structure you need to establish.

Once you’ve decided to start a small business, you need to pick a business structure. The type of structure you choose can affect four major areas:

• How much you pay in taxes

• Whether or not you can raise money

• Which paperwork you need to file

• Your personal liability

You don’t need to have the future of your business completely mapped out years before making a decision; the business structure you choose now may change in the future. With that said, you do want to be mindful of your choice, and you should consult with legal and financial professionals if you need to make a change down the line to avoid any unintended consequences.

There are several types of business structures in the UK. Here are the four most common.

1. Sole trader

2. Partnership

3. Limited Liability Partnership

4. Limited Company

Operating as a sole trader is the most common type of business structure. This is a solid choice for most new business owners who are just getting their feet wet or intentionally keeping things small. As a sole trader, you run the business and are responsible for all liabilities.

A Partnership consists of two or more people who share in the profits, losses, risks and benefits of a small business. Partnerships are unincorporated, with the partners considered to be self-employed.

A Limited Liability Partnership, or an LLP, is similar to a partnership, but each partner’s liability is limited to the capital they’ve invested in the business. The responsibilities and profit share of each partner should be established in an LLP agreement at the outset of operations. 

A Limited Company is owned by shareholders and run by a board of directors. A Limited Company is responsible for its own liabilities, with any profits going directly to the company before being distributed as dividends to the shareholders.

You can browse the GOV.UK site to find guidance for setting up a small business, as well as information about the tax applications of each model. You should also consult with tax, business and financial professionals about your options.

The short answer is: It depends.

First off, if your full-time job doesn’t allow employees to work concurrently on side businesses, that may help you reach your decision. You’ll want to confirm you can have a small business by consulting your employee handbook or talking to someone in your human resources department. 

If you’re in the clear, it may make sense to stay put and work on your business after your regular working hours. This way, you can eliminate the pressure of going all in on your business without a regular paycheck coming in.

You may also want to test the waters with your side hustle and gauge your success before completely striking out on your own. Having six to 12 months’ worth of living expenses in an emergency savings account won’t hurt, either.

Good luck! Your future customers are waiting for you.