The COVID-19 has unveiled an entirely fresh perspective of starting a business today. Although the effect of the pandemic seems to be long-lasting, the world is expected to return on track swiftly.
However, the UK witnessed a slow growth in 2021 compared to previous years, but the business opportunities are mushrooming at an impressive rate.
With that said, if a vaccination drive is carried out efficiently to restrict the spread of COVID-19, UK is expected to witness a juncture of innovation and excellence in 2022.
Meanwhile, many individuals seek opportunities to start a business in 2022 and struggle to make a mark amid COVID-19.
Supporting mid-size businesses and making room for economic development and employment is the primary aim of the UK finance department for 2022.
Given this, how to start a profitable small business in the UK in 2022?
The blog is a step-wise step formulation of how to start a small business in the UK in 2022.
How to start a Small Business in the UK in 2022:
Nearly 66,00,000 businesses register every year in the UK, and among these, only 40% make a mark. Why?
The reasons for business failure in the UK are:
- No proper business plans
- Failure to understand business concepts
- Ignoring potential aspects in data
- Not understanding the trends and marketplace
Given this, how to start the most profitable business without failing?
Here is how you can!
1) Understand the legal requirements of a small business in the UK
Understanding the legal requirements of a business in the UK is imperative for registering a business in the country. While doing so, be mindful of the type of legal business structure to choose:
- Sole trader ( 1 owner)
- Partnership ( where two or more people are involved in costs and risk undertakings)
- Limited company
Analyse the licence requirements for starting your business in the UK.
Moreover, for protecting a business against risks, some insurance policies are legally required:
Primary insurance covers to consider:
- Employment protection covers
- Cyber covers
- Business interruption
- Public liability covers
- Professional indemnity covers
2) Test your business Idea
Maximum individuals start up a business without delving deep into the potential and loopholes of the business and thus end up shutting it down.
Before kick-starting your business, identify:
- Whether your business idea is viable?
- Who is your target audience?
- What existing problem do you solve?
- How do you differ from your competitors? What is Your Unique Selling Feature?
To identify these, you can conduct a SWOT analysis:
STRENGTHS: Things that position your firm on the top
WEAKNESS: Things that your company lacks, or your competitors, have the edge over
OPPORTUNITIES: The emerging need for your products and services in the market
THREATS: Shifting consumer behaviours
Test your potential customers by launching webinars, surveys, or questionnaires to understand:
- Who are the actual buyers of your product?
- How much are they willing to pay?
- Your competitor’s image in customer’s eyes
- What potential problems does your business face?
3) Craft a Business Plan
A business plan outlines the initiatives to take when and how to implement them most profitably.
Your business plan should include the below parameters:
- Summary: an overview of your business- aims, story, and procedure to achieve it.
- Business idea: what you plan to offer, who is your audience, why your idea will be a success?
- Marketing strategy: details on competitors, pricing, distribution, and marketing tactics
- Operations: business location details, production, and IT support
- Financial Projection: cash flows, balance sheets, income and revenue details, capital needed, the collateral you can offer
4) Secured Finances
After outlining your business idea and walking past the terms and conditions for starting a business in the UK, the most important thing to analyze is-
“How much capital do you require to start your business in the UK?”
Are you going to dissolve all your savings?
If you fail to rationalize any of the above ideas, you can contact a direct lender. Why?
Benefits of hiring a direct lender for your business
- High liquidity premium
- More upside potential
- Low volatility
- Greater diversification
On the flip side, direct lending may cost if you fail to:
- Manage the fund leverage
- Establishing a strong source pipeline
- Complete the due diligence
- Secure the investment
Analyze every aspect of a business loan before applying for the same.
5) Branding your business
What first strikes your mind when you think about your business?
How do you want your customer to think about your brand?
Branding is an important part of making your business known to your customers online. Thus, it is imperative to position your brand’s message in the most impactful manner that it:
- Relates well with a problem or a desire
- Creates a belief
- Invites a TESTED- Solution
In this, focus on KEY drivers: Logo and company Name
How to decide the right business name?
- Analyse whether it aligns with customer problems and business goals
- Is it comprehensible?
- Is it easy to memorise?
To talk about logos, a logo is the primary business identifier and the face of the firm. Hence, it should be catchy, smart, and fulfil a purpose. It should send across a powerful message backed by a dynamic story.
Many individuals are die-heart fans of Cadbury. What made Cadbury an instant success?
The logo. How?
In the UK, purple is a colour of royalty. Cadbury created their handwritten font in purple that touches the class and relates well with chocolate lovers.
Message: When you buy Cadbury chocolate, you are buying the best in the world!
6) Abide by Tax guidelines
Running a business comes with multiple business obligations, and taxation requires undivided attention.
Registering with HMRC or Companies House makes you eligible for a £1000 tax allowance.
Before that, you need to understand the business type and registration rules:
- Register with HMRC
- submit an annual self-assessment tax return
- Register with Company House
- Pay corporation tax on profits
- File a company tax return
- Pay VAT
Most Successful Small Business To start in the UK in 2022:
- Coffee shops
- Car washes
- Food delivery Outlets
- Internet-based companies
- Accountant firms
Thus, test your business against the major business failures and ensure a strong technological backing to thrive in a cut-throat business environment.
This is how you can start your small business swiftly in the UK in 2022. To help make the process smooth and obtain a business loan in the UK, it is advisable to seek legal advice.