How to start a small business in 5 simple steps
Whether looking for financial freedom or a strong desire to be independent, learning how to start a small business is the first step towards achieving your goals. Starting a small business always seems daunting, but it shouldn’t be. As with any new project that involves change, having a plan (or in this case, a business plan for small business) in place is a great start.
The following 5 steps are a great starting point for any aspiring small business owner, and provide the small business guidelines you can follow to kickstart your project and hit those initial milestones.
If you're asking yourself how to start a small business in 2022, don't worry—you’re not alone. According to the FSB, there were 5.5 million small businesses in the UK in 2021, with 4.2 million of those having no employees. Starting a small business has never been easier, with information readily available on the web and some amazing free small business tools available such as SumUp’s online business account.
With the SumUp Business Account, you can send and receive money instantly within the UK, spend anywhere with your free contactless Mastercard and manage all things money in one convenient place.Sign up for free
1. Finding ideas to start a small business (and choosing a name)
Some people start a small business to live from their passions, or to chase a creative idea that's inspired them. Others base their choice on proven methods that have worked for other successful business owners and entrepreneurs. Remember, the majority of the big businesses we know today started out as a small business idea.
Once you have your small business idea, ask yourself a few key questions before moving on to the next steps:
Is there a market opportunity for your small business?
Is the opportunity sustainable, or lucrative in the short term?
Who is the competition and how are they doing?
Does your product or service have any specific requirements? (Diving into the food and catering industry, for instance, may require a specific licence to serve alcohol.)
There are no right or wrong answers when trying to find your business idea, but each product or service will have a different outcome, and require a different approach when figuring out how to start a small business.
Once you’ve narrowed down your idea, don’t forget to come up with a name that differentiates you from the competition, all the while being identifiable and easy to pronounce. The last thing you want is to start a small business in the UK with a name that doesn’t resonate with your target audience.
Originality is important for a small business, too, especially when starting a small business online. Even if your initial concept and plan forgoes an online presence, asking yourself how to start a small business online is a great way to plan ahead, and should be part of your business plan for later on.
Make sure to check the availability of domain names as well, and whether the name you’re thinking about is trademarked or not. This extra step will allow you to start a small business with peace of mind.
2. Validate your product idea (or service)
You’ve got the idea, you’ve got the name, now we just need to validate it. Before diving into writing a business plan, or spending money on stock and marketing efforts, take a moment to gauge interest and preferably get some firm commitment from prospective buyers.
One way to figure out initial interest without overspending is to start a small business online and take pre-orders. This allows you to reach a wider audience than by selling products in person.
SumUp offers a free online store builder, allowing you to validate your business idea with no upfront fees and minimising the risks of starting a small business.Build your online store
Make sure to gather as much feedback as possible during this phase by reaching out to potential distribution networks and directly to potential customers. Their feedback can help you grow and succeed.
3. Write a business plan
On paper, a business plan is an old formality that has seen its usefulness come and go. There are still a couple of important use cases for a small business though, so don’t skip writing a business plan when starting your small business.
Planning: a business plan does just that, it lays out the roadmap ahead for you and allows you to focus, minimising risk (and stress)
Business plans have different sections such as the target market, your strategy, your resources, the financial elements, short-term outlook, and initial results from the previous step
A business plan is also a great supporting tool for a small business when looking for a small business start-up loan or start-up grant
On the topic of resources, there are a number of free services and tools out there to help you start your small business. SumUp has built an ecosystem that includes a free business current account and Mastercard, free online store builder, and an industry-leading card reader that you can use to take payments on the go.
By including the smart allocation of resources and showing that you’ve done some research into tools such as those made by SumUp, you’ll be increasing your chances at that small business start-up grant that will kick start your project and get things going.
4. Small business start-up grants, cash flow and a business account
When you decide to start a small business, you’re going to need to manage cash flow. The good news is, budgeting is something we do in day-to-day life on a personal level, so adapting it to the small business world is straightforward.
To give your small business an extra edge early on, you can apply for a number of small business start-up grants in the UK. Some are regional, others are available across the country. This injection of funds will allow you to start your small business with extra stock and marketing efforts to gain further traction and start that snowball effect.
When managing a small business, cash flow is important. You’ll have a number of costs to manage depending on your business type, such as operating costs, marketing costs, online costs, product (stock), shipping, and potentially payroll if you take on an extra pair of hands.
By making some smart decisions and shopping around, you can improve your small business’s cash flow without adding pressure to your bottom line. The best way to do this is to start with a business account, thereby separating your business’s finances from your personal money. This can often be a costly exercise with banks taking initial sign-up fees, monthly fees and transaction fees for every operation you do.
Our free online business account is designed specifically for sole traders and small businesses, and operates just like a UK current account. You can make free, instant bank transfers within the UK, pay online or in-store with the complementary business Mastercard, withdraw cash for free 3 times a month and manage all your money in one place. We’ve decided that you no longer have to choose between a free business account or a functionality-rich online current account: your business deserves both.
Managing your small business’s finances shouldn’t be costly or overly complicated, simply sign up for a SumUp Business Account and download the app today on your mobile device.Open an account
5. Launch your business
You’ve gone from the daunting prospect of figuring out how to start a small business to having a proof of concept for your idea and a business plan to follow. It’s now time to launch your business and put all that planning and preparation into practice.
With the backing of a SumUp Business Account, you can keep your finances in order and build more and more traction to make your business a success. You can even use your business account to sign up for some paid ads (or pay a third party to help out) and get your product in front of your target audience in a relatively cost-effective way.
Maybe you’ve decided to launch your business at a specific local or regional event such as a market or a trade fair. This is a great way to start building your brand, and your reputation. We love putting a face to a name in the UK, and doing business face to face puts a positive swing on any sales efforts. Make sure to take one of SumUp’s card readers with you, such as the SumUp Air, a device which works with your smartphone’s 4G network, allowing you to take card payments, or even payments directly from other smartphones.
Another great way to start gaining traction is to reward early adopters and initial customers with special discounts or points. You can do this and more from your SumUp ecosystem (all with no upfront cost). Simply log in to SumUp and create some gift cards for your customers to redeem. By doing this, you also gather valuable customer contact details that you can use to keep in touch and encourage repeat business.
Once you figure out how to start a small business, be it as a sole trader or with business partners, you start a journey full of unknowns, but with a bit of planning and the right partners, you can achieve your goals, and much, much more.