Create a business plan
Here are key questions you need to answer before you write your business plan:
- What need are you addressing?
- Who is your customer base?
- What products or services do you provide?
- What resources do you need to get started?
- How will you market your business?
- Who is your competition?
- Have you identified support networks, such as getting a mentor or joining a mastermind group?
- How will you measure success?
- What are your short-term and long-term goals?
Key elements to include in your business plan
- Executive summary: A snapshot of your business plan. It should include a mission statement, brief description of your business, highlights of your growth and overview of future plans:
- Company description: An explanation of your company, how it differs from competitors and markets you plan to target.
- Market analysis: Define the market in terms of size, structure, opportunities for growth, industry trends and sales potential.
- Description of product or service: Explain the pain points that your customers face, and how your product or service will benefit them. Dive into key features, and how customers will use your solution. You may also include details about intellectual property issues, or any R&D activities that you’ve planned for.
- Revenue model: Define how you will generate revenue. This section includes information on revenue channels, pricing, margins and cost of goods sold.
- Operations and management: Explain how your business will operate. Outline your business logistics, legal structure, organisational structure, investment costs, critical costs and how your operations might change as your business grows.
- Competitive analysis: Identify your current and potential competitors (include both direct and indirect competitors). List out their strengths and weaknesses (you can do this by creating a competitive strength grid), and highlight the similarities and differences between your company and your competitors.
- Customer analysis and customer acquisition strategies: Knowing your audience is key, and the first step is to identify your customer demographics and map out buyer personas for your business. After which, you can then work on your acquisition strategies. This is essentially your marketing plan, and outlines the different channels you will use, as well as its associated costs.
- Financials: This final section details your figures and projections, along with a short summary of how you arrived at these numbers. It should include the following components: sales forecast, expenses budget, cash flow statement, income projections, projected balance sheet and breakeven analysis.
Business model canvas guide
A business model canvas is a one-page document that lets you visualise and assess your business concept. Think of it as a mini business plan—one that you can put together quickly without needing to dive into the details.
Here’s a quick guide to help you put together your business model canvas:
- Define value proposition: Your value proposition is central to your business model canvas. It describes your mission, consumer pain points you seek to resolve, how you will resolve it, the products or services you will offer and how your solution is unique relative to your competitors.
- Define customer segments: This refers to the groups of people or organisations you create value for. Once you’ve analysed all the different customer segments, pick out a few segments you want to target, and create buyer personas for each of these segments.
- Outline channel strategies: Channels refer to the touchpoints where customers connect with your business. It includes the mediums you use to communicate about your proposition (such as social media ads), as well as mediums you use to sell your products or services (website, ecommerce platform).
- List out customer relationship types: You’ll need to determine the type of relationship you want to establish with each customer segment, as well as how you’ll interact with your customers across their entire purchase journey. Examples of customer relationship types include communities, personal assistance, dedicated personal assistance, co-creation, self-service and automated services.
- Specify key revenue streams: Outline how you will generate from your value propositions. Examples of revenue streams include asset sales, usage fees, subscription fees, renting/ leasing/ lending, licensing, brokerage fees and advertising.
- Specify key activities: This section outlines the tasks and activities that are crucial for making your business model work. Key activities fall under three categories: production, problem solving and platform.
- Specify key resources: This section outlines what your business will need in order to fulfil its value proposition. The main types of resources are: human, financial, intellectual and physical.
- Identify key partners: Partners are individuals or entities outside of your company that you’ll need to work with in order to fulfil your value proposition. Examples of partnerships include strategic alliance, competition, joint venture and buyer-supplier relationships.
- List out cost structures: Describe all the costs and expenses associated with running your business. There are two cost structure categories (value-driven and cost-driven) and two types of costs (fixed costs and variable costs). This is the final step of the process, and it’s an important one—as it will help you determine if you should proceed with your concept, or pivot your business.
Vision, mission and values statement
The vision, mission and values statement serve as the foundation for your business activities, and should ideally tie in together. Here are a few steps you can take to put together these statements:
- Review your strategic plan: All the information you need for writing these statements can be found in your strategic plan. Revisit your business goals, business values, strengths, opportunities and background story.
- Create a vision board: The next step is to put together a vision board. You can do so by writing down detailed statements of the problems that you seek to resolve, customers you want to serve, long-term objectives or even improvements to the world that you strive to create through your business. Another way is to do this visually—by putting together images of businesses, brands and products that resonate with your values.
- Write your statements: Review all the information you’ve gathered. For your vision statement, focus on the value that your business generates for others—whether that’s a customer or employee. When you’re writing your mission statement, ask yourself: What do I need to do in order to achieve my vision? Be concise; use short words and sentences to make it engaging and easy-to-understand.
- Seek feedback: Gather feedback from friends, customers, employees and networking groups. You can present several options for each statement, and select the one that garners the best reponses.
- Review and revise: As your business grows, so will your vision, mission and values. Review it from time to time to check that it aligns with your current goals and growth, and make adjustments if you deem it necessary.
Name your business
Coming up with a business name isn’t quite as simple as it seems, but we’ve summed up the process to make things easier—and included a few pointers you need to pay attention to:
- Brainstorm: Start off with brainstorming general concepts, ideas and words. Along with these, think through the vision, mission and values statements you’ve written out in the previous section. Then do a second round of brainstorming, where you’ll begin to jot down names that come to mind.
- Do a thorough check: First up, you should ensure that the names aren’t offensive, nor do they contain sensitive words and expressions. You’ll need to run a search on Google to check that the names you’ve come up with are not already in use, and check that the name doesn’t infringe an existing trademark. If you’re setting up a limited company, you’ll need to register your business name (tip: run a check against Gov.uk’s company name availability checker tool to ensure that it isn’t the ‘same as’ an existing name). There are different rules for sole traders and partnerships.
- Availability of domain name and social media handles: Make sure the domain name can be acquired. There’s room for greater flexibility when it comes to your social media handles, so get creative with switching the words around if you’re not able to get an exact match. You can use a resoure like Namelix which uses AI to try and find a catchy name for your business with an available domain name. There's also Namemesh which searches through available domains and suggests a huge variety of available domain names. Finally, you will definitely want to check out SEO friendly domain names - Moz put together a great domain name SEO guide here.
Set up a website
In the digital age, it’s critical that you create a strong online presence for your small business. If you’re not sure how you should begin, here’s a brief step-by-step guide:
- Identify the main purpose of your website: Depending on the nature of your business, you may make do with just a simple, foundational website—or require a complex website to run your business. Identifying the main purpose for your site will help you decide on the user experience you want to create, and consider the journey that potential customers will go through as they navigate your site. Gabriel Shaoolian, CEO of digital agency Blue Fountain Media shares: "Whatever the fundamental goal of your website is or whatever the focus may be, users should be easily able to achieve it, and the goal itself should be reinforced as users navigate throughout your site."
- Acquire your domain name: After you’ve decided on your domain name, you’ll need to check if it’s available, and purchase it through a domain registrar like GoDaddy, Google Domains, Bluehost, HostGator or Web.com.
- Select a web host: Web hosting is a service that lets you post a website or web page to the internet; without it, your domain name wouldn’t lead anywhere. The packages and features—such as amount of storage, domain names, email accounts and more—will vary depending on your web hosting service provider. This article provides handy tips on choosing a web service provider.
- Create web content: Begin by writing the copy for the main pages of your site. These are the homepage, products or services page, ‘about us’ page, ‘contact us’ page, and blog homepage. You should also write a few articles, so that your blog doesn’t show up empty when you launch your website.
- Set up a payment system: This may not be necessary, depending on the nature of your business or purpose of your website. If you need to set up a payment system, you can do so through an ecommerce software provider, or a third-party payment processor.
- Test out your website: Before launching your site, check that it works across all popular web browsers. Be thorough: check that all features and pages are working, ensure that the links are correct and that your site images are showing up. Make sure that your website is linked to an analytics program, so that you’re able to review your site performance and make improvements along the way.
- Maintain your website: Staying up-to-date is key, so make sure you review and update your blog content regularly, and publish content about recent trends, news, promotions or new products and services. It’s also important that you put in place a website maintenance plan to keep your site healthy.
Determine your legal business structure
Choosing your legal business structure is a weighty decision. It affects a number of key aspects relating to you and your business—from the amount of administrative work involved, to how much tax you pay and your personal liability should your business fail. As such, it’s a good idea to consult a business attorney or accountant before you make a decision.
There are five business structures for UK startups: sole trader, partnership, limited liability partnership, private limited company and guarantee company (non-profit). Further information on each business structure, the pros and cons to consider and key factors to evaluate can be found here:
Register your business
Now that you’ve decided on a name and legal structure, you’ll need to register your business with the relevant authorities. Here’s an overview of the items you’ll need to check off your list to get your business established:
1. Register as a sole trader:
- Register with HMRC: You may complete the online form, mail the form by post or call up HMRC on 0300 200 3310
- Name your business
- Register as self-employed
2. Register as a limited company:
- Decide on the type of limited company to set up
- Register your business name
- Register with Companies House (or use a company formation service)
- Complete the company formation process: You’ll need to complete and submit the Memorandum of Association, Articles of Association, Form 10 and Form 12
- Register for Self Assessment
Purchase the right insurance for your business
As a small business owner, you need insurance to ensure that you’re protected against the various risks that you face—from property damage, to liability claims and theft. An Entrepreneur.com article highlights the types of insurance business owners need to have in place as soon as possible:
- Professional liability insurance
- Property insurance
- Workers’ compensation insurance
- Home-based businesses
- Product liability insurance
- Vehicle insurance
- Business interruption insurance
Apply for licenses and permits
Depending on the nature of your business, you might require a license or permit before you can start operating. Examples of businesses that require licenses include:
- Child minding and nursery businesses
- Financial services
- Pet businesses
- Sale of alcohol
- Sports coaching
- Security services
While small business owners often operate on informal agreements, creating contracts is one key task you shouldn’t put on the backburner. Contractual agreements enable the parties involved to:
- Define their obligations and expectations
- Limit their liability
- Outline payment terms
- Lay out risks and responsibilities
Contracts that are essential for small businesses include:
- Business contracts
- Service contracts
- Independent contractor agreement
- Release of liability
- Equipment lease
- Non disclosure agreement
- Provisional patent application
- Noncompete agreement
- Employment agreement
- Employee handbook
Protecting your intellectual property
Intellectual property (IP) refers to something that you create. These can be inventions, designs, slogans, brands and written works (such as websites and blogs). Just as how you value your physical assets, you need to be proactive in taking steps to protect your IP assets. To do that, you need to get a good grasp on the essentials of IP laws.
IP can be protected in the following ways:
- Design rights
- Resisted designs
Assess your finances
Find out how much you need
Taking the time to do your research is the first step towards finding out how much you’re going to need to start your business. Here’s how to get started:
- Speak to entrepreneurs in your industry to get an idea of their operational costs.
- Leverage networking groups, chambers of commerce and small business associations.
- Get in touch with potential suppliers to request a quotation. You’ll want to get a quote from multiple suppliers (this will let you better negotiate prices down the road), as well as ask for pricing for different quantities to check if bulk discounts are offered.
- Speak to a business consultant or accountant.
- Understand the key startup cost elements:
- Capital expenditures: These are one-time costs required to launch your business, such as equipment or furniture purchases.
- Expenses: These costs are in most instances, deductible and recurring. Examples include wages, rent, utilities and marketing costs.
- Assets: These are items that you own that are of value. Examples include inventory, trademarks, equipment, vehicles and cash on hand.
Explore different financing options
If you require external financing, these are several options you may consider:
- Small business grants: Small business grants typically fall under the following categories—equity finance, direct grants and soft loan—and vary in size (£500 to £500,000).
- Accelerator programs: Accelerators are organisations that offer funding and support services for startups. These range from mentoring, to network access, legal support and training.
- Crowdfunding campaigns: There are various types of crowdfunding, and these differ based on what contributors are given in exchange for their support. Small business owners can opt for equity crowdfunding, debt crowdfunding, rewards crowdfunding or donation crowdfunding.
- Alternative small business loans: Alternative financing refers to financing solutions that are structured differently from traditional bank loans. Examples include unsecured loan, revolving credit facility, invoice financing, business cash advance and asset financing.
Set up a business bank account
There are several reasons why setting up a business bank account is important: it gives you more credibility, protects your personal finances and helps you stay organised during tax season. Here’s an overview of the steps you’ll need to take:
Set up an accounting system
Having an accounting system in place is an important part of running your business. Without it, you won’t be able to keep track of your finances, meet your reporting requirements or obtain an overview of your business performance. To get started, you’ll need to:
- Set up your business accounts
- Choose your accounting method
- Select an accounting software
- Set up a chart of accounts
- Create a checklist: Put together a small business accounting checklist to help you keep track of what you need to do across the year to maintain your business accounts.
- Review how you’re managing your accounts periodically: Assess how much time you’re spending; for example, while spreadsheets may work well at the start, it may be more time-efficient to transition to a more advanced solution as your business grows.
- Work with the right accounting partners: Enlisting the help of professionals can make managing your accounts easily. An accountant, CPA, bookkeeper and tax advisor are professionals you may turn to—whether you’re looking to outsource your accounting, or just need advice from time to time.
Keep up with your business tax obligations
The main business tax obligations you’ll need to stay on top of are:
- Income tax: As a sole trader, you pay income tax on business profits. If you’re running your business as a limited company, you’ll pay income tax on salary or dividends you draw from your business.
- National Insurance: National Insurance contributions (NICs) are a tax on earnings that are paid by both employers and employees.
- Sole trader: You’ll pay Class 2 NIC, unless your profits fall below the small profits threshold. You’ll also pay Class 4 NIC if your profits go over the lower profits limit.
- Limited company: Class 1 employee’s NIC will be deducted from your salary. Class 1 employer’s NIC will be paid for by the company.
- Corporation tax: If you run a limited company, you’ll need to pay corporation tax.
- VAT: Regardless of your business structure, you’re required to register for VAT if your VATable sales exceeds the VAT registration threshold.
- Business rates: Business rates are a tax on the right to occupy non-domestic or commercial property.
Know your filing dates
These are key dates you need to keep in mind for the 2020/2021 tax year:
- 31 January 2020: Deadline for first payment on account for the 2019/2020 tax year
- 31 May 2020: Final day to provide employees with P60 for 2019/2020
- 31 July 2020: Deadline for making your second payment on account for the tax year ending 5 April 2020. If this payment does not completely cover your tax debt, you'll have until 31 January 2020 to make a 'balancing payment.'
- 5 October 2020: Deadline for notifying HMRC that you are self-employed
- 31 October 2020: Deadline for a paper tax return for the 2019/20 tax year
- 30 December 2020: If you want your self-employed tax owed to be collected via instalments through PAYE, you need to file your online tax form by 30 December. Keep in mind that you're only eligible if your Self Assessment tax bill falls below £3,000, and you are paid a salary or pension.
- 31 January 2021: Deadline for filing your online tax return for the 2019/20 tax year. Also the deadline for paying your tax bill for the 2019/20 tax year.
Set aside money for your taxes
As a self-employed person, tax season can be a taxing affair. That’s because you need to work out how much you need to set aside (keeping in mind your payment on account instalments). Take advantage of tools that help you budget for your taxes, such as HMRC’s ready reckoner.
Claim your tax deductions
As a small business owner, you’re always on the lookout for ways to save money. Tax deductions are a way to do that, yet it can be confusing. If you’re left wondering: ‘What can I claim as a business expense?’, check out our resources to get a better understanding of what you can and can’t claim:
Marketing, branding and advertising
Create a brand identity
For newly established businesses, ‘done is better than perfect’ is a quote that applies when it comes to creating your brand identity.
You’ll need to put together a brand style guide, and decide on the essentials, like the font, colours and logo—but remember, having an initial look is sufficient. After all, your brand identity isn’t set in stone, and it’s something you can refine and improve on at a later stage.
In search of a designer? Engage a designer or kickstart a contest on 99designs, or check out Fiverr if you’re seeking a more budget-friendly option.
Determine your marketing budget
Creating a marketing budgeting is essential for your small business success: it acts as a guide to help you stay on track with your estimated and actual costs, ensures that you’re prioritising your marketing activities and motivates you to track your marketing ROI.
The following articles offer helpful guidelines on developing a marketing budget:
Set up a process for tracking and measuring your marketing performance
To get the most bang for your buck, you need to put in place a process for measuring your marketing performance:
- Identify your goals: Outline your short-term and long-term goals for your business and marketing. Having SMART goals in place serves as a guide, so you’ll know the right metrics to measure, and be able to identify strategies that are making a difference to your bottomline.
- Monitor your sales figures: Keep track of your sales numbers before and after a marketing campaign. It doesn’t have to be complicated; using a spreadsheet to monitor your figures will suffice.
- Track brand awareness: Speaking to your customers, conducting online surveys, checking your online reviews and using social listening tools are ways in which you can gauge your brand awareness.
- Calculate ROI: ROI compares the amount you’ve spent on a campaign against the revenue received from it. If the latter doesn’t exceed the resources you’ve invested in a campaign, then it may not be worth the effort. HubSpot has a comprehensive guide on calculating marketing ROI for various online marketing strategies, as well as best practices you can implement.
Focus on customer service
Set your returns and refunds policy
The customer experience doesn’t end with a purchase. In fact, the post-sales process is just as important, and can have a large impact on customer loyalty, retention, sales and brand reputation. Having a well-implemented returns and refunds process adds to your customers’ experience, and makes them more comfortable about purchasing with a new merchant.
Here are some tips to guide you along:
- Review your costs: Figure out what these policies will cost your business. You’ll need to work out the time and manpower costs for handling the processes, as well as bank processing fees you may have to pay.
- Find out what your competitors are doing: Your competitors’ policies can serve as a guide. Check out if they’ve imposed a time limit, or put in place exceptions (such as a no-return policy for sale items).
- Be transparent: Ensure that your customer service contact information and returns policy are prominently displayed on your website. Be upfront about any fees that your customer may need to pay, and send through follow-up emails so that your customers stay updated on their refunds or returns processes.
The Balance Small Business has written up a helpful guide for handling store returns. If you’re running an online business, check out Quaderno’s guide to refunds.
Develop an efficient customer onboarding process
According to tech firm Pitney Bowes Software, the first 90 days where a customer comes onboard is critical for the success of the customer relationship. Having an efficient onboarding process is therefore paramount, as you’re effectively showing your customer everything that you have to offer, and what you can do for them within this crucial time period. When done right, it can help improve customer lifetime value, boost customer loyalty and decrease churn.
Read more about the best onboarding practices for small businesses, customer onboarding examples you can learn from and how you can streamline the onboarding process.
Best CRM options for small businesses
As a small business owner, you’re often juggling a variety of roles and responsibilities all at once. Whenever possible, you should tap into tech tools that can streamline your operations and boost your efficiency—and here’s where CRM software comes into the picture. Using the tool, you’ll be able to easily organise your contacts, manage your sales pipeline, generate reports and segment your customers.
When selecting your CRM software, key features to look out for include:
- Affordable pricing
- Reliable customer support
- Ease of use
- Good customisation
- Integration with other tools
- Free trial period
Set up key operating tools and processes
Develop an effective internal communication strategy
Communication is the glue that binds an organisation, and is important for any business—large or small. Yet, developing an effective internal communication strategy can be particularly tricky for newly established businesses, given that the lack of organised processes and clearly defined boundaries between business functions and roles.
To improve internal communication at your business, you can:
- Provide regular updates: Keep your team updated on changes, progress, challenges and upcoming plans. This can be done through team meetings, or a weekly email or newsletter if you’re managing a virtual team.
- Increase knowledge sharing: Creating opportunities for knowledge sharing can increase workplace social interaction, boost productivity and keep employees motivated. This can be done through organising off-site events, setting aside time for a bi-monthly meeting to share content or creating a Slack channel where team members can share their thoughts and readings.
- Implementing a mentoring or shadowing process: Assigning new team members to a mentor facilitates knowledge transfer, and encourages further collaboration in the workplace.
Use a project management solution
Managing projects effectively in a small business presents its own unique challenges. You’ll need to oversee multiple projects—on top of other roles you’re in charge of. Having the right software can help you stay organised, keep communication channels open and track your progress easily. Refer to Zapier’s guide for a list of the best project management apps for small businesses and individuals.
Decide on a suitable team or office setup
The digital age has brought about significant changes in how we live and work. Thanks to the myriad tools and technology available, remote working is now an option that small businesses can embrace. If you’re undecided between establishing a remote working or office working setup, here are some questions that can guide you towards making a decision:
- Does remote working make sense for my business model?
- Will I adopt a fully remote work model, or will I retain my physical office and implement a hybrid setup?
- Do I engage freelancers, or hire full-time remote employees?
- Do I have the facilities and tools required—such as coworking space, virtual services, remote work tools—to make remote working a success for my business?
Building a team
Know your responsibilities as a first-time employer
According to HMRC, you need to:
Keep proper employee records
As an employer, you’re required to keep the following records:
- Tax and National Insurance contributions: These should be kept for three years up to the end of the tax year they relate to.
- Details of the employee’s pay and pay slips: These should be kept for three years up to the end of the tax year they relate to.
- Incidents related to Health and Safety, such as accidents, injuries and dangerous occurrences.
- Work-related medical examinations after handling hazardous materials: These must be kept for up to 40 years after the date of the incident.
- Working Time Regulations: You’ll need to retain up-to-date records of workers who have agreed to opt out of the 48-hour working week. Maintain a list of the names of these workers, along with a copy of the opt-out agreements.
It’s also recommended that you keep the following records:
- Statutory Sick Pay (SSP) and paid sick leave. It’s recommended that these records be kept for three years up to the end of the tax year they relate to.
- Employment history, such as the date of hire, promotions, etc.
- Personal information, such as contact details and qualifications.
- Terms and conditions of employment.
- Pension scheme records
- Pension scheme investments
- Termination of employment
- Working time records
Set up a payroll system
Setting up a payroll system isn’t just about making sure your employees get paid. You’ll also understand the different components of payroll, and make sure that you meet HMRC’s requirements—or risk facing penalties. Here’s a brief overview of the steps you need to take:
- Understand the different components of payroll
- Salary, wage and net/ gross pay
- Additional payments, such as commission or tips
- Tax and National Insurance contributions
- Employee benefits
- Consult an accountant on payroll best practices for small businesses
- Choose a payroll software
- Comply with HMRC’s requirements
- Maintain up-to-date records
- Determine a pay period for your employees
- Schedule in reminders so you don’t miss any filing or payment deadlines
- Choose a payment method
Brush up your leadership and management skills
Being a successful entrepreneur doesn’t necessarily translate into being a great leader or manager—so it’s important that you invest time in developing the required skills. The following guides serve as a good jumping off point:
Supplement your team with consultants and freelancers
If you aren’t yet ready to hire full-time employees, consider building out your team with freelancers for a start. The following articles will guide you along: