Start a business FAQs
Nothing sets your business up for success like great preparation upfront. Make sure you have the right knowledge and support when setting up your own business. Always write a Business plan first to lay the foundations and help secure any required investment. The next steps will include choosing a name, deciding on an appropriate structure and registering your company (if necessary), as well as putting into place any relevant agreements. Also, don't forget to protect your business interests with Confidentiality agreements and business insurance. We'll explain all this and more.
The first thing to do when putting a business idea into practice is to write a comprehensive Business plan. This will help secure funding for your venture and provide a roadmap to show others what you aim to achieve and how you plan on achieving it.
A well written executive summary, which outlines the business proposal, will encourage investors to read the rest of your plan, so make sure it's detailed and accurately describes your business. For further information, read Executive summary and business outline.
Preparing a market analysis and strategy will demonstrate that you have a good grasp of your specific market and a sales plan, which can provide additional confidence to a potential investor. For further information, read Market analysis and strategy.
Highlighting the skills and experience of the management team is a vital part of any business plan. People are generally the most important factor in determining business success. Highlighting any professional attributes and industry expertise can give investors the confidence in providing investment into your business. For further information, read Management team operations and logistics.
Use realistic estimates of turnover and expenses to show that you have an understanding of the financial fundamentals. You should provide a cash flow forecast and set out how any investment will be spent and repaid. Financial expectations are extremely important for investors as this will determine when, and if, they will see a return on their investment. For further information, read Financial information and requirements.
SWOT is an acronym for 'Strengths, Weaknesses, Opportunities and Threats'. It's a good idea to include a SWOT analysis in your business plan to provide further reassurance to an investor. For further information, read SWOT analysis.
Before deciding on a name for your business, do research into its availability and whether other companies are using a similar name. Check that the name isn't already registered with Companies House using their name availability checker and be aware of any trademarks or registered intellectual property rights. Search the domain names registry to check that it's possible to register a relevant name for your website. You can use Nominet's WHOIS web tool to find out if the domain name is already registered in the UK and who the owner is if it's already registered. For further information, read How to choose a name for your business.
Choosing the right business structure will be a matter of weighing up the advantages and deciding whether these outweigh the downsides of each particular option.
If you're setting up alone, it may be best to start off as a sole trader. This will mean you will need to register for self-assessment for tax purposes.
If you're going into business with a few colleagues, a partnership may be the best option. A Partnership agreement or a Limited liability partnership agreement (for an LLP) will be needed.
In Scotland, you could consider a Scottish general partnership. In this model, each partner acts as an agent and binds the partnership. However, every partner has unlimited liability to creditors for all the partnership debts.
You could also set up a Scottish limited partnership (Scottish LP). This is a unique vehicle available only in Scotland. Partners are taxed on their share of partnership income and gains according to their profit-sharing ratios. Scottish LPs are commonly used in private equity and property investment fund structures.
Alternatively, you might prefer to trade as a limited company. If you opt for starting a limited company, consider putting in place a Shareholders' agreement as a useful way of protecting any investors' interests. You may also need to issue Share certificates to any subscribers. For further information, read Private limited companies and for further information on shareholders' agreements, read Shareholders' agreements.
Think about whether you are willing to deal with the extra administration of a company or LLP in exchange for the separation of personal finances with those of the business entity. Whatever the decision, make sure you register with HMRC for tax, National Insurance and VAT (if above the threshold). For further information, read How to set up your business.
It's likely that you will require certain types of insurance for your business. It's mandatory for any company with employees to have employer's liability insurance in place. Company cars attract the requirement of third party motor insurance.
Public liability insurance covers the cost of compensating members of the public who are injured or have property damaged when your business is liable. Other types of business insurance worth considering are those dealing with professional indemnity, product liability and environmental liability. For further information, read Business insurance.
When you're seeking investment from potential investors or shareholders, you will need to divulge information that may be confidential. Your business idea or venture may include a new invention or product not yet on the market or you may need to discuss financial information which would be confidential to your business. It's therefore important that you protect your ideas and any confidential information given to external individuals with a One-way confidentiality agreement or a mutual Non-disclosure agreement. For further information, read Confidentiality agreements.