Contrary to popular belief – you don’t need a long track record or a mega-rich backer to start a business!
How many of us have had a great business idea that we never get off the ground because we think it’s unworkable? It becomes even more frustrating if you see someone else take that idea, start their own business and make a success of it. However, there is good news, because learning how to start a business from scratch is much easier than you might think.
The startup community
According to the governments business population estimates for the UK and regions 2021: statistical release. there were 5.6million private sector businesses in the UK at the start of 2021. This is a 6.5% decrease from 2020 and likely due to the Coronavirus pandemic yet 99% of these businesses were SMEs.
It’s estimated that 56% of these businesses were sole traders, 37% limited companies and 7% partnerships and contributed around half of the turnover in the UK private sector.
From zero to hero: How to start a business out of nothing
Of course, getting finance from banks is difficult when you’re starting a business from scratch, but don’t worry. Thanks to the rise of digital technology the barriers to entry have come tumbling down.
Due to high-speed WiFi, you don’t necessarily need to spend money on an office. Many businesses can be run directly from your laptop wherever you are at any given moment: your home, a café with internet access, an airport lounge or the train. You might even run it during breaks at work.
If you can figure out how to start a business on a small scale in your spare time, you won’t have to quit your job: that means you can avoid that terrifying transitionary phase when you’ve lost a reliable income and aren’t making money through your new business. This has become increasingly popular over the years, as there has been around a 32% increase of businesses run on a part-time basis, which contribute a huge £14.4bn to the UK economy in the last 10 years!
If the traditional banks have turned their back on you, that doesn’t mean there aren’t options. Business accelerator programs are becoming increasingly popular. Some are run by governments; others by big corporations such as Virgin who want to be seen as helping entrepreneurs.
Another useful option is crowdfunding. Crowdfunding platforms offer a chance for businesses to go directly to the public and raise capital. It bypasses the banks and gives ideas a chance to thrive. If people like them, they will be willing to back them with cash.
There are also tools out there such as CreditFocus, which are aimed to help you build your business credit score, which once achieved means you can get better financial terms on loans. Find out more here.
So, there are ways to get around the lack of money, but one of the biggest obstacles, if you’re starting a business from scratch, could be your lack of expertise. The world is full of people who had a great idea but knew very little about starting up and running a business. One of the most common things small business owners say after a failed venture is ‘I wish I’d known at the start what I know now’.
Interestingly according to startups.co.uk, nearly 2/3 of entrepreneurs had no experience of owning or managing a business, but over half said they had already worked the sector they started their business in.
Many entrepreneurs go through several failed ventures before they get it right. Experience is valuable and you need to get as much as you can. Try attending low-cost workshops. These are often run by successful entrepreneurs and give you a chance to learn the lessons from their past.
Networking events can open up new business opportunities and introduce you to people who can help you in many surprising ways. At the very least they represent opportunities for group learning. You can swap ideas with other entrepreneurs and come away with lessons that may prove useful in your journey. And don’t panic: we’ve got some good tips for networking if you’re uneasy about diving straight in.
The web can be a great tool. There are lots of forums in which entrepreneurs discuss their adventures, as well as dedicated publications such as Entpreneur.com, our blog and our knowledge base, which have lots of invaluable content aimed at providing help and support to those worried about how to start a business successfully.
Do your research
Aside from this, all that remains are the usual tips we would give to any budding entrepreneur. Do your research. See what’s available in your local area and in your market. Understand the competition and work out if you can offer people something that they do not. This can be a great form of due diligence in itself. If there isn’t another company in your sector then it means two things: either you’ve hit upon an amazing idea that nobody has ever thought of yet, or there isn’t a market for your product.
Creating a limited company
Before you start trading, though, you will, of course, have to go about creating a limited company. This can be relatively straightforward, but it’s worth getting right. Register your company early and get all the necessary details out the way.
So, even if you don’t have much in terms of money or experience, it is possible to make that dream business idea a reality. Here at the Formations Company, we offer a range of resources to help you out. If you want to know more about how to start a business from scratch, check out the knowledge base for more advice. Or, get to work creating a limited company now by checking out our different packages.