They say success is 1% inspiration, and 99% perspiration. But does it really need to be that way? A variety of local, national, and international schemes are available to help you set up your own business.
So, if you’ve ever considered setting up your own company in the UK or EU, it’s good to know that every country has a unique way of encouraging business growth: an EU project attempted to break down fear-related barriers; the UK has made efforts to usher in an ‘entrepreneurial decade’ by creating monetary grants and start-up loans designed to aid new business; meanwhile, Sweden encourages workers to establish their own business ventures by eliminating risk, with job security – with only a handful of caveats, employees can take a break of 6 months to set up their company, with the peace of mind that they can return to their current role.
Ultimately, the most common obstacle preventing people from launching their own business is a fear of failure, in some form. That could relate to making a profit, interest in the product or various other manifestations of fear.
Why start a business anyway?
Some see a gap in the market - and realise they have the solution to fill it. Meanwhile, you could choose to be one of the many talented start-ups to turn their favourite hobbies or pastimes into a profitable business venture. Travelling is a popularly-cited source of inspiration, with somewhere in the region of 30% of entrepreneurs revealing they became inspired whilst travelling at home or abroad.
Even if you don’t have a ground-breaking business concept, you could still become a franchisee, or use a tried-and-tested business model if you’ve set your mind on running your own business. So even those who have yet to be struck by the muses have options to be their own boss.
Thomas Davies founded his company, Temporall, to provide data analysis services focused on improving company culture. He told us: “One of the things you find as the founder of a startup is that you often end up doing 25 different roles.” Nevertheless, whilst performing the roles of CEO, CFO, CMO, and more, he found the experience to be a positive one: “This is my first experience of doing my own startup, and it’s wonderful, because you’re literally learning new skills and building new relationships every single day, so it’s been a real journey for me.”
Rather than be a drawn out and complicated procedure, establishing a business is a straightforward process which can be completed in as little as one day. You can do so by following just a few easy steps:
Check if being self-employed is right for you.
Register your enterprise – let HMRC know you’re becoming self-employed. The most common models to register as are sole trader, limited company, or partnership.
Insure your business against the unexpected. You should seek the best deal which protects you against accidents, theft, and other threats which may be specific to the nature of your business.
Naming your company can be the most enjoyable aspect – though the name you trade under should be unique, and not already taken by another business.
Banking business accounts are typically required, as your business is a separate legal entity to you.
Comply with regulations such as licensing, health and safety, and data protection in order to avoid any problems down the line.
Accounting is necessary to maintain records of all costs and sales. You could appoint an accountant, or establish your own simple book-keeping system.
Premises from which you intend to operate your business will require consideration. Will you rent office space, or work from home?
A model business needs a business model
From coffee shops to property development, each business idea may be subject to different requirements. Depending on the type of business you are setting up, one business model may be preferable over another.
For example, if you intend to operate your business by yourself, establishing yourself as a sole trader may be the ideal. For greater ambitions, there are ten further business models to fit your entrepreneurial needs:
‘Ordinary’ Partnership: a non-legal agreement which can be easily dissolved, but should still be registered with HMRC for tax purposes.
Limited Partnership: a ‘limited’ partnership is made of ordinary and limited partners. Liability for limited partners extends to the amount of money invested, or personal guarantees to raise finance.
Limited Liability Partnership (LLP): at least two designated members with extra legal responsibilities placed on them. Must register and report with Companies House, though this model affords members some protection in troubled times.
Private Limited Company (LTD): company finances are separate from owner’s personal finances, and can be limited by shares or guarantee.
Private Unlimited Company: no limit on the liability of members, and may or may not have share capital. A rare model, legal advice is strongly recommended prior to establishing.
Public Limited Company (PLC): public share value of at least £50k, with at least two shareholders and two directors. The only model able to raise money by selling shares to the public.
Community Interest Company (CIC): run primarily for community benefit, rather than that of members or shareholders. Often take the form of leisure centres, co-operatives, or community trusts.
Right-to-Manage Company (RTM): run by leaseholders who perform management functions of a landlord, such as repairs and maintenance. Must be a private company, limited by guarantee, with a RTM objective stated.
Societas Europaea (SE): a trans-European company, which can be formed in a number of ways, such as a merger. Share capital at least £50k.
European Economic Interest Group (EEIG): an association of businesses or individuals operating across national borders, aiming to develop the economic activities of members.
You’ll want to do your research on these models, as different advantages – such as tax-saving – apply differently. A major asset to your venture will be to find a capable accountant, if dealing with this aspect of the business brings you out in a cold sweat. You can also find tax-saving schemes, saves costs on office equipment expenses, and claim National Insurance allowances to reduce your bill.
Temporall’s Thomas Davies found that: “One of the things that I think you have to do as a founder is find the right people that can work with you to understand your own identity, your core values, and to make sure that you get a bunch of people working around you that ‘get it’ and who really care deeply about you and the organisation.”
Common advice is to hire staff who share your vision or goals, don’t be afraid to ask for advice, and be willing to adopt change to let your baby grow – you may find greater success than you anticipated, or later realise you’re evolving into a different market than that which you began: Finnish corporation Nokia began life as a pulp mill creating toilet paper, and has functioned within various industries over the generations before becoming the mobile phone giant it is today.
You may also be considering which time of year is best to establish your entrepreneurial ventures – the most common is March (60k new businesses) whilst August (44k) and December (40k) have the least new business incorporations. This doesn’t necessarily reflect a strategic advantage, rather convenience – August and December are popular holiday times, both for entrepreneurs and those who may help them set up, such as accountants.
Avoid the Zombies
Naturally, in these situations, the business will need to either increase their earnings, or reduce their outgoings to tip the balance. For any business, this is far from ideal. Small businesses can be saved with a cash injection, though for larger corporations caught treading water it may be a much greater issue.
In such cases, the HMRC in the UK may agree to negotiate a plan for payments over a longer period of time - known as Time to Pay (TTP), they are designed for viable businesses experiencing temporary cash flow issues. Though as with all zombie outbreaks, avoid the bite as prevention is better than cure.
Apply for funding
There exists a steady variety of options on how to fund your new business – some offer stability at the expense of control; others involve more risk, but allow you greater freedom.
Self-funding is perhaps the most direct source, and most risky. You keep control, but unless you are very wealthy already, you may not get your start-up off the ground, and could lose your savings.
Friends and family could be a low-hassle investment answer, but if the venture goes south, you risk souring treasured relationships. Close ties are unlikely to be sophisticated investors able to provide adequate support.
Crowdfunding is often a web-based solution with a number of popular sites. It gives you the potential to reach thousands of investors, and achieve your financial goals through smaller amounts.
Grants, loans and other schemes are available from a number of sources to help your business grow. The UK Government website offers a range of suggestions from grants – money you are not required to pay back – loans, awards and advice.
Angel investors are typically affluent individuals ready to invest in worthy pitches. Some are forming investment groups to spread risk - think Dragon’s Den, without the national audience.
Venture capital firms provide early funding – though they are often looking for a large stake in the company to match their sizeable investments.
Remember: whilst every new venture has a portion of risk, you can minimise your chances of failure with a suitable business model, the right research, appropriate support, and ultimately, a confident outlook.
If you have whet your appetite here, and need more detailed business insight, a comprehensive programme such as BA (Hons) Business (CMI) is a great place to begin your journey to professional independence.
Master of Business Administration (CMI)
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