If you’re thinking of starting up a business, you’ll first need to come up with a realistic idea that you can turn into a product or service.
Find local support, including help with developing business ideas:
- England – National Enterprise Network
- Scotland – Business Gateway
- Northern Ireland – NI Business Info
- Wales – Business Wales
Register your intellectual property
You might have already come up with an idea for a business you think there’s a market for, or invented something you think people will want to buy. Find out how to register your intellectual property to make sure nobody copies it without your permission.
Turn your idea into a business
- Research your market – identify potential customers. Talk to them and find out if your idea is meeting a real need.
- Develop and plan – test your product or service with real customers, make changes, and test it again. Keep doing this until you’re sure there’s a demand for it.
- Find partners and suppliers – think about who you’re going to work with to develop and sell your idea.
- Set up your business – work out which legal structure is right for you, and whether you want to sell shares.
- Get funding – explore different sources of business finance, from bank loans to government-backed schemes.
You might be able to get support and financial help from Jobcentre Plus if you’re unemployed.
Contact the business support helpline in your area for help and advice on starting or growing your business or contact us here at IAIS to guide you through the start-up maze.
When you start a business, there’ll usually be a period when you’re investing lots of time, effort and money before you start making a profit. It’s important to research your market to make sure your customers will really pay for your product or service before you do this.
Once you’re confident that they will, explore sources of funding to help with the costs of starting up your business.
You might be able to get help from a government-backed support scheme if you need some initial funding to test and develop your business idea.
Search for business finance using the finance finder tool to see which schemes you may be eligible for.
Get a bank loan
Once you can show that there’s a market for your idea, one option for funding your start-up costs is getting a bank loan. You’ll need to be able to:
- give the bank realistic cash flow forecasts
- prove that you’ll be able to pay back the loan with interest
Watch a video on forecasting business finances, including sales, profit and loss, and cash flow.
The bank might require you to provide security against your loan, like your house or car, in case you don’t repay. You should think carefully about how much risk you’re willing to take on before you get a loan or give any personal guarantees.
Find business finance in your area using the British Bankers’ Association’s finance finder tool, including business angels (individuals who invest in start-up businesses), regional funds, government schemes and banks.
If you need more investment, you might be able to raise money to fund your growth plan by selling shares in your business. You can do this by getting friends and family to invest. However, if this isn’t enough you can look for sources of ‘equity funding’, including:
- ‘business angels’ (wealthy individuals who invest in start-up businesses)
- ‘venture capital’ from companies who invest large sums of money in businesses that they think will grow quickly (known as ‘private equity’ companies)
- ‘crowdfunding’ (where a large group of people invest money in a business idea, usually via the internet)
- alternative sources of funding like ‘peer-to-peer lending’
Any outside investors will own the company jointly with you and the other founders. They have a say in the running of the company, and are entitled to get a share of the profits, known as ‘dividends’.
You should get legal advice before selling shares in your business.
Find a solicitor on the Law Society website.
Search for equity funding
Find out about equity funding and venture capital, and search for sources of funding from the:
- British Private Equity and Venture Capital Association (BVCA)
- UK Business Angels Association
- Next Generation Finance Consortium (NGFC)
You can also sign up for the Seed Enterprise Investment Scheme – your investors will get certain tax reliefs, making your company more attractive to investment.
Test your business idea with potential customers to check if there’s real demand for what you’re planning to sell. This lets you find out about any problems and fix them before you’ve wasted too much time, effort and money.
Watch a video on researching your market to understand your customers’ needs.
- Identify potential customers. Talk to them and find out about their needs.
- If you can, make a basic version of your product or service (a ‘prototype’). Work out the cheapest and quickest way of making something that lets you find out if you’re meeting a real customer need.
- Test it with them and get feedback. Find out what they’d be willing to pay for it. Try out different prices with different customers in a consistent, realistic way to see what people will really pay. Can you make enough money for a return on your investment?
- If there are other businesses competing for your market, think about what will make you different. Can you provide something better than what’s already available?
If you’re in retail you could try different opening hours or home delivery. You could aim for a specific group of customers who aren’t being targeted by other businesses (a ‘market niche’), make something that’s easier to use than competitors’ products, or meet a customer need by solving a problem that nobody’s ever solved before.
If you’re starting a retail business, think about testing your idea by taking a short-term lease on premises for a few weeks or months.
Develop and change your idea based on what you’ve found out about your customers’ needs before investing. Deal with any problems you’ve found with your product or service, including the way you’re planning to make and sell it.
Go back to your customers and test again.
Keep doing this until you’re confident that they’ll be willing to pay what you’re asking, and that you’re meeting their needs.
If there’s no real demand for your idea, think about changing it completely. Is there another product, service or market that uses your skills and resources in a different way?
Write a business plan
A business plan is a good way to sum up:
- the customer need you’re aiming to meet
- how your business will meet that need while making a profit
It should clearly show the results of your customer research, and that you’re able to explain how you can turn your idea into a viable business before you invest lots of time and money.
Watch a video on understanding cash flow.
Many businesses start with just one person, known as a ‘sole trader’. If you set up as a sole trader you’ll be self-employed, which means you’ll be your own boss.
You’ll also be responsible for:
- managing your own time
- looking after all of your company’s admin and accounts
- taking risks with your own money, particularly if you’re leaving full-time employment
Whether you set up as a sole trader, partnership or limited company, your business is likely to involve working with more people to develop and sell your idea – including partners, suppliers and distributors.
Finding a co-founder with relevant skills and knowledge that are different to yours lets you focus on what you’re best at.
For example, you might be selling a product you invented, or a service that uses a particular skill or talent you have, but not have any hands-on experience of running a business. If so, you might want to work with someone who has business and management skills, and can look after things like financial planning and recruitment.
Consider working with several partners in a team. You’ll be able to share responsibilities including risk, getting funding, expertise and sharing contacts.
Whether you’re making a product and you need raw materials, or supplies and equipment to run your service, many businesses need to work closely with suppliers.
Search online and talk to other businesses. Draw up a list of potential suppliers. Get estimates, then go and talk to them so you can:
- negotiate prices
- start to develop relationships
- get a sense of which suppliers are reliable and trustworthy
You’ll need to agree on payment terms with your suppliers, and get them in writing. This includes your ‘trade credit’ period (how many days you agree to pay invoices within), and whether they can offer you discounts for things like buying in bulk or quick payments.
You’ll also need to find suppliers for the equipment you’ll need to run your business, including your information technology (IT) systems.
Watch a video about choosing the right IT for your business.
Getting your product to market
If you’re planning to sell your product in shops and expand outside of your local area, you’ll need to work with a distributor. If you’re selling overseas, consider working with a freight forwarder who can deal with exporting your goods.
Watch a video on the different ways of getting your product or service to market.
Build a website
You can also attract customers and increase awareness by setting up a website for your business. Search online for resources, as well as local web design and development companies you can work with.
You may also be able to sell your product or service directly through your website.
Finding business premises
The RICS (Royal Institute of Chartered Surveyors) guides to small business property have information about buying, leasing, maintaining or extending business premises.