Updated: Feb 17
Our business start-up checklist covers 22 planning essentials that you may have to address when setting up a new business, whether in the form of a limited company, Limited Liability Partnership (LLP), or sole trader structure.
Whilst some of the points on our checklist may not apply to you at the moment, it’s worthwhile considering each one to minimise the risk of overlooking important factors. Lack of research, poor planning, and simple oversights are often the most common reasons why many business start-ups fail to get off the ground.
1. Research your business idea
Researching a business idea is crucial. Before investing too much time and money, you need to determine whether your business start-up is viable, relevant, and sustainable. Consider the following points when embarking on an effective market research strategy:
Examine the market and industry you will be entering:
Is it sustainable or dwindling, saturated or under-served?
Is there significant demand or a real need for your product?
Analyse the competition:
What do they do well?
Where are they failing?
Can you compete with them?
Apply these findings and use them to your advantage
Research your potential customers:
Where are they located?
How will you reach them?
Analyse their demographics to obtain useful insight
Test out your business start-up idea by conducting surveys, questionnaires, and focus groups. Ask friends and family for their honest opinions. These research methods will give you a better understanding of whether your business has the potential to succeed. You will likely receive critical feedback that could help you to improve your product or service.
2. Write a business plan
Writing a business plan is an essential step in the start-up process, especially if you intend to approach investors, banks, lenders, or specialist advisors. They will expect to see a detailed outline of your business start-up idea that demonstrates what you plan to do and how you plan to achieve it.
You may also be expected to include financial projections for start-up and running costs, and you should be able to illustrate the viability and sustainability of your business idea.
If you’re setting up on your own and don’t intend to approach third parties for assistance, it’s still a good idea to write a business plan. It will help you to stay organised, remain on track, and monitor your progress throughout the business start-up process.
3. Choose a business name
The name of your business is incredibly important, so it’s worth dedicating sufficient time to this task. Throughout the course of your brainstorming sessions, you will likely come up with many potential names (and some utterly ridiculous ones, too). The process can be enjoyable, amusing, and frustrating in equal measure. Eventually, however, you will have that lightbulb moment when the perfect business name just pops into your head.
Don’t rush the process – give yourself plenty of time to choose a business name. Write down everything you think of because the most unlikely word, phrase, or idea could lead to the perfect name.
Think about your products or services, the values and mission of your business, the market you are entering, and the people you are targeting. You could also ask friends and family for ideas and test out your potential names to see what they think. All of these factors are useful.
When you have a shortlist of proposed business names, do an online check against the Companies House register. This will enable you to find out if a name is available to register or if it is already being used by an existing company.
You should also check the Trademark Register online to ensure your proposed business name is not the same as a registered trade mark.
4. Choose a legal structure
There are many legal business structures available in the UK. The most popular ones are:
Private company limited by shares
Private company limited by guarantee
Limited Liability Partnership (LLP)
Sole traders are self-employed individuals who have personal liability for all business debts. If you want to operate as a sole trader, you will have to register with HMRC, complete a Self-Assessment tax return each year, and pay Income Tax and National Insurance on your earnings.
Limited companies are incorporated at Companies House. They can be owned and operated by one person or multiple people, so there is more ownership flexibility with this type of business structure.
A limited company exists as a legal ‘person’. This means that it is responsible for its own liabilities. The owners of a company are protected by limited liability, so they are not personally liable for business debts other than what they formally agree to contribute to the company.
Limited companies are often more tax-efficient than sole trader businesses. A company limited by shares is most suitable if you want to keep business profits for yourself. A limited by guarantee structure is better suited to non-profit businesses and charitable enterprises.
Limited Liability Partnership (LLP)
A Limited Liability Partnership is a great structure for accountants and other types of professionals who want to run a business partnership with other people. You need at least two people to set up an LLP. This type of business structure is very similar to a normal partnership in terms of ownership structure and taxation, but it has the added benefit of providing limited liability to the partners.
5. Business bank account
Once your business is registered, you can set up a business bank account. This is the best way to manage your finances effectively.
Avoid using your personal bank account when your business is up and running, unless you are a very small sole trader, because it will just complicate matters. Start as you mean to go on by drawing a clear line between business and personal finances.
6. Finance for your business start-up
You should give serious thought to how you will finance your new business. This includes start-up costs and expenses, as well as running costs and personal income management. Many small businesses are self-funded, whilst others require financial assistance. If you are planning to self-fund, you may need to keep your existing job while setting up and establishing your new business.
There are many ways to finance a business start-up, including:
Borrowing from friends and family
Small business loans
Overdrafts or 0% credit cards
Investors or business angels
Government loans or grants
To find out if you are eligible for any type of government-backed financial support, check out GOV.UK’s business finance support finder tool.
7. Suppliers and manufacturers
Give yourself plenty of time to research potential suppliers and manufacturers. Ask for prices, including VAT and shipping costs. Get samples of materials or products before placing large orders. Find out about their minimum order quantities (MOQs).
If a manufacturer is going to produce products for you, place a sample order of prototypes to ensure the quality, workmanship, and durability of the product is up to scratch. Determine timescales for production as well.
If you’re dealing with overseas suppliers and manufacturers, it may be beneficial to register for VAT before placing any orders. This could save you a great deal of money because businesses in certain countries are required to charge VAT to overseas customers who are not VAT registered.
8. Business premises
Running a new business from home is the best way to keep costs down, especially in the early days when you’re just starting out and not making much (if any) profit. However, that’s not always an option for everyone.
If you need dedicated business premises, give yourself plenty of time to find somewhere appropriate. You need to think about:
the size of premises you require
how much you can afford to pay
the location that best suits your needs and budget
how you plan to occupy the premises – tenancy, lease, licence, or purchase
Agents and brokers can assist with the search. You should also visit potential areas yourself and look around for available properties. Ask professional contacts and local businesses in your desired area if they are aware of any available premises. Can they recommend an agent, broker, or property manager?
Here at the SME Centre of Excellence, we specialise in offices that are suitable for start-ups, so why not checkout our physical offices.
9. Company logo
Your company logo and business name will create your brand identity, so they have to be both appropriate and memorable. Try to come up with some concepts and designs yourself. This will lower your graphic design costs. Depending on your needs, you should expect to pay anywhere between £250 – £4,000 for someone to create a company logo. The more ideas and information you give the designer, the cheaper it will be.
Ideally, take a look online for local, independent graphic designers. If you’re on a tight budget, do not approach big firms because their fees are high. Be clear about what you want and give the designer as much information as possible about your business, its values, your products, and your target market. You could also take a look at some DIY logo sites and create a free one yourself.
10. Websites and social media
Take a look at your competitors’ websites for inspiration. Are they visually pleasing, easy to use, responsive, informative? Based on your findings, you can think about how you would like your website to look and behave. If your website is unappealing or difficult to use, people will simply leave. It’s important to get it right or you’ll lose potential customers.
You can build a website yourself through a number of online sites. They provide standard, professional templates that you can personalise and adapt to your needs. Alternatively, you can get a web designer to create a site for you. Many independent graphic designers offer these services, so you may be able to use the same person for your logo and website.
Social media is a really important consideration, too. It is one of the most effective and affordable ways to promote a business and connect with potential customers. Be sure to keep your accounts up to date, post relevant and interesting content on a regular basis, and engage with your followers and customers. This will help to build trust, confidence, and strong relationships.
11. Licences and permits
Depending on the type of business you are setting up, you may require licences and/or permits in order to trade. Use this online licence finder from GOV.UK to determine if you require any licences for your business start-up.
12. Business insurance
There are a number of different types of business insurance policies you might need, such as:
Director’s and Officer’s Insurance
Buildings and Contents
Goods in Transit
13. Data Protection and Information Rights
Data protection and information rights are often overlooked, but these are things that most businesses need to be aware of. If you will be holding information on any individuals (including customers, employees, or suppliers), the Data Protection Act requires you to protect that information.
The Information Commissioner’s Office (ICO) also provides a useful data protection self assessment checklist for small business owners and sole traders, which we highly recommend.
14. Intellectual Property (IP) protection
Intellectual Property relates to trademarks, patents, copyright and design rights. You may wish to protect an idea, product designs, or a work of art. You can even protect your company logo to prevent others from stealing, copying, using, and selling it without your permission.
15. Money Laundering Regulations
Certain types of businesses are legally required to comply with Money Laundering Regulations. This involves carrying out ‘customer due diligence’ measures to ensure your customers are who they say they are. The most common types of businesses that the regulations apply to include:
Financial and credit businesses
Independent legal professionals
Estate agency businesses
Company formation agents
GOV.UK provides guidance to help you to determine if Money Laundering Regulations apply to your business.
16. Business addresses
If you are setting up a business start-up as sole trader, you will need to provide a trading address for HMRC. You will also need a business address for your customers and other contacts, and a returns address if you are selling physical items. You can use the same address for all of these purposes if it is suitable.
If you are setting up a limited company or LLP, you will need to provide a registered office address. This will be your company’s official contact address. A service address must also be provided by each member, director, secretary, and Person with Significant Control (PSC). Additionally, you may wish to set up a business address and a customer returns/shipping address.
Let us help you get a professional business address in Newcastle Upon Tyne. Visit our virtual office page to find out more.
17. Labelling and packaging
Not all goods require labels, but the vast majority of retailers do have to label their products. Retailers must state the price (including VAT), quantities, and metric measures (where applicable) on product labels.
If you plan to sell food and drink, products for children, footwear, or precious metals, there are special rules you will have to follow. Safety information must be included on any products that are dangerous.
If you plan to sell textiles, including furniture, flooring, clothes and fashion accessories, you must adhere to the EU Textile Products (Labelling and Fibre Composition) Regulations 2012.
All information displayed on labels must be accurate. It is a criminal office to include anything misleading on product labels.
Product packaging and presentation makes a lasting impression, particularly if you are selling luxury items. The right packaging can really add value to your products.
The Food Standards Agency imposes strict rules on packaging food and drinks. There are also special rules for medicines and potentially dangerous chemicals.
Furthermore, the Packaging (Essential Requirements) Regulations 2015 (SI 2015 No. 1640) requires all businesses to reduce the impact their packing has on the environment by adhering to volume and weight restrictions and ensuring that all materials can be ‘recovered’.
For advice on the specific labelling and packaging requirements for your products, please contact your local Trading Standards office.
18. Product delivery and returns
If you will be sending goods by post, you must provide a secure and reliable delivery service. Think about the following:
How will you package your products?
How much will you charge?
What delivery options will you offer?
Will you provide international delivery?
Look at your competitors’ delivery policies and fees for guidance. Match or exceed their services.
Depending on the volume of orders, you might have to use a courier. If you only have a few items to deliver on an occasional basis, you may be better served using Royal Mail and Parcel Force.
When it comes to customer returns, you have certain legal obligations. You must offer a refund if a product is faulty, not as described, or does not do what it is supposed to do. Customers are entitled to a full return if a product is returned within 14 days. Many businesses increase this to a 30-day period.
You will also have to think about whether to offer free returns. In certain situations, businesses have to pay return postage fees, i.e., when goods are faulty. Offering free returns can have a positive impact, even if it’s just for first orders or on an ad-hoc basis to encourage sales.
19. Business stationery
You will most likely need various types of stationery for your business start-up. Ideally, your stationery should be customised with your business name, logo, and contact details. Companies and LLPs are legally required to state their name, registration number, and registered office details on various forms of stationery.
The types of stationery you may require include:
Returns slips and labels
Leaflets and flyers
Discount and gift vouchers
Printed envelopes and labels
Stationery is often an afterthought, but it shouldn’t be. It is an effective way to promote your business, create a lasting impression, and establish a strong brand image. Use good quality paper and avoid cheap images and clip art. Try to be environmentally friendly wherever possible by choosing recycled paper and eco-friendly inks.
20. Employing staff
If you plan to employ other people to work for your business start-up, you will have a number of obligations and responsibilities, including:
Registering with HMRC as an employer
Adhering to Health and Safety requirements
Taking out Employer’s Liability insurance
Enrolling eligible employees in a workplace pension scheme
21. Marketing Plan
A marketing plan may be the key to success. If you don’t market your business start-up, no one will know you are there. You have to introduce yourself to the world by telling them you exist. Give them a reason to care. And remember: marketing is a continuous process, even when your business is established and successful.
22. Tax and Accounting
Once you have set up your business, you will need to register with HMRC for certain taxes. This may include Corporation Tax, VAT, PAYE, and Self-Assessment. It depends what legal structure you choose. This is when the joyous tasks of bookkeeping and accounting come into play.
We would advise consulting an accountant for assistance and guidance on running your business start-up in a cost-effective and tax-efficient manner. Take a look at our accountancy packages that can support you from day 1 and grow with you as you develop your business.
Concentrate on the fun aspects of setting up and growing your business and get someone else to do the tedious paperwork. You won’t regret it, unless you’re a glutton for punishment.