How to start a business

Please be aware that this is a guide only and you should seek specific advice for your business*

Getting started is the fun part. But it also brings its challenges. Our guide should help you consider all aspects of setting up a business.

Think about your work-life balance

Before starting out, it can be a good idea to discuss your plans with family and friends to ensure they’re onboard with the demands of starting a business.

Building a new business can demand a lot of your time, especially in its early stages, so it’s important to put clear boundaries in place, in order to separate your home life from work. This can help make sure you’re balancing your time effectively, and not burning out by allowing these two areas of your life to blur.

It can be as simple as turning off your mobile phone during family time, or planning evenings and weekends with friends and family to make sure you’re not losing quality time with the people that matter to you most.

Make your business stand out

Can you offer something others cannot, to make your business stand out? Read on to learn how you could add a competitive edge to your business.

Avoid trying to undercut competitors

It’s important not to get too caught up trying to compete on price, because you do not want to minimise the quality of your goods. Instead, focus on what you do well, without concerning yourself too much with what similar businesses are doing.

If your products and services are of high enough quality, they should be able to speak for themselves. Stay true to your own brand, and remember why you started out.

Focus on establishing a loyal customer base

With high quality goods and services, your customers will not feel the need to look elsewhere to have their needs met. By not compromising on the standard of what you’re offering, you’ll find your target audience are usually happy to pay that little bit extra – especially if those goods are backed up with a fantastic customer experience.

Encourage your customers to keep coming back

To encourage repeat business, you can incentivise custom through loyalty schemes, returning customer discount codes and special offers.

These techniques can help build a better relationship between your business and its customers, evoking a sense of familiarity and inclusivity.

Write a business plan

It does not need to be the fanciest document, but be clear about what you want to achieve and what you will need to do as a business owner for it to be a success. Important things to consider include:

• What will you sell?
• Who is your product or service aimed at?
• How will it be beneficial to your customers?
• What will your charging structure be like?
• What do you need to earn to make your business a success?
• How will you market your business? (such as advertising on social media, newspapers or using flyers etc.)
• How will you encourage word of mouth referrals?
• What materials will you need to get started?
• How much will it cost to start up your business and where will this funding come from?

You can view lending options that may be available to your business at The British Business Bank

How to choose a business name

Choosing the right name can be tricky. Start by researching the market – look at your potential customer base and check if there is a demand for your product or service. Try to do some customer research to understand their needs. You could do this via social media or by simply talking to people.

When choosing a name, a couple of things to keep in mind include to:

Make it relevant

Your business name should not leave customers feeling mystified. It should reflect what your business actually does or how it should make your customers feel or react.

If the name of the business is too vague, it may end up losing you money, as customers may not understand what type of company you are, and what you’re actually selling.

Make it short and easy to spell

If people are searching for your business you want them to find it easily and not have difficulty with the spelling.

Using the right company structure

Sole trader, limited company, society or partnership?

How you set your business up will depend on the business type you choose. Take a look at our business structure guide to help you decide.

Which you choose will depend on where you work, whether you have people helping you (such as shareholders) and your purpose. It’s recommended that you seek professional advice on which company structure is most suitable for you and your business.

You can find out more on the government website about setting up as a sole trader, partnership or limited company and the various benefits and drawbacks of each.

The Co-operative Bank PLC does not provide accounting, legal or business advisory services and we'd recommend you seek independent professional advice on which set up is most appropriate for your business.

Visit the Government's set up a business page.

Starting a co-operative

Co-operatives (co-ops) can operate under most legal structures (apart from sole trader). A co-op is a business or organisation that's owned and controlled by its members, to meet their shared needs.

The members can be its customers, employees, residents or suppliers, who have a say in how the co-op is run. Members choose what to do with profits, whether distributing among members, reinvesting in the business or giving back to the community.

Every co-op across the world shares the same co-operative principles and values. If you are looking to start one, you can find out about the different legal structures co-operatives can take.

Manage your business accounts

It is always smart to speak to an accountant early. Accountants are experts who can provide advice and support in the early stages of a business being established.

They can help you to decide what the legal structure of your business should be, assist with creating your annual accounts and meet your tax obligations.

Accountants can also advise on what you need to tell HM Revenue & Customs (HMRC) and whether you need to be VAT registered.

Open a business bank account

Open a business bank account to assist in running your business. At The Co-operative Bank we have a range of business bank accounts which offer some great benefits, including:

• The Business Current Account offers no monthly service charge with no limitations and free digital banking (charges apply for cheque and cash transactions)
• The Business Directplus account offers free business banking for 30 months for new Co-operative Bank customers (subject to monthly limits)
• The Cash Tariff account offers one of the lowest cash depositing fees on the market
• The FSB Business Banking Account offers free everyday banking for members of the Federation of Small Businesses (subject to monthly limits)
• The Community Directplus is a charity and community account that offers free everyday banking and the ability for our customers to apply to our Customer Donation Fund
• The Standard Tariff has no transaction limits and charges remain consistent regardless of balance

You can access all our business bank accounts online and via telephone banking.

Learn more about how to open a business bank account.

Plan your business marketing

Marketing is key, most especially for a new business as it can help you reach your target customers.

Social media is a really useful and cost effective way to reach your target customers, make sure you research which channels will work best for you. Given that it’s free to own a social media account, and that they’re so wildly accessible, this can be a brilliant way to appeal to your ideal customer base.

By having a clear idea in your mind of your target customer, you can create campaigns specifically addressed to them, factoring in their pain points and answering their queries in a way that feels direct to them.

So it’s important to figure out where your customers are spending the most amount of time (for example, Facebook or LinkedIn), so that you can tailor your posts and campaigns to ensure you’re reaching the right market, and focusing your attention on the correct platform.

Social media can also be used in conjunction with other forms of media, such as posters, flyers and adverts, so that you’re not relying too heavily on the algorithm. The more you can get the word out about your business, the better chance you’ll reach your target market.

How and where to register a new business

The below section will take you through who you might need to tell about your business.

Companies House

You will need to register your business with Companies House if you are planning to start up as a limited company. If you instruct an accountant, they can assist with business registration.

HM Revenue & Customs (HMRC)

You may need to discuss the requirements to pay tariffs if you are planning to import or export goods.

Sole traders

If you're setting up as a sole trader, it's your responsibility to ensure that you are compliant with UK tax requirements. You can find out more about operating as a sole trader. If you have any further questions, you should seek the advice of a suitably qualified adviser.

Regulators and agencies

Depending on your business sector, you may need to register with certain regulators. For example, if you're opening a food business you will need to register with The Food Standards Agency. You can find out more about which professions are regulated.

Consider business insurance

You might be surprised what types of insurance could benefit you and your business.

Personal injury, public liability insurance and professional indemnity insurance are some of the more common types. If you hire staff, you may need employer's liability insurance.

To help you get the insurance your business needs, we've chosen AXA Insurance as our preferred business insurance provider. Providing cover you can tailor to suit your unique business needs.

Learn more about business insurance

The Co-operative Bank acts as an introducer only to AXA Insurance, and will not provide any advice in relation to insurance products. The Co-operative Bank will receive commission on business insurance policies purchased through this introductory service.

How to manage business administration and HR

When starting out, you’ll likely need to navigate new skills or challenges you may not have initially considered. This may involve things such as the daily administration tasks needed to run your business, or any legal or HR support that can be imperative to running your business successfully.

So it may be beneficial to reach out to a third party for a bit of extra support. They can run these services for you, giving you more time to spend on your business and doing what you love. They could help with taking care of correspondence, raising invoices and issuing payroll, and generally making sure your business’s paperwork is in order.

There are also companies that can assist with legal and HR issues, involving providing helplines to trusted law firms, legal document health checks, downloadable templates for legal forms such as employee contracts, and HR advice from highly trained parties.

At The Co-operative Bank, we've teamed up with our preferred third party provider Assurant to provide a market leading Business Concierge Package which has been designed, delivered and is serviced with your needs at heart.

 Learn more about the Business Concierge

The Co-operative Bank acts as an introducer only to Assurant, and will not provide any advice in relation to administration products. The Co-operative Bank will receive commission on business administration packages purchased through this introductory service.

Business funding

There may be several options available to small business owners just starting out, and the option you pick will likely depend on your own circumstances. You may, for example, have personal savings to dip into, or a friend or family member that is comfortable loaning you a bit of extra cash to get started.

Start-up grants

Alternatively, you may also wish to look into start-up grants. This type of funding is available across the nation, with different schemes designed to help give small business owners the boost they need to find their feet financially.

It’s a good idea to search around when applying for grants, as each scheme will likely have their own criteria and requirements for applying. However, if approved, this type of funding can be excellent in securing lower start-up costs for your small business.

Business loans

Loans are also a viable option for providing additional support for businesses just starting out. Like grants, each loan can vary in terms of criteria, so it’s best to shop around to ensure you’re selecting the best option for your business.

Opting for an unsecured personal loan, rather than a business loan, is generally quicker and easier. But not all lenders allow using this type of loan for funding small businesses, so it’s always best to check with your provider first.

Choosing to take out an unsecured personal loan could also mitigate the need for collateral, and typically involves lower interest rates. However, depending on how much you want to borrow, business loans are often able to provide a larger sum (of up to £100,000 or more), so it’s best to evaluate your own circumstances when choosing which is right for you.

Recommended Sources of Information

The British Chamber of Commerce

The Federation of Small Businesses

HMRC

The Food Standards Agency

Companies House

Information Commissioner's Office

The British Business Bank

*While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by The Co-operative Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. This is merely a guide and each business is unique in its requirements. Specific advice should always be sought in each instance.