Every business starts with an idea. The tricky part is coming up with it.
Inspiration for business ideas can come from anywhere, be it a passing comment, or hours of dedicated idea-generation time. The following tips might help formulate your business idea:
If you have a lot of knowledge or experience in a certain sector or subject, make sure your business idea incorporates it. Starting a business can be tough at times, so it’s always helpful to have the relevant tools and knowledge at your disposal.
Recognising your strengths goes hand-in-hand with knowing where your limitations lie. You should ask yourself questions like:
- What don't you know anything about?
- What is outside your budget?
Using questions like these to set boundaries can be useful when you're working on ideas, to stop your imagination from running too wild. This isn’t to say that you shouldn't think big for the longer term - but it’s important to be realistic with your goals, especially when you're first starting out.
Click the link for some frighteningly ambitious start up ideas.
Setting boundaries doesn’t mean that you can’t think outside the box. Sometimes lateral thinking produces the best business ideas. For inspiration, here is a showcase of some of the most unusual, yet successful, business ideas.
It’s important to harness your creativity. If you’re struggling to come up with ideas for starting an online business, or if you’re not feeling particularly imaginative, try out some of these tips to improve your creativity.
It’s hard to say, exactly, what defines a good business idea. But, there are a few tips you can follow to make sure you’re on the right track. You can start by asking yourself the following questions:
Is your idea rooted in expertise?
Your business idea should be in a field that you are familiar with or where your skills are relevant. Stepping into an unknown market is not advised, but if you are, you may want to consider going into business with someone who does have the relevant experience and knowledge that you require.
Does your idea have a purpose?
Good business ideas have a clear purpose. Without a distinct function, there’s a good chance that your target market won’t be interested in your idea. You should aim to solve a genuine problem that people experience. What task could be done better, cheaper, faster, or more efficiently? Take a look at these problem-solving businesses for some helpful examples.
Is there a worthwhile market?
You need to consider the size of your market, the potential for growth, and your likely competition when you're deciding whether or not your idea is viable. It’s a good sign if your idea fills a niche or gap in the market, but be sure to question why the gap hasn’t been filled before.
Alternatively, if your product is similar to others, what is your unique selling point (USP)? Without one, you may struggle to stand out and compete in a crowded market.
Is your idea sustainable?
It’s important that your business idea has the stamina to last for a long time. Will there always be a need for your product or service, or will it be a trend that dies quickly? Consider if your idea could develop in the future and present opportunities for your business to expand - or if your business could incorperate new ideas and product developments.
A good business idea will be able to withstand even the toughest scrutiny, so don’t be afraid to constructively criticise and analyse your ideas. It’s good practice to rigorously test your idea and scrutinise it from every possible angle. It’s better to discover any major flaws at the start than somewhere further down the line, after you’ve invested your time, money and effort.
Once you’ve dissected and explored your idea from all angles, ask your friends and family to do the same. They may be able to consider the idea from a new perspective, or spot flaws that you've missed.
You can also test your idea against this downloadable business idea evaluation checklist just to be certain of its strength.
If you do find any issues, you should determine how big they are. Significant problems can sometimes be solved with some tweaking. But, if this is not the case, you may have to head back to the drawing board.
Once you’re confident that your idea has potential as a business, it is time to begin your market research.
The main aim of your market research is to collect information about the landscape of your potential market. You will be finding out vital information such as who your audience are, which makes market research one of the most essential parts of setting up any business.
Whether your target audience is the general public (business to consumer - or b2c) or other businesses (business to business - or b2b), conducting well-planned and thoughtful market research can help you gain in-depth insight into your key demographic.
You would typically look to find out:
Collating all of this information for analysis is time consuming, but it’s also time well spent.
So, where should you start?
There are six core methods used in market research. Each one is designed to give you the most accurate, insightful and up-to-date information possible. These are:
Developing concise questionnaires can help you analyse a representative sample of your target market. Survey Monkey is the perfect place to get started if you want to create an online questionnaire.
Once you’ve created your survey, getting people to complete it is a big part of the battle. Here are a few articles that offer tips to help encourage engagement:
To conduct research with a focus group, you need to gather a cross section of individuals who are representative of your target demographic. Typically a moderator will then start off a discussion, and encourages participants to continue the conversation themselves, whilst you observe. However, there are multiple different focus group formats.
Interviews are perhaps the most commonly used market research method for businesses looking for in-depth information. They can be as formal or informal as you’d like, varying from a free-flowing conversation, to a more structured set of questions.
There are many different types of observational research you could use to assess consumer behaviour. However, some methods come with large price tags. If you wish to explore these methods, here are some methods of observational research you might look to explore.
This is the process of monitoring individuals behaviour while they're interacting with your product or service.
You observe a relaxed interview with an individual in your target market that happens while they go about their normal activities in varying environments.
These interviews are conducted in a chosen individual's home, where they are more likely to feel relaxed, allowing you to create a lifestyle profile for your target market.
Understanding how people interact with products when shopping in-store can provide user information for your website, such as preferences and decision-making.
This involves hiring an individual to secretly use a product or service in order to attain an accurate representation of a customer’s experience. This can then be analysed to improve future customer experiences.
Another valuable way to conduct market research is to spend time delving into your competitors’ activities. After all, if you’ve identified them as your competitors, they must be doing something right. By taking a look at their methods, you can find out what is and isn't working for them, and factor that knowledge your own efforts.
Some different types of competitor research methods include:
Taking a look around competitor websites is the easiest way to get a sense of what they sell, how they sell and what their prices are. You should take note of what you like about their site as well as what you dislike. Obtaining this basic information early on can be useful in developing your own product lines and pricing strategies.
A simple Google search of your competitors can reveal a lot, including: where they’re being mentioned the details of the positive and negative feedback they’re getting. You can even use tools such as Mention to create alerts and see what’s happening in real time.
Another way for you to easily monitor your competitors' feedback is through customer review sites such as Trust Pilot and Review Centre. Here you can find information on how your target customer base feels about your competition, allowing you to identify areas that you can improve upon.
Following your competitors’ activities on social media platforms such as Facebook, Twitter, Pinterest and Google+ lets you see who they’re interacting with and who's interacting with. It also allows you to assess their engagement strategies, as well as any promotional activity they're using to generate additional customers and sales.
You can find out which sites your competitors are linking to online and who is linking to them with tools like Open Site Explorer. This makes it easier to identify potential sites to target in your own content marketing strategy.
Reading through competitors’ blog posts to see which news stories and content they’re covering will help you further understand the issues and topics that your target demographic align themselves with. You can then start offering a commentary on similar kinds of stories through your own blog and social media accounts.
If your competitors have newsletters, sign up to receive them. This will give you an insight into exactly how they communicate directly with your shared target market.
You can use tools like AdBeat to find out exactly where your competitors are advertising, which can give you an edge when exploring your own advertising opportunities.
Here is some general advice to consider when you’re carrying out your market research.
Set clear goals
Make sure you have a clear understanding of what you want to achieve from your market research. This can help you formulate questions that you should aim to answer, such as:
Is there a demand for my product or service?
What sales figures can I expect?
Who is going to buy my products?
What is the best price for my product or service?
Answering these questions will help inform your future business decisions.
When you’re engaging with people, you should make the process of communicating as easy as possible. Few people want to fill out a five-page survey, so be mindful to create correspondence in a streamlined and economical way.
Ensure confidentiality by adequately protecting information you collect from surveys, online accounts, or any other platform you might use to obtain personal details.
Make sure the amount of data you’ve collected can be measured and that it provides you with tangible results. It’s no good doing research if you can’t realistically interpret the findings.
Keep it relevant
Use a sample group that is representative of your target audience. If you use a sample in your research that doesn’t represent the correct age or gender you wish to target, or it is irrelevant in some other way, your research becomes a pointless exercise in futility.
Look for honesty
When asking potential customers their thoughts on your product or service, an upfront question like "would you buy this?" will rarely result in a truthful answer. However, Rob Fitzpatrick offers some helpful advice to cut through to the truth in his post The 2 (or 4) most important custdev questions.
In conclusion, don’t underestimate the value of the insight you can gain from thorough market research.
While you may think you know your customers and competitors, there's always more knowledge to learn. Dedicating time to conduct market research will help you make sure that you’re starting your online business on the right track.
Your market research should be an ongoing process that you return to as you expand and grow. When you're starting out the information you've learned about your target audience, market and competitors, should inform the creation of your business plan. Let's look at that next.
A business plan is a document that outlines the goals you have set out to achieve with your business, as well as how you intend to achieve them. This is your opportunity to assess your idea and determine whether it can be turned into a profitable business model.
Many entreprenuers use their business plan to obtain financing, but you should also use it to:
A business is made up of many individual goals and objectives that need to be brought together if you want it to be successful. A comprehensive business plan helps you to stay organised by setting out your steps clearly, making sure none are overlooked.
Monitoring your goals helps your business stay on track, which is important for growth. Your business plan is a constant reference point that allows you to timetable your activities and monitor your business’s progress in relation to the targets you’ve set yourself.
A business plan is an opportunity to scrutinise your ideas to determine if they are profitable. If you find a problem, now is the time to develop your idea and identify potential fixes, so you don’t come unstuck further down the line.
You should look to gain purpose and vision from your business plan by considering future development. This not only involves identifying opportunities for business expansion, but also anticipation of potential obstacles that you may encounter or risks that you may be exposed to.
In addition, there are a multitude of other benefits of creating a business plan.
While a thoroughly developed plan does not guarantee a successful business – that’s going to require lots of hard work and determination – creating and committing to a carefully thought out business plan can really improve your chances of success.
So, if you’re ready to progress your idea into a plan of action, let’s get started!
The strongest business plans consider everything: every step, every outcome, and every possibility. The Prince's Trust offers some really useful templates to help ensure you don’t miss anything out.
Click here to download The Prince's Trust business plan template. (MS Word document - 393kb)
Click here to download The Prince's Trust financial forecast template. (MS Excel document - 52kb)
Once you have downloaded the templates, you can begin working through them with our handy step-by-step business plan guide. (MS Word document - 34kb)
There are no hard and fast rules to follow when writing a business plan, but there is a lot of useful advice available. Here are our tips to help you get the most from your business plan:
A business plan is often viewed solely as a useful tool for acquiring investors, and it’s important to realise that this is not its only purpose. Impressing investors with an unrealistic financial forecast will set alarm bells ringing with potential stakeholders, so you should always take measures to make sure your financial predictions are as accurate as possible.
Here are some useful tips to help you draw up a budget and keep it realistic.
Consider every eventuality
To get the most out of your business plan, you should consider every possible eventuality - good or bad. You may find it difficult to picture negative outcomes at such an early stage of planning, but considering adverse outcomes now could pay dividends in times of need.
Consider some of these common problems that many business start-ups face.
Writing your business plan is only the start. The most successful businesses constantly refer back to their business plans and update goals to reflect their ever-changing strategies. Not only will this help make sure your plan properly represents your business, but it can also help you identify potential areas for expansion and development.
Before you start writing a business plan, you should first consider how you’re going to present your information. Handing over page after page of text is the fastest way to lose your reader’s attention, so when you have a lot of information to present, you should use tables, graphs, lists and break-out paragraphs to improve its accessibility. This will help break the information down into manageable chunks, while emphasizing key points.
For ideas on how to liven-up your information, have a look at this blog post.
Appeal to human nature
This is a good way to improve your reader engagement. For example, people subconsciously search for patterns when given data, even if none exist. So by deliberately presenting data in patterns, you can subliminally make the information more appealing, and improve the chances of retention.
Finally, you should make sure that your business plan stands out. Be creative, and don’t worry about using overly formal language. As long as it is an accurate representation of you and your business, then potential investors should respond to it in a positive way.
For tips on making your business plan stand out, click here.
If you’re unsure about any element of your business plan, it can help to seek the advice of a community, or mentor scheme, such as Spark Labs. This means you can get on hand support from experts throughout the startup process.”
Once you're happy that your plan is comprehensive, perhaps you'll move onto the challanges around naming and branding of your business.
Naming your business is an important step in the start-up process. It’s likely to be the first thing a customer notices when they come into contact with your brand, so it’s important that the name accurately represents your business ethos. A good way to achieve this is to follow these ‘Dos’ and ‘Don’ts’ when generating your own business name ideas:
Your business is unique, as are strong company names. There’s nothing wrong with taking inspiration from other business names, but don’t simply copy them. Plus, you could get into legal trouble by copying someone else’s idea.
Names that use unfamiliar or invented words, such as 'Xobni' and 'Shpoonkel', can be difficult for customers to pronounce and remember, which makes it hard to build familiarity with your brand. Successful business names are simple, short and unique. Coming up with an effective name for your business can take hours of thinking time. However, some of the best business names have come from less-traditional methods. Here are some examples of unique business names and how they were dreamt up.
Think what your domain name will be when you set up a website. Don’t make the same mistakes as the computer recycling company, ‘IT Scrap’ , whose unfortunate web address was www.itscrap.com. It is also worth considering how your name will translate onto social media sites – for example, what would your Twitter handle (@businessname) be? It is useful to remember that hyphens are a good way to separate words in a domain name, whilst maintaining readability.
You should also consider shortening your web address, especially if you have a long business name. British Airways, for example, own britishairways.com, but they have also registered BA.com. Adding a word to your domain is another good way to secure a unique web address with your business name. For example, Firefly Legal Services included the word ‘legal’ to secure fireflylegal.com.
Naming your business after yourself (for example The John Jones Co.), is not a good idea as it may put buyers off if you ever decide to sell your business.
You could even consider using a professional naming service if you’re struggling to choose a company name. It's important to take your time when deciding, because once it’s done, it’s not easily changed!
If you're still struggling to come up with a name for your business, why not take a look at Name Robot's top tips for creating a catchy company name.
Of course, it’s not mandatory for your online business to have a logo, and while you're setting up it’s unlikely not going to be a priority. However, there are clear benefits to incorporating a visual element and it is a challenge you're probably going to need to tackle sooner or later.
When you are developing a visual identity for your company, you might heed the following advice:
Yes, it will cost money, but it could be money well spent. If your logo doesn’t look appealing, then neither will your business. A professional designer can help you to create a company logo that will really stand out and help you portray a unique business identity.
Think of the leading businesses in any sector… Now, think of their logo design. For the most part, they’re all very simple. Take Nike as an example: their logo is a simple design, but is such a strong symbol that their products and advertising campaigns often omit the brand name altogether. Logos should not be overly complicated or cluttered, but easy to look at, recognise and remember.
If done appropriately, this will strengthen your brand, making your name more memorable to customers. It could be the case that your brand name does not lend itself to a brand logo, for example if it's particularly long or complicated. If you do decide to use your company name in your logo, you may also want to consider designing your own font to help strengthen your brand identity.
Choose colours carefully and consider their psychological impact. Invest time in experimenting with colours and shades that complement each other, and discard ones that don’t. You may find it useful to look at interior design sites to get a feel for attractive colour schemes.
Communication is visual as well as verbal, so it’s important that your logo accurately communicates the name of your business. Take this 'Doghouse Brewing' logo as an imaginative example. Bear in mind, however, that your logo does not necessarily have to represent the products or services you provide in a literal way - for example, McDonald’s and Apple’s logos represent the company name but have nothing to do with fast food or computers. You can get very creative with your logo – look at the ‘hidden’ symbolism in these designs.
Business slogans can add value to a brand, but they are not essential. Your company will probably not be disadvantaged by not having one but choosing a bad one could harm your brand. So, the first thing you should think about is whether or not your brand could benefit from a slogan.
This blog post can help you decide if your brand needs a slogan with 5 simple questions.
Note the use of punctuation in Nike’s ‘Just do it.’ and Apple’s ‘Think different.’ The full stops make these business slogans commanding, direct and memorable. L’Oreal’s ‘Because you’re worth it’ makes a gurantee to the buyer, and Lay’s ‘Betcha can’t eat just one’ a challenge while also reinforcing the exceptionality of the product. Click here for some more strong slogan examples.
But, if you're still interested, here's what it takes to write a good business slogan.
Your aim should be to build and evolve your business’s brand and align it closer with your target audience. For advice on building and moving your brand forward, read Small Business Opportunities' Top 5 tips for building a brand.
Once you are confident in your name and brand identity, you are ready to move onto the next step.
Before you can register your business and present it to the big wide world, you need to identify which structure it will operate under.
Most businesses operating in the UK fall under three categories:
There are different legalities, risks and benefits you will need to consider before you can start trading. Defining your company as one of the above can impact your online business in a number of ways, including:
Becoming the sole owner of a business is probably the easiest way to manage a new online business.
This type of business structure is flexible, allowing you to either work alone or employ staff. It can also allow you to formally trade under your own name or a new business name. However, it does mean you shoulder sole responsibility for the business, including debts and legal claims.
Below you can find a table with the pros and cons of running an online business as a sole trader.
|Setting up is quick and easy||You’re personally liable for business debts|
|Lower tax payments||Fewer social security benefits|
|Lower National Insurance||Limited finance raising opportunities|
|Simple and unaudited accounts||Harder to sell on|
|You can form a limited company at a later date||Assets are more at risk because of personal liability|
To become a sole trader, you will first need to register as self-employed. This means it will be legally recognised that you’re working for yourself.
For more information on any of these pros or cons, visit gov.uk.
Once you've set up your business, it's possible to change the legal structure that you operate under at a later date. Other legal business structures include business partnership and limited companies, each bringing their own advantages and disadvantages to running a business.
Partnerships operate in a similar way to sole trading businesses, but with a few noticeable differences.
With a business partnership, responsibility for the business is shared between one or more partners, meaning you don’t have to take on the full responsibility of running the business yourself. This also gives you the option to raise more funding for your business as there are more people to contribute.
Find out more about the pros and cons of entering a business partnership here.
To register your business as a partnership, you will need to first register for a self-assessment with HMRC. The government website can show you how to do this.
If you would like to set up and run a private business in the UK, you can register as a limited company. However, you should take these pros and cons into account first:
|It is easier to raise larger sums of money for your business||National Insurance payments are higher|
|In most cases your liability is limited to the amount that you invest||It can be difficult to cease trading|
|A limited company carries more credibility||There are certain instances where you can still be held to personal liability|
|You can choose to sell only part of the business||Annual accounts are more complicated|
|High earning tax advantages are available||Earning £6.5 million+ means you are required to conduct an independent audit|
If you do decide to register as a limited company, you will need to:
There are certain types of tax or VAT your new online business may be required to register for:
This type of tax is only applicable to sole traders. You can register for this using the gov.uk website.
The government website can help to guide you through the ins and outs of whether or not you need to register to pay National Insurance contributions.
Your businesses may be required to register for VAT if it earns upwards of £79,000 over a 12 month period. You can find out more from HM Revenue and Customs (HMRC).
Corporation tax is only applicable to businesses who decide to register as a limited company. Click here for more information and to register for Corporation Tax.
Please read Step 12 for more in-depth advice on paying your business’s taxes.
When you’ve thought of the perfect name, designed the perfect logo and crafted the perfect brand identity, you’ll need to register your company name.
You need to make sure that your company’s name is not being used by anyone else. You can do this by searching online including social media sites, and in directories such as the Yellow Pages. You should also look at the Companies House name check service and at the UK trademark register, which can be accessed on the International Property Office site. Although there's no way of guaranteeing that someone isn't already operating under the name you've chosen, following these simple steps can significantly reduce the chances and save you potential legal trouble down the line.
After your initial checks, it’s time to bring your business into existence through registration. The process of doing this can vary depending on the nature of your business. Find out what steps your business may have to take here.
You can also register a trademark for your business. A trademark is anything used to represent your business, such as a logo, slogan, or business name. You can register a trademark with the UK Trade Marks Registry. A registered trademark means that you have exclusive rights to the business it represents, and no one else is legally allowed to use that trademark without your permission. To find out more about the advantages of having a trademark click here.
The types of licence you'll need to apply for when setting up your online business will depend on the type of business you’re running.
To give you an idea of the licences you may need, here are some common examples:
You can use the gov.uk website to find out which licences your business might need using their licence finder tool. Your search can be filtered based on your business’s industry, the type of activities you want to carry out, and the location of your business.
You can also find a list of licences and permits, along with their application forms, here. It is possible to apply for some licences online using these forms, but others may require you to contact certain governmental departments.
Once your business is registered and licensed, it's time to start thinking about financing your business, which is covered in the next step.
There are a lots of options available for those looking to fund their online business idea.
After forecasting figures in your business plan, you should have a good idea of how much financing you are going to need to get your business up and running.
Every business starts from a unique financial position. You may be in a fortunate situation and already have personal finances in place to invest in your business. If not, you will need to consider one of the following:
There's plenty of choice when it comes to bank loans, with many lenders offering your business different interest rates and benefits. However, getting funding from a bank depends on whether or not your application is successful. You will need to make sure:
If the amount that you apply for is not in proportion with the size of your planned business, your loan application will not be taken seriously. Your business plan must account for how the money will be spent if you’re to be successful in your application.
Banks will always favour safer investments when offering business loans. Proving you have lot's of experience in your chosen market is a great way to reassure the banks that you are a solid investment with good knowledge of your industry.
Having a good credit history will put a lender at ease and increase your chance of getting a loan.
Offering collateral will help strengthen your loan application. Lenders like secure investments, so you may be able to offer business or personal assets as collateral against the loan to improve your chances of a successful application.
The main reason that many small business loans are denied, or delayed, is because of incomplete applications. Before applying for a business loan, you should first speak to the bank’s lending officer to find out exactly which documents you need for your application. Traditionally, this includes: proof of credit history, projected financial statements, a detailed business plan and personal guarantees.
Remember, banks take into account lots of factors that can influence the overall price of a loan, such as collateral and interest rates, so it's important that you shop around to make sure you're getting the best deal possible.
This may not be an option for every start up, but some entrepreneurs may be able to find financial support through family and friends. Obviously, lending money from those close to you harbours its own set of challenges, but it can provide a flexible, and often low-interest, way to make up any gaps in your funding.
Unlike a business loan, credit cards are easier to apply for and they offer more flexibility, but they generally have higher interest rates, which can ultimately reduce your margins. If you have a low spending limit, you may need multiple cards to generate the money you need to get started. If this is the case, it's important to keep track of your finances as failing to do so could mean falling into arrears. This can lead to poor credit and action being taken by collection agencies, impacting your business and personal financial situation for years.
For a full list of the pros and cons a small business credit card offers, click here.
For more information on credit cards available to your business, click here.
The government now offers a series of grants for new businesses, which you may be able to apply for. However, the application process often requires you to meet strict criteria, and even with a successful application, competition for grants is often high.
To meet the criteria you may have to realign your business goals, which will help strengthen your application. On the other hand, refocusing your goals can detract away from your own personal business objectives - and that could potentially slow down the growth of your business.
Click here for more information on the application process for individual grants.
Fortunately it’s not all bad news and bureaucracy. Government grants often come with little or no interest, which means that some financial pressure can be alleviated. In some cases grants are also offered with additional support, such as workshops to help you set up your business.
Remortgaging your house is a drastic step to fund your business, and we recommend it as a last resort. Of course, everyone’s decision will be made based on their personal circumstances, but it’s important to remember that this option brings lots of added pressure along with it.
For more information on the importance of finding the right way to fund your online business, click here.
If you find that you’re struggling to reach your funding target, there are other avenues you can explore to raise money. Rather than raise the entire amount, these methods could make up any shortfall you might have from your main sources of investment.
Crowd-sourced funding is a relatively new concept that matches entrepreneurs with a number of sponsors who each contribute a small percentage of the money needed to fund a business idea. Unlike a traditional investor who might be able to sponsor the full amount, crowd funding involves a number of smaller donations in order to reach the same level of financial support.
There are many different types of crowd-sourced funding and you may find that one suits your business’s needs better than the others.
There are two common types of crowd funding. These are:
Similar to applying for a bank loan, credit-based crowd funding introduces prospective borrowers with projects that meet their lending terms, including: rates of interest, monthly repayments and length of loan. This model makes finding funding easier for all business start-ups, but you must carefully read the terms on which the loan is offered.
This model allows entrepreneurs to pre-sell a product or service in order to launch a business without risking debt or equity. Success in reward-based crowd funding lies in the ability to convince others of your business idea. As such, exciting and innovative products - like new electronic gadgets - tend to thrive using this funding method.
Typically, there are two models used in crowd funding, Keep-it-all (KIA) and All-or-nothing (AON). The KIA model allows the business to keep any money raised, even if the specified target is not reached. This is more likely to be successful if you are only looking to raise a partial or small amount. On the other hand the AON model states that the business can only keep the amount raised if the specific target is reached. This has proven more successful with larger amounts of funding.
For help finding the right crowd funding platform for you, click here.
Offering product presales can help your business generate an extra cash flow. While presales can be useful in showing there's a genuine interest in your product, you may run the risk of putting unnecessary pressure on your start-up by setting unrealistic presale targets.
If you are struggling to find funding for materials or tools, many small businesses can negotiate a trade credit account from their suppliers. This is like running a tab. By guaranteeing the supplier your custom, you can pay for the materials after you’ve used them – a great way of offsetting any expensive upfront material costs.
If you provide a service you could consider invoice financing. This allows you to borrow the majority (around 85%) of the money to complete the job from an invoice financier, who will then collect the full amount from the customer upon completion. This means you are able to borrow finances against unpaid invoices, but you will lose profit from the services you provide.
These are some of the more common methods of funding, but not every business wis financed in the same way, and chances are you may require multiple sources of funding. If you still find yourself struggling to attain financial support, click here to discover even more alternatives.
Confidence will play a large part in convincing others of your idea and securing investment. After completing your business plan, you should have all the relevant figures to persuade potential stakeholders that your idea is worth investing in. The real challenge lies in communicating this with conviction. Here are a few tips to remember when discussing your business with potential investors:
Creating a good first impression is a vital step to secure funding. Many business specialists believe you have 30 seconds to convince an investor in your pitch, so it’s essential you get off to a good start. To help you achieve this, you should make sure you are fully prepared, understand your audience, show up early and dress smart.
For a more in-depth look at creating a good first impression, click here.
When talking about your business strategies, keep your end goal of securing funding in mind. This gives your plan a sense of direction and will help you to communicate a clear line of progression.
If you intend on going into business with a partner (or partners), make sure you portray their strengths and competencies in relation to the business as well as your own. Your potential investors may be confident in your abilities, but you are more likely to secure funding if they are also confident in your partner(s), and the business as a whole.
For more information on preparing for your first investment meeting, click here.
Once you have your finance in place, it's time to lay the groundworks of your website.
First impressions count for a lot, and potential customers can be instantly put off exploring your website by poor design and navigation. This will have a negative impact on the number of customers who will find out about your product or services directly from you.
Unless you are an experienced web designer, it’s recommended that you hire a professional to design and build your website for you. There are certain online DIY website creation services available, however these are unlikely to fulfil the needs of an e-commerce site and are better suited to static information-based websites.
Before approaching a professional designer, you must have a clear view of the functionality, style and look that you want for your website. You should spend time researching sites with features you like to help support your vision.
When it comes to presenting your ideas to a designer, it can be difficult to know what details to include in a design brief. A good starting point is to plan out which pages you are going to need and write out any content ahead of the design process. This will help the designer understand the basic structure for your site.
For more useful tips and advice about briefing a web designer, click here.
Hiring a web designer and/or developer can be expensive, so it’s important to make sure that you budget for it in your business plan. You'll find there are a number of options in different price ranges available.
Local web design companies
Hiring a local web design company means you will have direct access to professionals who are on hand to advise and field any questions you may have. They often work within teams, which increases the speed of turnaround time for a project. However, all these benefits are reflected within the price.
Freelance web designer / developer
If you don’t have the budget to hire a professional web design company, a cheaper alternative may be to find a freelancer, either locally through internet searches and local advertising, or remotely online through services such as Elance and freelancer.com. However, for the cheaper price, you will need to compromise on accessibility, sometimes communication and quite often speed, as many freelancers will work remotely and often independently.
Click here, for some useful tips on hiring a web designer.
Once you have decided on the type of designer you’re going to hire, you need to make sure they can meet all of your requirements. For a useful list of questions that you should ask any web designer, click here.
Securing a domain name is an important step towards creating your own website. First and foremost, your domain address should be your business’s name - or at least relevant to it. For example, if your business name is Trident Trees, you should consider using this, or a variation of this, as your domain name. You should also avoid using unusual or invented words as domain names as they can be hard to pronounce and difficult to remember.
Additionally, you should try to secure a ‘.com’ or ‘.co.uk’ (as opposed to ‘.info’ or ‘.me.uk’) as these are the most well recognised and trusted domain name extensions.
Click here for help on picking the right domain name for your business.
Once you’ve picked a suitable domain name, you need to check its availability and purchase it.Click here to see lifehacker.com’s top five places to buy a domain name.
Once you’ve registered a domain name, you’re going to need space on the web to host your site, which can be purchased through a web hosting company. There are a number of services online that offer web hosting, but choosing the right one is essential in ensuring your website's reliability. It may be tempting to choose a less expensive service, however prioritising quality of service often means a better standard of tech support and more bandwidth, allowing your website to handle higher levels of traffic.
Two important features to pay attention to when comparing web hosts are:
This is measured in megabytes (MB) or gigabytes (GB), and it indicates how much data you are allowed to host. If you are building a small e-commerce site with just a handful of pages, you won’t need more than a couple of hundred megabytes. However, if you are building an online store with hundreds of different products, then you may need a few gigabytes of space.
This figure is measured in gigabytes and indicates how much data can be transferred through your site at any one time. If you have just a handful of visitors to your site each day, you won’t need much bandwidth but if you have thousands of visitors browsing every day you’ll need a lot more. For help on estimating how much bandwidth your website needs, click here.
Click here for a useful comparison of some of the UKs biggest website hosting services.
If all of this sounds a bit complicated, don't panic. Often a web designer can help you decide which hosting package is right for you. Alternatively, you can take a look at this guide.
A content management system (CMS) is a non-technical way for users to create, edit and delete pages on their websites, as well as upload pictures and videos, and complete many other tasks associated with website maintenance.
There are a few widely used CMSs available, and the good news is that some really great open source platforms are available for free. Whichever CMS you decide to work with be sure to ask your web designer to walk you through it and explain how it works.
Some of the most popular CMS platforms include:
Wordpress is the most popular content management system on the martket, with a number of sites offering tips and advice, such as Dani Magestro's What is WordPress? guide. But, for help deciding which platform is right for you, click here.
If you want to sell items and take payments through your website, your business is going to need a merchant account. Some banks will offer a merchant account as part of a business bank account package but this isn't offered by all.
In order to mediate card payments made on your website, you will also need a payment processing gateway (PPG). Again, some banks will include this feature as part of their merchant account package but this depends entirely on your provider, so it's always worth checking.
For more information of PPGs and merchant accounts, click here.
Now that your website has the capability to collect and process bank details, your next step should be to secure this sensitive data with a secure socket layer (SSL) certificate. An SSL certificate is a security measure that encrypts sensitive data. Signified by a padlock in the address bar, it can instil trust in your customers when they first land on your website.
To apply for an SSL certificate, you first need to be verified. For more information on how to verify your website, click here. Again, if this all sounds a little complicated don't worry. This is something your web developer should be able to help you with.Alternatives
As an alternative to a merchant account, more and more small businesses are choosing to use payment services, such as PayPal, SagePay or PayPoint. Working on a subscription model, your site can accept payments by hosting “Pay Now” buttons provided by these online payment services, or by inputting customers' bank details directly into the service provider’s website.
This is often a lot simpler and removes any worries over data security.
Tracking is an important part of running a website in order to understand how it's performing. There are many services available to help you track statistics, but Google Analytics is the most universal, and is also free to use.
There will be a number of key statistics that you'll want to track on your website, such as:
Monitoring and tracking these stats will allow you to fine tune and optimise your website to improve the customer's experience and sales.
To read more about the kind of useful information that can be gained by tracking statistics, click here.
Using Google Analytics can seem like a daunting task at first but there are many useful guides available for beginners, like this one from Kiss Metrics.
Once your website is up and running and you’re in a position to start tracking your website traffic, you can begin thinking about generating that traffic through advertising and marketing.
Marketing is an integral, yet difficult, part of setting up a business. It can play a pivotal role in determining how successful your business will be in the long-term, so it's safe to say that it's not an area you should overlook when you’re getting started.
After all, if consumers can’t find or don’t know about the product or service you have worked so hard to produce, how can they invest their interest (and money) in it?
Marketing goes further than just creating a Twitter or Facebook account and sending out updates, or putting out a targeted print advert and waiting to see what happens. Advertising your business needs to be ongoing and strategic. To get your online business started, it's a good ideas to plan how you’re going to market your business in order to attract customers to your site.
Remember to refer to your business plan for guidance on your marketing strategy.
Generally speaking, marketing can be broken down into two core groups:
Marketing your company on the internet through search, social media or email.
Marketing your company in more traditional ways using print, radio and leaflets.
It's a good idea to make use of both online and offline techniques as part of your marketing strategy, as this will allow you to test which methods work best for your online business.
In this guide we mainly focus on online marketing techniques, however traditional marketing can give your site valuable exposure. Below you'll find a few articles that should provide some useful tips and ideas for marketing your business offline:
As well as 'online' and 'offline' marketing techniques can be further broken down into ‘paid’ and ‘non-paid’ options, too.
It’s generally the case that advertising your business offline - for example by creating local radio adverts, printing flyers or sponsoring events - will almost always cost you money. Online marketing however, offers an arguably wider selection of both paid and free techniques, which we'll look at in more detail below.
Some paid online advertising methods may seem costly, but it’s important to compare the cost to the potential level of custom and revenue (and ultimately, return on investment) that each method can bring to your business.
Below we have listed some examples of paid advertising methods along with their pros and cons, to help you decide where to concentrate your paid marketing efforts.
Social media adverts
This method involves paying a fee to a social networking site, such as Twitter or Facebook, to advertise your own profile, website or products directly to your chosen target demographic.
|Targeting||The ability to customise the reach of your advertising based on factors such as age, location, gender and interests.||Limiting potential reach||Focusing your advertising on a target group runs the risk of neglecting any other groups of people who could be receptive to your advertising.|
|Cost effective, wide reach||Targeting means less money has to be spent to achieve an optimum spread of your marketing content over a wide number of potential customers.||Intrusive||Becoming too familiar with your target audience could make it feel like you’re breaching their privacy, which impacts negatively on your advertising efforts.|
|Creative advertising copy||Understanding your customers’ interests means you can use their vernacular in your advertising for greater appeal.||Negative comments||Remember, social media gives individuals a platform to directly and publicly respond to clumsy advertising with negative comments.|
To read more about how social media advertising can benefit your business, click here.
Pay per click (PPC) adverts
PPC advertising is essentially paying to appear prominently on a search engine’s results page for a particular term or a selection of terms, used by your customers when searching for your product. Like an auction, you can set a maximum amount that you’re willing to pay per click and the maximum budget you're willing to spend per day. Generally speaking, the higher you bid, the higher up the results page you will appear, which can be a significant factor in how much traffic your ad will drive. Google's AdWords is the most popular PPC platform.
|Targeting||You can target your adverts using key phrases and regions to ensure your website receives traffic with the highest chance of converting into a sale.||Bidding wars||Targeting competitive phrases can be very expensive and lead to a bidding war, where the cost you pay per click can quickly erode any margin you were making.|
|Faster than SEO||PPC can give you immediate visibility on page one of the search engines results pages without pouring months of effort into SEO techniques.||Inaccurate targeting||You should be careful which keywords you bid on. Use negative matching when possible to minimise the amount of irrelevant clicks you receive, that have no chance of converting into a sale.|
|Budgeting||Defining how much you are willing to spend is a good way to ensure your PPC campaign remains a cost-effective way to advertise and your expenditure doesn't spiral out of control.||A click doesn’t guarantee a sale||PPC is a risk, and you may pay for clicks that don’t convert to sales. Click here for some techniques to influence your conversion rate.|
You can find out more about the ins and outs of PPC for beginners by reading this useful guide from Trend Blog.
Online display advertising
This method is a targeted form of advertising which displays your adverts on pages around the web to potential customers. This is based on their interests and traits as indicated by their browsing cookies, or by the content of the page on which the adverts appear. You can also customise your advertising based on audience location and even retarget customers who started, but failed, to complete the conversion journey on your site. Google's AdWords is the most popular online display platform.
|Brand assimilation||By appearing on websites that your customers visit, you can begin to build a reputation for your business as a recognised brand in your chosen market.||Ad blindness||Customers are often bombarded with online advertising, which can condition them to skim over much of it.|
|Targeting||Using cookies, display advertising can be highly targeted to help increase the conversion of clicks to customers.||Ad blocking||Some modern browsers have ad blocking extensions that will prevent many advertisements from appearing on web pages.|
|Testing||Ad campaign data is frequently updated with services such as Google Ads, which means your campaigns can be easily edited and their effectiveness tested.||Distractions||When advertising on the internet you have a lot to compete with, including content and other advertising.|
Advertising in forums
You can pay to have a thread feature prominently on forums that are frequently visited by your target demographic. This can be good for building brand recognition and can help to spark discussion surrounding your brand.
|Drive new traffic||Finding niche forums that relate to your business’s market means you can tap into new customers who already have an interest in your product area.||Thread management||Some forums require you to moderate your own thread, which can be very time-consuming.|
|Authority||If your paid thread is frequently solving genuine problems for people, it's posisble that, over time, your brand could become a thought leader in your industry.||No guarantee of sales||When someone is visiting a forum, they are looking to have a conversation, solve a problem or have a problem solved. This means they are not necessarily in the mind to buy, or be sold to.|
|Be part of the conversation||An online forum is not only a good way to see what your customers are talking about, but it also allows you to be a direct part of the conversation.||Competition||If you’re not a regular contributor to a forum, and you have little influence in the subject field, you may find you have some stiff competition when it comes to enticing people to visit your thread.|
Paid discovery is a way to reach people who may be willing to interact with your website. This method usually involves creating a piece of content that your customers would find useful or interesting, and advertising it on services such as Stumbleupon, Reddit or Outbrain to encourage the sharing of, and interaction with, your brand.
|Cheap||Depending on the service you choose, the cost per click can be as low as 0.03p, which means you can get 1000 clicks landing directly on your site for just £30.||Trial and error||It is harder to predict results with paid discovery because some services do not offer audience targeting or direct analytics.|
|Less invasive||Many paid discovery services will choose usefulness over invasiveness in content. This helps to improve the quality of the traffic that is generated for your site.||Targets interaction not sales||To do well in paid discovery you should target your content for interaction. However, interaction does not necessarily mean sales for your business.|
|Higher click through rate||The positioning of paid discovery through services such as Outbrain means that your post can be found in an optimum position on webpages of popular and high profile sites to encourage clicks.||Lots of choice||There are a lot of services to choose from when it comes to paid discovery, so you need to take the time to identify those that are popular with your target demographic to obtain maximum coverage for your efforts.|
Click here to see a list of the online discovery service available.
Affiliates and cashback sites
These methods reward other businesses, partners and organisations for referring customers to your website. Providing the customer converts into a sale, the partner or affiliate will receive a percentage or agreed fee for the sale. A combination of affiliate schemes and cashback sites is a good way to ensure new leads for your site.
|Spread your online presence||You can increase the chances of customers buying from you by increasing the number of places that your product can be found.||Be careful who you affiliate with||You need to research potential affiliates to make sure they are trustworthy. Linking your brand with an untrustworthy website could damage your brand image.|
|No marketing knowledge required||Using affiliates and cashback schemes is a good way to support your marketing efforts and acquire new leads if you have minimal knowledge of business marketing.||Lack of control||You have little control over how affiliates market to their audience. So, quite often your success relies on the success of your affiliate partners, which can ultimately hinder your business’s growth.|
|Pay only for converted customers||You only pay your affiliates for converting customers, which can make affiliate and cashback marketing particularly cost-effective methods to pursue.||Middlemen||When using affiliate marketing, any sale that is converted from referred traffic means that you must part with a percentage of the sale - which can squeeze the margins you make.|
In addition to the paid methods above, you can also supplement your online marketing strategy with free techniques. Although you may need to investment a lot of time to get the same level of return.
It’s possible to optimise your website so that it appears prominently in search engine ranking pages for free using SEO (search engine optimisation) techniques. It is important to note that this particular requires a large investment of not only time and effort, but also a certain level of knowledge.
There is a wealth of information available on the subject, but the topic is more expansive than we could ever cover in this guide. Ensuring your website’s title tags, meta descriptions and content are keyword-optimised is one of the first SEO steps you should take to make sure your website is easier for customers to find, when they're searching for your products and services through search engines.The best way to learn more about SEO is Moz's beginners guide to SEO.
There are a number of services out there that promise to get you to the top of Google's rankings, but these are almost always scams and a waste of money. No one can promise this for certain, and using these types of services can do you more harm than good, by getting your site banned from the search engine.
Once you have optimised your website for search engines, you can begin tracking your progress using Google Analytics.
Guest blog posts
It's possible for online consumers to access lots of information on niche subjects through specialist blogs. By offering your own content to these specialist blogs in the form of guest posts, you are able to build up a relevant back-link profile for your website, which can help improve Google rankings and increase traffic to your website. This method is equally useful for increasing awareness of your brand with customers who are actively engaging and searching for content related to your market.
Click here for some success stories of big brands that have benefited from guest blogging.
You can also take a look at these tips to find good blogging opportunities for your online business.
Social media engagement
Having a strategic and active presence on social media can work wonders for a new business. You can develop brand recognition by regularly engaging with active users and discussing important news and interesting topics in your target market on social media platforms, which can also help drive traffic to your website.
Social Media Examiner has a great guide to social media for small businesses, which also includes some really useful tools to help strategise and monitor your social networking accounts.
One of the most organic ways to drive traffic to your website is by increasing consumer knowledge of your brand. Genuine forum participation allows you to interact with your target audience over the issues they are discussing. You should identify the forums frequented by your target customers, and then begin problem solving and offering advice under your brand name to increase recognition and authority within your chosen market.
By all means link to your website to support the answers you give, but make sure you don't overdo it as it could be taken as spam.
Developing working relationships with relevant press agencies and regularly producing and syndicating press releases is the best way to get your brand in front of lots of people and drive traffic to your website – but, it may not be as easy as it sounds. Competition to get your brand in the mainstream press - such as tabloid newspapers, magazines, radio or TV - is high, so to begin with, it may be worth identifying local newspapers and more niche publications that relate to your chosen market area and targeting them.
It is important to note that this option may sometimes come with a price.
Making a video that is personal, focused and entertaining - with a strong call to action - is an increasingly effective way to appeal to your target demographic and cut through all the other information that is available to them.
For advice on using video in your marketing efforts, click here.
Here are some of the core marketing and advertising tips to follow when you’re setting up an online business:
The ways that you advertise and market your business will change depending on the landscape of your market and the needs of your target audience, so it’s important to have a flexible plan in place that can be adapted if required.
Once you’re happy with the way you have planned the launch of your online business, you can begin to think about banking.
If you're operating as a sole trader or partnership, you could technically use your personal current account to manage your business's finances. However, many business owners find it beneficial to keep their business's money separate from their personal finances, and here’s why:
There are many services that you can ccess through a business account that you couldn't with a personal account, such as:
When running a business, it helps to keep your personal and business finances separate - something that becomes harder to do the more you sell. Distinguishing between business and personal transactions can make bookkeeping easier, which could save you money and your accountant time, if you choose to hire one.
A business bank account can help protect your personal finances against bankruptcy and legal claims. If, for example, a legal claim is made against your company, then keeping your business and personal finances separate can help to create a corporate distinction that clearly defines where your personal finances end and your business finances begin.
When cashing cheques or taking payments, it's more professional to have the payments made to an account registered under the business name than to an account under your own personal name.
For more help deciding if your business needs a business bank account, click here.
A business current account can act as the main account you use for your business’s finances, keeping them all in one place. However, there are also specialised types of accounts that may be relevant to you:
This account is for holding client’s cash separately from your own.
To store surplus cash as savings, and earn a greater rate of interest on it.
Used if a business opts to expand overseas, allowing you to trade with customers in other currencies while protecting you from extra risks, such as fluctuations associated with foreign exchange rates.
For online businesses, or businesses with an online element, there may be certain features that make one business bank account more appealing than another. Most business bank accounts will come with online banking options, meaning you can access your bank account online and from mobile devices. Yet there may be additional features that are beneficial to actually accepting online payments, such as:
You’ll need a merchant account to accept online payments much in the same way that you’d need one to accept physical cards payments from chip and pin machines. It’s often a good idea to keep your online revenue separate from that of your physical business. Some business bank accounts will come with the option of a merchant account, but others won’t, meaning you may have to pay to open one separately.
To find out more about Merchant accounts why not give us a call?
Online payment processing gateways act as an online version of chip and pin machines, allowing you receive payments. Some merchant accounts come with an online payment gateway, and others don’t, so it’s worth checking.
For more information about merchant accounts, online payment gateways, and more about selling online, see the ‘sales’ section of Step 7.
There are a range of factors and variables that form each account’s benefits and drawbacks – click here for tips on what to bear in mind when choosing. Remember that terms and conditions and fees will apply to every business bank account on offer, and that some of the perks you see may not be applicable to you – so take your time choosing and make sure you understand all the information. You may find it beneficial to compare business bank accounts like for like, to make it all easier to digest. For more information on business bank accounts, click here.
With so many banks and building societies offering business accounts, it’s often difficult to decide who to bank with. For example, HSBC provide small business support such as access to business specialists and business review opportunities. For help deciding which bank is going to offer the best benefits for your business, click here.
Now you've set up your business bank account, you can start thinking about protecting your business with insurance.
Once you’ve put all that hard work into setting up your online business, it makes sense that you would want to protect your venture in case the worst should happen. Insurance is a good place to start - and there are some important factors to consider.
For example, what would happen if one of your employees was injured at work and made a claim for compensation? What if important and expensive business equipment was stolen from your property, leaving you unable to operate at full capacity? This is where business insurance comes in.
‘Business insurance’ is a broad term which refers to a number of different policies that could protect against the risks you're exposed to. As such, it’s sensible to identify areas where you're at risk so you can purchase cover that's relevant to your business.
Depending on the nature of your business, there may be some policies that you're legally required to have in place, whereas others will be entirely optional. The optional policies you include in your insurance package will depend on what you deem to be a potential threat to your business – as well as your general attitude to risk. To find out what insurance you may need for your business, click here.
The main types of cover that can make up a business insurance package are detailed below. Click the links provided to find out more about each type of insurance:
Employers’ liability is compulsory if you employ staff, and can provide protection if an employee makes a claim against you or your business -either for injury or illness they suffer as a direct result of working for you.
Buildings insurance can provide protection if the bricks and mortar of your business suffers damage as a result of vandalism, accidents, or unforeseen events such as a fire. However, if you rent your property, such cover could already be included under a contract with your landlord, so it’s always worth checking before taking out a policy. You should also check with your insurance provider to see if any additional protection is required to cover your activities if you run a business from home.
If you’re running your business from home then you may need additional cover for your contents. This is something that can be done with the inclusion of an ‘all-risks’ extension to your policy, although you’ll have to check listed exemptions with your provider or broker.
If you intend to store stock on your business premises, stock insurance could cover your items if they are damaged, destroyed, lost or stolen. However, if you run a business from home, how and where you choose to store this stock will heavily influence your premiums. For example, simply storing it in your garage - will likely cause your premiums to rise, whereas securely storing stock under lock and key could help lower the cost.
Tools and equipment insurance policies can cover essential computer equipment against risks such as loss, damage and theft.
Some examples of additional business insurance policies you might consider are:
This type of insurance is important if your business offers professional advice or services to clients. It could provide protection if your advice or expertise results in a client experiemcing loss or damage.
Business interruption insurance could cover lost revenue and help to pay overheads if an unexpected event, such as a flood, stops your business from trading temporarily.
Licensed insurance brokers that are authroised and regulated by the FCA can provide you with expert advice on which insurance policies are ideal for your business.
A conversation with an insurance expert about the ins and outs of your business’s set-up, and the types of risks it might face, can give you an insight into the different forms of cover you could benefit from. With this information, a broker can then put together a bespoke insurance package for you, which will include all of the policies that you agree are necessary to properly protect your business.
This means that you’ll receive an accurate quote for your business insurance, and that you will avoid paying for cover that you may not require.
Before choosing an insurance broker, it is recommended that you check to make sure that they are listed as an authorised insurer on the British Insurance Brokers’ Association (BIBA) website, to assert that they are properly regulated, impartial and licensed in the UK.
Once you've found secured the cover that's right for your business, you should start thinking about your telecoms set up.
As an online business, having a reliable, affordable broadband connection is essential. That's why it's so important to find the right broadband package that suits you – ideally one that doesn't compromise of either price or service. Choosing a package based solely on price could result in a slow and unreliable connection, which may also be backed up by poor quality technical support.Keep in mind there are other factors that need to be considered when choosing a broadband provider, such as speed, security and support.
We recommend investing in a business broadband package with fast upload speeds as you’ll be able to upload data and content to your website quickly. The speeds traditionally offered with domestic broadband packages are often not sufficient for an online business’s needs. This is because domestic users typically download more data than they upload, therefore download speeds are often prioritised.
Business broadband packages, on the other hand, traditionally have faster upload speeds, and are better suited for business functions, such as uploading content to your site quickly.
A business broadband package will often offer a variety of security features including firewalls, online anti-virus software and data back-up. However, these features are not always offered as standard, so you may want to take this into consideration when comparing broadband providers.
Having good standard of technical support is essential for an online business to help minimise any negative impacts, such as website downtime, that your internet connection can have on your business overall. Business broadband customers are traditionally offered a better standard of service, which is often reflected in the price of the package.
If you’re still not convinced that your website needs a business broadband connection, click here for some convincing reasons.
A phone line can offer a variety of benefits, even when conducting your business online.
A visible phone number on your website is a good way to promote a professional image for your business, which can help build trust when customers land on your site. A business phone line can also offer your customers the peace of mind that they can speak to a real person if something should go wrong with their order.
It also has the advantage of allowing direct customer feedback. This can be used to help improve your understanding of your customer base and the quality of your service.
Click here to find out how you can set up a phone line for your business.
An ‘08’ prefix on your business phone number is another good way to strengthen a professional image. However, it is important to be aware that each prefix has a unique set of charges that need to be taken into account when considering which prefix is right for your business.
As an online business, the more common prefixes to consider are:
|Number prefix||Charge to customers|
|0800||No charge from a landline|
|0843 / 0844||Between 1p-13p|
|0845||Between 1p-12p (varying on time of day)|
|0870||Local rate (around 12p)|
See Ofcom’s comprehensive guide to phone numbers for more information.
If most of your phone calls will be in a customer service capacity and dealing with complaints, it is recommended that you choose an 0800 prefix because charging a customer to lodge a verbal complaint can sometimes aggravate the situation.
As your customer base grows, you may find it unfeasible to personally deal with the large volumes of calls that your business might receive. Fortunately, there are a number of call handling services available that can help your business manage a large volume of calls without the need for additional staff.
Call answering services
A call answering service helps to free up your phone lines by forwarding calls to a remote assistant when you’re too busy to answer them. The assistant will then take a message from the customer and e-mail the details back to you. Not only does this method help portray the image of a larger business, but it is also a personal and cost-effective way of dealing with waiting calls.
Click here for the pros and cons of call answering services.
Call queuing software
As an alternative, call queuing software is a method of placing multiple callers on hold, which can be a slightly cheaper alternative. However, long waiting times can lead to unhappy customers, so the feasibility of call queuing software will often depend on the volume of calls that you receive.
Click here to find out more about call queuing software.
Once you are happy with your telecoms setup, you can move onto the next step and begin thinking about bookkeeping.
Bookkeeping has a reputation for being notoriously difficult, but this doesn't have to be the case. Keeping track of your business's finances can actually be straightforward, providing you are organised and keep the receipts from all of your business expenses. It also helps to closely monitor your income and any outstanding invoices.
One mistake that many start-ups may make is to neglect their bookkeeping until their business is up and running. This means that early reports are produced from memory, which can be unreliable.
One of the most efficient ways to keep track of your online business’s finances is through a digital spreadsheet, although some small businesses prefer the more traditional approach of keeping a hand-written log. Both are perfectly acceptable methods to use, but functions in digital spreadsheets can often prove to be more beneficial as they help to automate certain parts of the bookkeeping process, such as calculations and formulas.
In order to keep your accounts as accurate and up-to-date as possible, it is important that you follow these simple steps:
This is one of the most important steps to follow. Keeping a record of receipts, dating back to the day you started, means you’ll have a direct reference point for what was paid and when. This will help you keep track of how much you’re spending.
Once you have a filing system for your receipts, you should make sure that you update you ledger regularly. You are not legally required to update your ledger regularly, but generally speaking, the busier your business finances are, the more frequently it should be updated to maintain accuracy.
Once your ledger is updated, you can create useful reports to highlight your business's income and expenditure. Ledger reports are important to identify how profitable your business is, and a lot of the report leg work can be taken care of with bookkeeping software, such as Fresh Books.
There are going to be a number of key metrics that you'll want to watch closely in order to evaluate how fast your business is growing, and also to identify any areas that need improving.
These key metrics are:
|Metric||What it shows||Benefits|
|Sales revenue||Your business income minus the operating costs you have to pay.||Data can be analysed alongside advertising campaigns, seasonal expectations and competitors' actions to monitor how they impact your business.|
|Customer retention||Your business’s ability to create and nurture a relationship with your customers for repeat and improved custom.||A 5% increase in customer retention can be the equivalent of a 20-100% increase in profits in many industries.|
|Cost of customer acquisition||How much your business spends on marketing and sales to acquire new customers.||This can help you monitor the success of your advertising, highlighting projects that have or haven't worked.|
|Productivity||How productive your business and staff are.||Highlights the performance of your business, and helps you check for improvement over time.|
|Gross margin||Your business’s revenue, minus the cost of goods sold.||This metric is key for tracking any improvements to your margins. This will help you spot opportunities to lower costs and improve your business’s efficiency.|
|Profit and loss||The amount your business is making once all conceivable costs have been deducted.||Monitoring this metric lets you determine your rate of growth and ensure your business is covering its operating costs.|
|Overhead costs||The fixed payments, such as salaries and bills, that your business must pay each month.||Helps to highlight areas of spending in your business. You can also use the information to inform future reports and budgets.|
|Variable cost||Variable costs show expenses that are liable to change depending on season and business activity. Variation should decrease as business volume grows.||This will help you make more accurate forecasting and budgets.|
|Inventory size||The amount of finished goods, works in progress and raw materials that your business has.||Monitoring your inventory is essential to predicting your future potential revenue generation. Managing it properly will help your business grow efficiently.|
|Hours per process||The amount of time that is spent on individual processes - especially in labour intensive sectors, such as manufacturing or packaging.||This lets you determine how efficiently your business is running and will highlight areas that require improvement.|
Nothing helps a business grow more than the motivation of seeing your key performance indicators move in the right direction. But it’s also important to monitor what the industry averages are to see how you're performing compared to your competitors.
Click here for more information on how to do your own bookkeeping.
Keeping a close eye on your business's finances and key metrics is critical. A business should know in detail how much their product costs to make, as well as any figures, such as average basket value, lifetime value of a customer and profit margin. Remember, these figures are likely to fluctuate, so this should be an ongoing process.
Bookkeeping can help you to keep track of your business’s incoming and outgoing expenses, as well as the items used for your business, such as printer paper and fuel, that you can claim tax back on. However this doesn’t mean that you should start spending frivolously; it’s important to keep on top of your business expenses at all times, because ultimately all expenses will come out of your bottom line.
For other useful bookkeeping tips, click here.
If you don’t think you’ll have the resource, ability or inclination to do your own books, hiring an accountant is an option that you may want to consider. For a cost, accountants can take care of your business's books, which will free up your time to concentrate on management and growth.
If you decide to go it alone, a whole host of bookkeeping software is available to help you with your business finances, such as Quickbooks.
However, if you do decide to hire an accountant, click here to find out what benefits it could bring to your online business.
Once you're confident that you have the right processes in place for bookkeeping, you should move onto the next step - Tax.
Even when you are your own boss, there’s no escaping the tax man. Being your own boss tends to mean you have to be extra-shrewd about your taxes, as failing to keep everything in order could lead to heavy fines.
The tax you pay will depend on various factors, such as your staffing situation and how much profit your business generates each year.
For more information on the factors that determine the types of tax your business pays, click here.
Organising your tax:
You can choose to do your taxes yourself, hire a full time accountant for your business or outsource the task to a specialised tax accountant.
Below, we have compiled a list of the more common tax types - to help you identify those you may need to pay.
A PAYE (pay as you earn) system is required if your business employs staff, or if you are registered as a limited company. In order to set up a PAYE system for your business, you first need to register your company with HMRC. Once you have done this, all wages will automatically be taxed for National Insurance and income tax, provided the employee earns over the threshold defined by HMRC.
It is possible to outsource your PAYE and payroll duties to accounting businesses if you don’t have the time or inclination to do it yourself - or if you are reluctant to hire a full time payroll clerk.
Self-assessment is an alternative to PAYE if you’re srequired to pay your own tax. Provided you have registered as self-employed, you'll be sent a self-assessment form by the government every twelve months, usually around April. The amount that you'll need to pay depends on your earnings from the previous year. Remember, if you do not receive a self-assessment form, but you think you should have, it is your responsibility to apply for a new one. Failure to do so could result in you receiving a fine.
If you need more information on registering and filling out your self-assessment, click here.
National Insurance is paid on the gross amount of income that you earn in a year - specifically before wages, sick pay, and maternity/paternity leave are deducted. There are a number of different classes of National Insurance, these are:
|Class type||Employment status||Amount earned/profits||Amount to pay|
|Class 1a||Employed||Between £153-£805 per week||12% of amount earned|
|Class 1b||Employed||Over £805 per week||an additional 2%|
|Class 2||Self Employed||Between £5,885-£41,865||£2.70 per week|
|Class 4||Self Employed||Between £7,956-£41,865||9% (plus 2% on profits over £41,865)|
There is also Class 3, which covers voluntary contributions to fill in any gaps you may have accumulated in your National Insurance record through unemployment.
For more information on National Insurance and the different classes available, click here.
Value Added Tax
VAT is a tax on goods and services. As soon as your business earns more than £79,000 a year, you become eligible to pay VAT. If you are approaching this threshold, it is your responsibility to make sure you have registered to pay VAT at least 30 days before reaching this figure.
For more information on how VAT affects your business, click here.
Corporation Tax is a limited or partnership business’s equivalent of income tax. The amount of Corporation Tax you pay will depend on your annual income, but you will usually be expected to pay 20% of your business’s revenue - providing that your annual profits are below £300,000 per year. Unlike other forms of tax, Corporation Tax must be paid electronically nine months in advance of the end of your financial year.
For more information on Corporation Tax and how to pay it, click here.
*All figures accurate for the 2014 tax year.
Congratulations – you’re in business! These thirteen steps are just the beginning of an ongoing journey, and it’s important that you regularly revisit your initial business plan to identify where you can adpat and improve. This will also help to ensure every decision you make is informed and in-line with the developing needs of your business.
Remember that there is no generic formula for success – most of the time it’s a matter of trial and error. The important thing is that you treat each trial as an opportunity to learn, develop your plans and grow your business.
Finally, if you ever feel you need further guidance, don't hesitate to take advantage of the wealth of useful advice available online. Small business communities and forums are a great place to look for helpful tips that could steer you in the right direction, and consulting your peers is an effective way to learn from others who've experienced similar challenges to you. Good Luck!