An essential checklist for business startups
Our business startup checklist covers 22 planning essentials that you might have to address when setting up a new business. Some of them may not apply to you at the moment, but it’s worthwhile considering each one, just in case you’ve overlooked something important. The last thing you want is an unexpected delay due to lack of research or a simple oversight. There will certainly be hiccups along the way, but they needn’t be caused by a lack of planning.
1. Research your Business Idea
Make sure your business startup idea is viable before investing too much time and money.
- Examine the market and industry you will be entering:
- Is it sustainable or dwindling, saturated or under-served?
- Is there significant demand or a real need for your product?
- Analyse the competition.
- What do they do well?
- Where are they failing?
- Can you compete with them?
- Use your findings to your advantage.
- Research your potential customers.
- Where are they located?
- How will you reach them?
- Analyse their demographics to obtain useful insight.
Test out your idea by conducting surveys, questionnaires and/or focus groups. Ask friends and family for their honest opinions. This will give you a better understanding of whether or not your business could be successful. You will likely receive critical feedback that could help you improve your product or service.
2. Write a Business Plan
You will need a business plan if you intend to approach investors, banks, lenders or specialist advisors. They will want to see a detailed outline of what you plan to do and how you plan to achieve it. They might ask for financial projections for start-up and running costs. You will be expected to demonstrate the viability and sustainability of your idea.
If you’re setting up on your own and don’t intend to approach third parties for assistance, it’s still a good idea to write a business plan. It will help you to stay organised and monitor your progress.
3. Choose a Business Name
The name of your business is incredibly important. It’s worthwhile dedicating sufficient time to this task. You will likely come up with lots of amazing names at first, then you will realise they are not quite right. You will also come up with some downright ridiculous ideas throughout the course of your brainstorming. The process can be enjoyable, hilarious and frustrating all at once. But eventually you will have the lightbulb moment when the perfect name just pops into your head.
Don’t rush the business naming process. Give yourself time. Write down everything you think of. The most unlikely thing could lead to that winning name. Think about your products and services. The values and mission of the business. The market you are entering. The people you are targeting. All of these things are useful. Ask friends and family for ideas. Test out your potential names to see what they think.
When you have a shortlist of proposed business names, do an online check against the register of companies at Companies House. This will enable you to find out if a name is available to register or has been registered by an existing company. You can’t register a company with the same name as an existing company, so it is important to check as soon as possible.
Finally, before you register your company, make sure that your proposed business name is not the same as a registered trade mark. You can check the trade mark register online.
4. Choose a Legal Structure
Have you given any thought to the type of legal structure you will use to run your business? There are many options available, but the most popular structures are:
- Sole trader.
- Private company limited by shares.
- Private company limited by guarantee.
- Limited Liability Partnership (LLP).
Sole traders are self-employed individuals who have personal liability for all business debts. You will have to register with HMRC and pay Income Tax and National Insurance on your earnings at the end of every tax year. You will be responsible for preparing a Self Assessment tax return to report your annual income and tax liability.
Limited companies must be incorporated at Companies House. They can be owned and operated by one person or multiple people. There is more ownership flexibility with this type of business structure.
A limited company exists as a legal ‘person’. This means they are responsible for their own liabilities. The owners of a company are protected by limited liability. They are not personally liable for business debts other than what they agree to contribute to the business.
Limited companies are often more tax-efficient than sole trader businesses. A company limited by shares is most suitable if you want to keep business profits for yourself. A limited by guarantee structure is better suited to non-profit businesses and charitable enterprises.
For comprehensive guidance on the benefits and process of limited company formation, click here.
Limited Liability Partnership
A great structure for accountants and other types of professionals who want to run a partnership with other people. You need at least two people to set up an LLP. This type of business structure is very similar to a normal partnership in terms of ownership structure and taxation, but it provides limited liability to all partners.
For more information on the benefits and process of setting up a limited liability partnership, click here.
5. Business Bank Account
Once your business has been registered, you can set up a business bank account. This is the best way to manage your finances effectively.
Avoid using your personal bank account when your business is up and running, unless you are a very small sole trader. It will just complicate matters. Start as you mean to go on and draw a clear line between business and personal finance.
6. Finance for Business Startups
You must give serious thought to how you will finance your business. This includes startup costs and expenses, as well as running costs and personal income management. Many small businesses are self funded. Others require financial assistance. If you are planning to self fund, you might have to keep your existing job while setting up and establishing your business.
There are many ways to finance a startup business, including:
- Personal savings.
- Borrowing from friends and family.
- Small business loans.
- Overdrafts or 0% credit cards.
- Investors or business angels.
- Government loans or grants.
To find out if you are eligible for any type of government-backed financial support, click here.
7. Suppliers and Manufacturers
Give yourself lots of time to research potential suppliers and manufacturers. Ask for prices, including VAT and shipping costs. Get samples of materials or products before placing large orders. Find out about their minimum order quantities (MOQs). If a manufacturer is going to produce products for you, place a sample order of prototypes to ensure the quality and workmanship is up to scratch. Determine timescales for production.
If you’re dealing with overseas suppliers and manufacturers, it may be beneficial to register your business for VAT before placing any orders. Businesses in certain countries are required to charge VAT to overseas customers that are not VAT registered. This could save you a great deal of money.
8. Business Premises
Running your new business from home is the best way to keep costs down, especially in the early days when you’re just starting out and not making much (if any) profit. However, that’s not always an option for everyone.
If you need dedicated business premises, give yourself plenty of time to find somewhere appropriate. You need to think about the size of premises you require. How much you can afford to pay? Which location will work best for your needs and budget? Should you lease, licence or purchase the premises?
Agents and brokers can assist with the search. You should also visit potential areas yourself and look around for available properties. Ask business contacts and local businesses in your desired area if they are aware of any available premises. Can they recommend an agent, broker or property manager?
9. Company Logo
Your company logo and business name will create your brand identity. They have to be appropriate and memorable. Try to come up with some concepts and designs yourself. This will lower your graphic design costs. Otherwise you’ll have to pay a lot more. Depending on your needs, you should expect to pay anywhere between £250 – £4,000 for someone to create a company logo. The more ideas and information you give the designer, the cheaper it will be.
Ideally, take a look online for local, independent graphic designers. If you’re on a tight budget, do not approach big firms because their fees are high. These types of city-centre firms tend to deal with bigger clients. Be clear about what you want. Tell the designer about your business, its values and your products. This will give them a clear understanding of what you want. You could also take a look at some DIY logo sites and create a free one yourself.
10. Websites and Social Media
Take a look at competitors’ websites for inspiration. Are they visually pleasing, easy to use, responsive, informative? Based on your findings, you can think about how you would like your website to look and behave. If your website is unappealing or difficult to use, people will leave. If I find a website confusing and I can’t find what I am looking for within a few seconds, I shut it down. It’s important to get it right or you’ll lose potential customers.
You can build a website yourself through a number of online sites. They provide standard, professional templates that you can personalise and adapt to your needs. Alternatively, you can get a web designer to create a site for you. Many independent graphic designers offer these services so you may be able to use the same person for your logo and website.
Social media is a really important consideration, too. It is one of the most effective and affordable ways to promote your business and connect with your target market. For some people, your business doesn’t exist if you don’t have a social media presence! Keep your accounts up to date. Post relevant and interesting content on a regular basis. Engage with customers to build trust, confidence and strong relationships.
11. Licences and Permits
Depending on the type of business you are setting up, you may require licences and/or permits in order to trade. Use this online tool from GOV.UK to find out if you need any.
12. Business Insurance
There are a number of different types of business insurance policies you might need, such as:
- Employer’s Liability.
- Public Liability.
- Product Liability.
- Professional Indemnity.
- Income Protection.
- Director’s and Officer’s Insurance.
- Buildings and Contents.
- Business Interruption/Continuation.
- Commercial vehicle.
- Landlords Insurance.
- Industry-specific insurance.
- Goods in Transit.
- Money insurance.
13. Data Protection and Information Rights
Data protection and information rights are often overlooked, but these are things that most businesses need to be aware of. If you will be holding information on any individuals, including customers, employees or suppliers, the Data Protection Act requires you to protect that information.
To find out more about your obligations, take a look at this guide.
14. Intellectual Property (IP) Protection
Intellectual Property relates to trade marks, patents, copyright and design rights. You may wish to protect an idea, product designs or a work of art. You can even protect your company logo to prevent others from stealing, copying, using and selling it without your permission.
15. Money Laundering Regulations
Certain types of businesses are legally required to comply with Money Laundering Regulations. This involves carrying out ‘customer due diligence’ measures to ensure your customers are who they say they are. The most common types of businesses these regulations apply to include:
- Financial and credit businesses.
- Tax advisors.
- Insolvency practitioners.
- Independent legal professionals.
- Estate agency businesses.
- Company formation agents.
Take a look at this guide to find out if these regulations apply to you.
16. Business Addresses
If you are setting up a business as sole trader, you will need to provide a trading address for HMRC. You will also need a business address for your customers and other contacts. A customer returns address may be necessary if you are selling physical items. You can use the same address for all of these purposes if it is suitable.
If you are setting up a limited company or limited liability partnership, you will need a registered office address for the business and a service address for each director, secretary, subscriber and Person with Significant Control (PSC). You will also likely require a business address and perhaps a customer returns/shipping address. Perhaps you can use just one address for all of these purposes if it is suitable.
17. Labelling and Packaging
Not all goods require labels but the vast majority of retailers do have to label their products. Retailers must state the price (including VAT), quantities and metric measures (where applicable) on product labels.
If your sell food and drink, products for children, footwear or precious metals, there are special rules you have to follow. Safety information must be included on any products which are dangerous. If you sell textiles, including furniture, flooring, clothes and fashion accessories, you must adhere to the EU Textile Products (Labelling and Fibre Composition) Regulations 2012.
All information displayed on labels must be accurate. It is a criminal office to include anything misleading on product labels.
The way your products are packaged and presented to your customers makes a lasting impression, particularly if you are selling luxury items. The right packaging can really add value to your products.
The Food Standards Agency imposes strict rules on packaging food and drinks. There are also special rules for medicines and potentially dangerous chemicals. Furthermore, the Packaging (Essential Requirements) Regulations 2015 (SI 2015 No. 1640), requires all businesses to reduce the impact their packing has on the environment by adhering to volume and weight restrictions and ensuring all materials can be ‘recovered’.
18. Product Delivery and Returns
If you will be sending goods by post, you must provide a secure and reliable delivery service. Think about how you will send your products. How much will you charge? What delivery options will you offer? Will you provide international delivery? Look at your competitors’ delivery policies and fees for guidance. Match or exceed their services.
Depending on the volume of orders, you might have to use a courier. If you only have a few items to deliver on an occasional basis, you may be better served using Royal Mail and Parcel Force.
When it comes to customer returns, you have certain legal obligations. You must offer a refund if a product is faulty, not as described or does not do what it is supposed to do. Customers are entitled to a full return if a product is returned within 14 days. Many businesses increase this to a 30-day period.
You will also have to think about whether to offer free returns. In certain situations, businesses have to pay return postage fees, i.e. when goods are faulty. Offering free returns can have a positive impact, even if it’s just for first orders or on an ad-hoc basis to encourage sales.
19. Business Stationery
You will most likely need various types of stationery. Ideally, it should be customised with your business name, logo and contact details. Companies and LLPs are legally required to state their name, registration number and registered office details on various forms of stationery.
The types of stationery you may require include:
- Compliment slips.
- Business cards.
- Purchase orders.
- Returns slips and labels.
- Till rolls.
- Leaflets and flyers.
- Discount and gift vouchers.
- Printed envelopes and labels.
Stationery is often an afterthought but it shouldn’t be. It is an effective way to promote your business, create a lasting impression and establish a strong brand image. Use good quality paper, avoid cheap images and clip art. Try to be environmentally friendly wherever possible by choosing recycled paper and eco-friendly inks.
20. Employing staff
If you plan to employ other people to work for your startup business, you will have a number of obligations and responsibilities:
- Register with HMRC as an employer.
- Operate payroll.
- Adhere to heath and safety requirements.
- Take out Employer’s Liability insurance.
- Enrol eligible employees in a workplace pension scheme.
For more information on becoming an employer, take a look at this guide.
21. Marketing Plan
A marketing plan may be the key to success. If you don’t market your startup business, no one will know you are there. You have to introduce yourself to the world by telling them you exist. Give them a reason to care. Marketing is a continuous process, even when your business is established and successful.
22. Tax and Accounting
Once you have set up your business, you will need to register with HMRC for certain taxes. This may include Corporation Tax, VAT, PAYE and Self Assessment. It depends what legal structure you choose. This is when the joyous tasks of bookkeeping and accounting come into play.
I would advise consulting and accountant for assistance and guidance on running your business in a cost-effective and tax-efficient manner. Concentrate on the fun aspects of starting and growing a business and get someone else to do the tedious paperwork. You won’t regret it, unless you’re a glutton for punishment.