How to start a business in 10 straightforward steps

By Indeed Editorial Team

Published 22 June 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Starting your own business can provide you with a range of benefits. You could enjoy more freedom with the way you choose to work and the sort of work you carry out and increase your earning potential. The process of starting a business can be daunting, so knowing the steps involved can help you to prepare and decide if it's right for you. In this article, we outline why you may want to start a business and how you can do so in 10 straightforward steps.

Why start a business?

There are several reasons to start a business. Having your own business means that you don't work for someone else. You can express your creativity and do things the way you see fit. You can set your own hours and follow your passion. If you have an idea that you think might be profitable, it may be worth starting a business to see whether it can generate any money. Your own business also means you can potentially make more money if the idea is indeed a profitable one.

Apart from the financial benefits, a business is an asset. As it grows, its value increases. If you want, you can sell your business at a later date. Depending on the value of the business, this could be a substantial amount of money. With greater control of your time, comes the opportunity to spend less time at work and more time pursuing the things you care about, like hobbies, friends and family. Starting your own business can entitle you to tax breaks. Many government programmes offer tax incentives to small businesses, including businesses started by minority groups.

Related: How to become an entrepreneur

How to start a business in 10 steps

Here are 10 steps to follow when starting a business:

1. Research your idea

If you have an idea for a business, the first step is to research and identify a market for it. It's important to establish how much competition there is in the space in which you want to operate. Your idea may be excellent, but the success you can expect to have can depend a lot on external factors like interest and competition. If you can't find a sizeable market for your business idea, making money is likely to be difficult.

It's also essential for you to evaluate your own skills and expertise to know if you have the capacity and interest to bring the idea to fruition. For instance, if you have a passion for cooking, starting a restaurant could suit your skill set. If you're good at programming, starting a web development agency could be right for you.

2. Evaluate the pros and cons

Once you research the market and validate your idea, the next step is to weigh the pros and cons. Starting a business requires considerable time and energy. During the first few months, your motivation is likely to waver, especially as you move time and resources away from other aspects of your life to put into the business.

By fully establishing the pros and cons of setting up a new business before you begin, you may have additional incentive to continue when times get difficult. It could also make you reconsider your current employment situation, leading you to appreciate the stability of conventional work more.

3. Build your self-motivation

Successful entrepreneurs generally rely on motivation and drive to take on all kinds of challenges. They don't mind making personal sacrifices either, as long as it benefits the company. Building your self-motivation is important because a fledgling business demands a lot of time and energy. Setting long-term goals and breaking them down into shorter, executable tasks can help you to maintain your motivation as you see results from your efforts. Clearly defined goals also ensure that you know your next steps.

Related: How to develop SMART goals

4. Decide on the type of business you want to start

The next step is to decide the kind of business you want to start. There are several options to choose from, such as an online business, a drop-shipping business or a bricks-and-mortar store with a physical location. The nature of business you choose has a profound impact on the way it operates.

For instance, overhead costs for an online store are different when compared with a bricks-and-mortar location. For an online store, you require a website and a database where you regularly upload new products and images. If you opt for a bricks-and-mortar location, you may want to lease space to set up an office or a shop. It's important to make an informed decision backed up with market research to help you decide the best business model to follow.

5. Develop your business plan

Your business plan is an important document that details every aspect of your business idea. This includes information about sources of funding, the nature of your business, your market research, potential buyer personas and a comprehensive marketing strategy. Details regarding the first year's sales projects and earnings are also included in the plan.

The business plan becomes even more important if you intend to approach venture capitalists or investment firms for start-up funding. Investors usually ask for business plans and supporting documents, such as spreadsheets or projection graphs, before they decide to invest their money in your business. This is your chance to show the depth of your research and validate your idea before a qualified audience.

Related: How to plan a project in 10 simple steps (with tips)

6. Decide start-up capital

Before you start opening capital accounts and register your business, it's imperative to figure out how much start-up capital your venture requires. Do your research to identify the amount of money you require to find your first customer. Get an estimate so you know the cost until you start offering your first services. The start-up capital varies depending on the nature of your business. A business you start at home generally doesn't cost as much as renting office space, buying furniture and hiring employees. For the former, you may only require a computer, a stable Internet connection and software.

Investment increases depending on the size of your business too. A retail location costs more since you also require inventory, store decorations and a marketing budget. Payroll also increases costs if you bring on more employees. When deciding your start-up capital, try to be reasonable and realistic. If you're too conservative, there's a risk that your projections are wrong. It's important to validate your research and back it up so you know just how much investment your business requires.

7. File paperwork

Once you have the name, the business plan and the start-up capital projections, you can file the necessary paperwork. Registration with HM Revenue and Customs is necessary for tax purposes. If you're starting a limited liability company, registration with the Companies House is necessary. Depending upon the kind of business you start, you may require a business licence or a special permit. Certifications for catering or food safety are also necessary. It's necessary to comply with local laws and regulations, as there's a high risk of penalties or fines due to non-compliance.

8. Maintain proper accounts

It's also indispensable to maintain proper accounts for tax purposes. Vigilant and timely recording of all transactions saves a lot of time and money and protects your business from random audits. You can decide whether you want to maintain accounts yourself using accounting software, or outsource these services to a bookkeeping company. You can also hire an accountant to maintain your books. Maintaining proper accounts is necessary to avoid issues with the HMRC. It can save you from financial issues and protect you from hefty fines, penalties or litigation.

Related: What is basic accounting (principles, jobs and education)

9. Establish a company address

To start a company, a business address is necessary. This is the address that appears on your listing in the Companies House and is where all official postage is delivered. This includes return requests, tax documentation and other necessary paperwork. You can either use a PO box, a home address or an office address. When filing the paperwork, make sure you proofread all relevant documents, including the memorandum and the articles of association. It might be a wise idea to hire an administration firm to oversee the drafting and filing of paperwork.

10. Protect your business

It's also important to learn how to protect your business from frivolous lawsuits or uncertainty. For that reason, finding a law firm is quite important. Initially, you probably won't require the services of a solicitor. But as your business grows, legal support may eventually become necessary. A law firm can help you in many ways, from drawing up contracts to offering legal advice. They can also file intellectual property documents to protect your trade secrets and your business's name and trademarks. They can also help in filing patents and advise you with guidelines associated with copyright laws.

Buying business insurance is important. In drastic situations, your business insurance can protect your company from bankruptcy. Ideally, public liability insurance is necessary, professional indemnity insurance and employers' liability insurance to protect your business.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

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