Starting a new business: A step-by-step guide

Want to be your own boss? Congratulations!

Ideas are great, but building a start-up can seem overwhelming. But don't panic. We've created a foolproof list on how to build a start-up from scratch.

The idea is to help you understand everything you need to know to get started. We've included links to relevant resources in each section.

How to build a successful start-up from scratch

1. Come up with an idea

The first thing you need to do to start a new business is to come up with an idea. Will your business be selling a product or are you looking to provide a service?

Not everyone has that ultimate lightbulb moment so think about ways your new business can fulfil people's needs or solve a problem.

Many businesses come about because the founder has spotted a gap in the market. If you're looking for something you just can't find, other people may be looking too and your new business could provide the solution.

Another way to settle on a new business idea is to find a product or service that already exists that you could do better or cheaper.

Finally, you need to love what you do when you're running your own business, so what about turning your passion, hobby or skill into a company?

2. Research the market

If you don't have a market for your product or service, you don't have a business. It's crucial that you spend time researching whether there's a need or desire for your product or service and who your target customers are.

Interview your target customers and ask them about your new product or service. You could set up a focus group of people with certain demographics such as age, location and education or send potential customers a survey to fill in.

You might think that you need to target a very big customer base but finding a niche can often be more effective.

As Mike Thompson, founder of Boozie Biccies, says:

"Narrowing down your target market might feel like a reduction in your business potential but use the advice to define a target niche to really see your business grow."

You also need to research your competitors so you know your place in the market. Look at what they charge, how they market to customers and their levels of customer service.

VIDEO: Everything to know about market research

Marketer Anna Morrish looks at how businesses can understand their position online, including how and what they appear for in search results. She also discuss competitors and what you can learn from them:

3. Decide on your business structure

There are different legal structures you can use for setting up a business. These are your options:

Sole trader

The easiest and cheapest way to start a new business. You need to register with HM Revenue & Customs (HMRC) and pay tax through Self Assessment.

Partnership

If you're setting up a business with someone else, a partnership might be a good option. You'll share responsibility for your business including any losses, costs and profits. If the business fails, you're personally responsible for debts.

Limited liability partnership (LLP)

A limited liability partnership (LLP) is similar to a partnership, but different in that you're only responsible for the debts up to the amount of your investment in the business.

Limited company

A limited company is a legal entity in its own right, which means the assets and debts are separate from those of its shareholders.

That means if the company experiences financial difficulties, the personal assets of the shareholders are not at risk and each shareholder will only lose the value of their original investment.

The company can pay directors and shareholders a salary or dividend from the profits. Limited companies are more tax-efficient than the sole trader status but you need to submit full accounts to Companies House every year and pay corporation tax.

VIDEO: Self-employed or limited company – which is better for you?

In this webinar, accountant Anna Romasko discusses the pros and cons of setting up a sole trader or a limited company. She also shares top tips that will help you decide how to register your new business:

4. Create a business plan

A business plan gives you a clear sense of direction and provides a structure to your business's growth.

The plan should include details of the size of your market and demographics about your target customers such as age and location. You should also outline your marketing plan and how you intend to reach your customers.

Use your business plan to set out the competition your business faces and operation costs such as stock, rent, IT equipment and manufacturing capacity.

Include a cash flow forecast that shows the sales for the time period you're writing the plan and your costs. This will give you your projected profits and help you understand how many sales you expect to generate.

Entrepreneurs need to stay flexible so your business plan should be a moving document. As your business grows or the market changes, you'll need to adapt it but planning from the moment you start a new business will keep you focused and help you predict stumbling blocks you might face.

The main sections of a start-up business plan

• Executive summary

• Your vision and objectives

• Opportunity analysis

• Sales and marketing

• Logistics and operations

• Finances

VIDEO: How to write a business plan, and why you need one

Marketing expert Sophie Eglin explores the key elements of a business plan and why this plan matters, and shares practical tips for developing a plan that works for your unique needs:

5. Raise money for your start-up

Many ideas require more than just grit to get started. If you need cash to start your business, don't worry: there are a number of routes you can take.

The key is to know what type of funding is relevant to your business – and what’s available. Every funding source has positives and negatives.

If you raise investment, you're selling shares in your business and giving up some control. Investors will need to be convinced that the idea is worth backing too, which normally means you've made progress in proving demand for your product or service.

Loans need to be paid back and some will require a personal guarantee, meaning that if your business fails you'll be personally liable.

Grants are great because you don't have to pay them back, but they normally have strict criteria on how you can use them (here's more on how to apply for a grant).

VIDEO: First steps to getting investment

In this webinar, pitching coach Henry Blanchard discusses business funding in the UK – who's offering it, who can apply, and how you can get in front of the right investors:

6. Get your legal affairs in order

The paperwork doesn't stop with registering your business. There are a number of other things you need to get sorted when you're building a start-up from scratch.

The other key areas to think about are intellectual property (IP) and whether there are any requirements for the space you're trading in, such as health and safety or food preparation guidelines.

After registering, here are the main areas you need to look at:

• Checking you're meeting the requirements of any relevant regulations (such as food and drink, and exporting)

• Following health and safety guidance

• Getting insurance

• Making sure you're keeping to GDPR, the data protection law

Use our setting up a business checklist to make sure you have all your legal bases covered.

7. Create a winning brand for your start-up

Branding is a vehicle for communicating with customers, conveying a clear message and influencing the way people perceive your business.

These days, there's far more to building a winning brand than simply whipping up a logo and whacking it on your product.

Your brand has the potential to boost your business in lots of ways. Invest time in getting it right and it'll really pay off in the long run.

One of the first aims of a new business is for people to know who you are – branding is the perfect way to introduce yourself.

Your brand is your chance to convince a potential customer that your business is relevant and desirable.

If your brand is consistent with your purpose, it lets its audience know what to expect and starts to build trust.

Your brand encapsulates your business's personality and value – a powerful marketing tool. Learn more in our free guide

8. Plan your marketing

By this point, you have a business plan and a brand. Now it's time to start doing some marketing. Here are seven things you can be doing to help promote your new business:

• Reach prospective customers on social media

• Spend time on your website

• Engage in email marketing

• Go old-school and send out flyers

• Put a referral strategy in place

• Take the paid advertising route

• Get a customer relationship management (CRM) system

You need to think about what's going to work for your audience. Your business plan should include a decent outline of who you're trying to reach. Customer personas can help too.

Developing a successful marketing strategy is essential to your small business's success. This checklist of marketing tools explains where to start. Read now

9. Build an online presence

To make as many sales as possible, your business needs to be online. Without a presence on the web, you'll miss out on thousands or even millions of customers. There are various ways to get online. Here are some of them:

Your own website

When you're starting your own business and you're on a limited budget, you don't need to invest a large amount of money to build a website.

You first need to decide on the domain name (the web address) for your website, which you can get using a domain registrar such as GoDaddy or 123 Reg. Choose something that's simple, is easy to remember and reflects your brand.

To launch your website, you could invest in the services of a web designer. However, a cheaper option is to use a template version such as WordPress, Squarespace or Wix.

Online stores

It can sometimes be hard and quite time-consuming to manage your own website and deliveries yourself. You can sell products to a wide audience via online marketplaces that welcome third-party sellers, such as Etsy, eBay and Amazon.

They allow you to reach a broader audience, both in the UK and around the world. You can list your products and also use advertising functionality to reach your target customers.

As Sophia Procter from Munchy Play says:

"Being on Amazon has brought huge benefits. Not only the kudos that goes with being able to fulfil orders with Prime delivery, but also the visibility and search that comes with it. It has allowed us to grow and scale our business and reach new audiences."

Social media

Social media platforms like Twitter, Facebook, LinkedIn, TikTok and Instagram give you free access to customers.

Setting up a profile allows you to post content about your brand and build connections with potential customers. You can also pay for social media advertising to get even more targeted with your messages.

Not all platforms will be right for your business though, and it can be easy to waste time by posting on all of them in the hope that your customers are there. Instead, you should find out the platforms that your target customers use the most and focus on those.

As Gosia Suchojad from Bunch Skincare says:

"Social media platforms are great for building community, showcasing the person behind the brand, conveying the purpose of business and just having some fun.

"I'm an introvert but being on social media for the purpose of running a business challenges me to come out of my 'shell', get to know my customers and allow them to get to know me."

Search engine optimisation (SEO)

SEO is a process to help your website be found by the customers you're targeting when they search for your products or services on internet search engines such as Google.

You can set up your website with target keywords and phrases so the right people find you. Google Keyword Planner is a good place to start to find the right keywords and once your website is set up you can use Google Search Console to check how keywords are performing.

10. Make your first sales

This is one of the best feelings in business. People are paying for your brainchild! You're off to the races.

Getting that first sale can be tricky, so it’s helpful to have a process to work through.

• Start with a target list. Use LinkedIn, recommendations and internet research to put together a sales hit list of people you’re going to approach.

• Next, you need to develop a sales process. How can you start talking to them? Ideally, you want a number of touchpoints, such as connecting on social media and sharing useful resources before talking on the phone.

• For every "yes" you get, there will likely be a lot of people who say "no". This can be tough, so it's important to remember everyone goes through it.

• The key is to learn as much as you can through your initial sales process:

  • What marketing channels are working?

  • What challenges do potential customers want to overcome?

  • How do customers react to your prices?

  • What's the best way to present your unique selling point (USP)?

Get expert guidance on how to navigate the biggest challenge of all – putting your idea into practice and making those first sales. Read the guide

Relevant resources

• How to start a business in 2025: Tips from entrepreneurs

• Eight ways to start a business with no money

• How to bootstrap a start-up