How to start your own business in the UK

Small BusinessCategory
26 min read
Sage Becker

The UK is one of the most business-friendly countries in the world. The World Bank Group gives it a 94.6 rating out of 100 for ease of starting a business. If you’re thinking about setting up your own outfit, this handy guide will help you understand how to start your own business.  

In the following article we’ll cover: 

What type of entrepreneur are you? 

Young woman posing outdoors

There are a number of reasons people in the UK launch a small business. Which group do you fall into? 

1. The passion project pursuers 

Many people in the UK establish a business in order to pursue a passion. This could be a skill like art and crafts or it could be a cause.  

For example, you might want to set up a zero waste shop because you’d like to make money in a way that has a positive impact on the environment. 

2. The BYOBers 

Man tasting beer in a brewery

Research from GoDaddy suggests that 8% of UK people who start a business as a side hustle do so because they want the autonomy that comes with being their own boss. 

3. The market gap discoverers 

The same research mentioned above suggests that 22% of people who start a new business as a side hustle have discovered a gap in the market and have either invented a product or created a service to fill that gap. 

4. The set my own schedulers 

One of the bonuses of running your own business is that you get to set your own schedule.  

When you're self-employed, you may start out working more hours than before, but you get to dictate what those hours look like. And if you need to take a break to pick the kids up from school, nobody can tell you can’t.  

5. The extra income seekers 

Times are challenging at the moment, which explains why many people in the UK are setting up side businesses in order to earn a little extra money. If you fall into this category, check out our blog on side hustles that are easy to start 

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Coming up with an idea for your business 

If you’re reading this article there’s a good chance you’ll already have at least a kernel of a small business idea in your mind.  

Stylist weaving pearls into a bride's hair

However, if you’re looking for a little inspiration you might want to consider the following. 

Your passion project 

As mentioned above, many people in the UK start successful businesses to pursue something they love. 

Think about your skills.  

  • Are you arty?  
  • Can you bake?  
  • Do you love animals?  
  • Have you got any design skills?  
  • Are you good at organising events?  
  • Does your passion lie in fitness and keeping other people fit?  

If any of these apply to you, you could build a business around your passion.  

A franchise 

In a franchise, an established business owner gives others the rights to run their own subset of the business, using the same business model and branding.  

Baskin Robbins cup sitting on an open textbook

Franchising is a lower-risk way to start a business, since the model has already proven successful. 

There are all sorts if franchises out there, in industries from food to pet care.  

Top franchises in the UK include: 

  • McDonald’s 
  • Domino’s Pizza 
  • Starbucks 
  • Subway  
  • Molly Maid 
  • Ovenclean 
  • Anytime Fitness 
  • Hotpod Yoga 
  • Stagecoach 
  • Pitman Training 

One thing to bear in mind is that setting up a franchise takes time and money. You may have to demonstrate some experience or prior training in the industry your franchise is related to.  

Some franchises, like McDonalds are prohibitively expensive to buy into. McDonalds reports: ‘For 80% of restaurants franchised in 2018 the cost of purchasing the franchise rights and equipment was between £350k and £1,85 million* and this was priced on profitability over a 10 year period.’ 

Drop shipping 

Pink shipping packages on a conveyor belt

Drop shipping allows you to sell goods to customers without you having to bulk buy stock, as the drop shipping company stores and ships the products for you. This is a good option for anyone wishing to start and online business.

Sites like AliExpress make it possible to drop ship as many as 100 million products in categories from clothing to children’s toys.  

Companies like SaleHoo provide directories of vetted suppliers and you can cherry pick the ones you want to use.  

White label goods 

Also known as private labeling, this business model sees entrepreneurs selling goods and services from established companies and manufacturers under their own branding.  

 

A few examples include: 

  • Dripshipper – private label coffee products 
  • White label botanist – beauty products 
  • Cosmiko – private label baby products 
  • Start products – a range of personal and pet care products 

For even more ideas on new businesses to start, read our post 37 of the best small business ideas.

Editor’s note: If you run a web design or development business and are already buying hosting and domains for clients, you could be making extra money with GoDaddy’s Reseller Programme. 

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How to fine-tune your new business idea 

Woman making notes on a pad as she looks at a laptop screen

Whichever of the above categories you fall into and regardless of the type of business you plan to start, you’ll want to fine-tune your business idea in a similar way.  

To begin with, you’ll need to do a little bit of research. Here are the four areas to look into: 

Buyer persona research 

If you’ve got a business idea in mind, you should already have a good idea of the type of customers you’ll be selling to.  

However, putting a bit more thought into who your customers are can help you really fine-tune your offering. This is where developing a persona comes in.  

A persona is a semi-fictional snapshot of your typical customer or customers.  

To develop a customer persona, you’ll ideally need to give it the following: 

  • Name (such as “working mum” or “impulsive buyer”) 
  • Age 
  • Gender 
  • Income bracket 
  • Whether they’re a homeowner or renter 
  • Marital status 
  • Geographic location 
  • Number of children 
  • Occupation 
  • Education level 
  • Beliefs and opinions 
  • Interests and hobbies 
  • How they spend their money 
  • The social media sites they use 
  • Worries and fears 
Personas Artist Drawing a Face

If you can, it’s also useful to have an idea of the pain points and challenges that will lead them to need products and services like the ones you plan to offer. What do they need and want from these products or services that aren’t offered by other providers? 

Competitor research 

Ask yourself who your main competitors are and look closely at how they operate. If you’re not sure who’s who in your niche, do an online search for your product or service and see who comes up.  

You could also try using a tool like Crunchbase or Product Hunt. 

Once you’ve found your competitors, discern what their USPs (unique selling proposition) are and ask yourself if you can set yourself apart with a different but equally valuable USP.  

Pricing research 

Person holding up bars of handmade soap

Before you launch your business, take a good look at what similar products or services in your sector are selling for. 

You’ll want to make sure you can sell your items for a price that is acceptable to the consumer but also allows you to make money.  

Market research 

Getting feedback on your product or services from your target market can be invaluable. 

There are a number of ways to get opinions on your ideas. For example, you could: 

  1. Put an ad on social media asking for people willing to provide feedback. Sites like Facebook allow you to tailor who sees your ads — you can target people based on everything from age, gender and relationship status to previous purchasing behaviour.  
  2. Hold a focus group. There are a number of ways to get a focus group together, from advertising for feedback providers on a local community social media page to asking family and friends if they could recommend anyone in your target market who might be willing to offer a little bit of their time.  If you have the budget, you could enlist the services of a professional market research organisation such as SurveyMonkey and Pollfish.  
  3. Attend industry events so you can mingle with your target audience.  

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Writing a simple business plan 

You may not know it, but you don’t need an economics degree to write a business plan.  

Silhouette of person throwing paper plane into sky

A basic business plan will outline the following:

The problem your business will exist to solve: This will work best if you can incorporate some facts and figures on elements such as: 

  • The presence of rival businesses 
  • How much demand there is for these existing businesses 
  • Any figures that demonstrate there will be a demand for the goods and services you propose 

The solution your business will provide: This section should include details on how you will operate (e.g. direct to customers, via a marketplace, etc), how you will market your business to ensure customers know you’re there, and the milestones you expect to reach in terms of units sold in a given timeframe.  

Your structure: This is where you explain how your business will be run. Will it just be you at the helm or will you need a team? If you do need a team, you should outline their roles and responsibilities in your business plan.  

Financial expectations: Here you’ll share your sales forecasts and — if you’re already up and selling — a profit and loss statement, cash flow statement and a balance sheet.  

If you’re just starting out and haven’t sold many of your products or services yet, you won’t have the exact data to base these forecasts and statements on. 

In this case, you could do some research into the financials of competitors. If this aspect of writing a business plan daunts you, you might want to consider enlisting the help of a financial advisor.  

Related: What is e-commerce? A beginner's guide

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Choosing a business name 

Display of handmade wooden cooking utensils

Once you’ve done your research and prepared a business plan, you can get down to the fun things, including deciding on your company name.  

Again, if you’ve been thinking about setting up your business for a while, there’s a good chance you’ve got your heart set on a name already.  

However, before you get your logo and things like your shop sign designed, there are a few things to think about.  

Trademarks  

Before you commit to a company name, you’ll need to make sure you’re not infringing on any registered trademarks. You may not use a business name that someone else has already trademarked.  

 

You can easily check whether the name you’d like to use is taken or not on the Government’s trademarks web page 

Longevity  

Ask yourself if your brand name is future proof. Question where your business might be in five or even 10 years’ time and see if your brand name will reflect this future business as well as it reflects your current one.  

For example, you might set out selling brownies and decide on the name Bertie’s Brownies. 

But if you plan on expanding your product range as you grow, you’ll probably want to select a business name that will be a little less specific, such as Bertie Bakes.    

Your web address  

In an ideal world, you’ll want a web address that matches your brand name. However, it’s not always that easy to get the web address (aka domain name) you want.  

This is because there’s a massive 1.13 billion websites on the internet and every one has a different domain name. So, many domain names are already registered.  

Getting your own domain name GoDaddy domain search page on a smartphone

To buy a domain name, just type it into the search box below. 

It will take only seconds for GoDaddy to check to see if your perfect domain is available. If it is, you can register it right now. 

If it’s not available, you’ll be provided with a selection of options.

For example, say you wanted the web address flamingo.co.uk, you could be offered flamingoco.uk or flamingoshop.co and so on. 

If you’ve got your heart dead set on one domain name and one only, you could try going through a domain broker service 

For a one-off fee and a commission if the service is successful, a domain broker will approach the registered owner of the domain and try to negotiate a sale for you.  

See if you can register the domain name you want now: 

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Creating your brand identity

With your company name and web address taken care of, it’s time to build up your brand. 

Developing a brand identity is key to any successful business and it involves the following: 

Choosing your business colours

Book of colour swatches spread out

You want to be sure to use the same colour palette in everything you do – be it the paper bags you use in store or the colours of any uniforms you might need.  

You’ll need to put quite bit of thought into the colours you use, as different colours have different connotations. 

For example, if you are setting up a massage company, you’ll want to choose calming colours like greys, blues and greens as opposed to more provocative energising colours like reds and bright oranges.  

Picking your fonts  

To create a brand that’s instantly recognisable you’ll want to use the same font or collection of fonts at all times, from your logo to your email marketing 

As with colours, fonts impact people in different ways. Some fonts look more serious while other appear more playful. Some can suggest quality while others can imply bargains.  

An open book showing various typefaces

To read into the concept further, take a look at the book Why Fonts Matter by Sarah Hyndman. 

Once you’ve decided on the colours and fonts you want to use, you can use them to design your logo. 

There are a number of ways to go about this. If you’re arty, you can design your logo by hand. If you feel like you haven’t got a creative bone in your body, you can enlist the services of a professional designer.  

Or, if you need to create a logo on a budget but with a little help, you can use a free service like GoDaddy Studio. This tool lets you choose from hundreds of customisable templates to develop a bespoke logo yourself.  

Defining your tone of voice  

Just as the most successful businesses use uniformity when it comes to colours and fonts, they also talk to their customers in the same tone. In marketing we call this the Tone of Voice 

The right tone of voice can help you: 

  • Appeal to the people most likely to buy from you 
  • Stand out from competitors 
  • Build a bond with customers  
  • Demonstrate attention to detail 
Virgin Holidays website as seen on a smartphone

For example:

Virgin Holidays has an informal, down-to-earth, playful and sometimes slightly cheeky tone of voice that uses puns, plays on words, and colloquial language. 

Big brands have detailed guides that describe their tones of voice. These guides feature rules on everything from sentence length to the correct use of punctuation.  

If you don’t have the time to develop a full tone of voice for your business yet, it will help to carry out the following exercise.  

First 

Reflect on your business and the characteristics of your likely customers. Ask yourself how you want to come across to customers and how they might want to be spoken to.  

Second 

Based on the above reflection, brainstorm three or four values you want to come across in the way you communicate with customers. Do you want to seem serious or funny, formal or casual, excitable or level-headed, for example? 

Third 

Think about ways you can translate these values into language. Here are a few general rules of thumb: 

  • Use short sentences to seem upbeat, modern and to to-the-point.  
  • Use longer sentences to portray quality and expertise.  
  • Use contractions (think we’re instead of we are) to seem conversational. 
  • Talk to your customers in the second person (i.e. you, you’re) to appear approachable. 
  • Regularly start sentences with verbs if you want to inspire action. 

Launching a website 

Your website is the place where you can showcase all your hard work on defining your colours, fonts, tone and more. 

Bobcat Gallery online shop
Catherine Sweet used Online Store to build a digital shop for her ecommerce art gallery.

If you’ve never launched a website before here’s how it works: 

Step 1 

Buy a domain — use the domain search box above to see if the domain you want is available now. 

Step 2  

Choose either a website builder package or a hosting plan that comes with a content management system (CMS) like WordPress preinstalled. 

Person building a website on their laptop

If you’re completely new to website creation, the easiest choice is a website builder. 

With do-it-yourself website builders, you build a site by customising a fully functional, pre-built template.  

You can do everything from changing colours and adding text to adding tables, images and videos, through a series of very simple point, click, drag and drop actions.  

For a step-by-step guide on how to create a website, refer to this guide. 

When your website is live, you can start attracting customers to it with marketing.  

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Marketing your business 

With more than 1.13 billion websites in the world, the internet is a crowded place. So, you can’t expect your website to show up on the first page of search results without putting in a little work.  

Here are the key pieces of any good start-up marketing plan.

Set up on social media 

Social media marketing will not only help you sell to customers, but it will help you develop bonds and loyalty with them through the provision of: 

  • Helpful information related to your products or services 
  • Topical conversations  
  • Entertaining content, where appropriate  

To start with social media marketing, you need to choose your platform. You won’t need to be active on every social media site; focus on one or two where you target buyers are most active.  

When you’ve identified which platforms are most used by your target audience, it’s time to set up a business page. These differ from personal pages ... and Facebook, Instagram, LinkedIn, TikTok and more all offer them.  

To set up your page you’ll usually need to add a logo, a short ‘About us’ paragraph, and company details.  

Once that’s done, you’re ready to start sharing content with your customers.  

A screenshot of the GoDaddy website builder about to publish a post on social media
GoDaddy's site builders make it easy to post to your social accounts.

How to win on social media 

You may use social media privately every day, but there’s a difference between personal and business account content. For the latter to succeed, it needs to be planned, regular, scheduled and needs to target the following stages of the marketing funnel: 

Awareness – This is content that piques the interest of your customers and subtly introduces them to your business. Awareness posts can feature links to your own blog posts or guides, contests, entertaining videos, inspiring quotes, topical polls and interesting infographics.  

If you’re new to creating content like this, check out the free GoDaddy Studio app 

Consideration – When potential customers start to become aware of your brand, they will consider buying from you. But they’ll want to know they can trust you first.  

This is when they enter the consideration phase. Consideration posts can feature: 

  • Customer reviews 
  • Case studies 
  • A day in your life as a businessperson  
  • Your company and the positive ways it works 
  • In-depth product demos 
Example of Facebook ad

Conversion – At the conversion point of the marketing funnel, customers are nearly ready to buy, but they need a little extra persuasion such as an offer, sale or promo.   

As a rule of thumb, you’ll want 80% of your social posts to fall into the top two categories and 20% to fall into the latter. 

To reach even more people on social media, you can create adverts.  

Every platform allows you to create ads and lets you tailor who sees these ads based on everything from their age to hobbies.

They also come with analytics tools that let you analyse how well these ads are performing.  

Consider email 

The beauty of email marketing is that it goes directly to the inbox of potential and existing customers, a place where most people are active at least once a day.  

   

To get started, you’ll need a professional email address – this is an email address that mirrors your domain name. 

For example, if your domain is www.pinkpolkadotfashion.com your email address will be yourname@pinkpolkadotfashion.com or info@pinkpolkadotfashion.com and so on. 

Most domain providers will also sell professional email accounts. For example, GoDaddy offers a professional email solution that starts at just £1.99 per user per month.  

Example of an abandoned cart email reminder

Do not skimp on email.

You might think that you can get away with a free email address like pinkpolkadotfashion@hotmail.co.uk but it won’t look as credible to customers as a slick on-brand address.  

When you’ve set up your professional email address, you’ll need to develop a contacts list 

There are a few ways to do this: 

  • Ask people if they’d like to receive marketing emails from you right after they’ve made a purchase. Add a note to your order confirmation email asking them to sign up for money-saving offers and other perks. 
  • Add an email sign up form to your website. You’ll want to put this in a place where people can see it easily, such as a home page pop up. Be sure to include a brief (yet enticing) explanation of what people can expect to receive from you if they sign up. For example, news about special events or flash sales. Also, be mindful of how many fields you ask subscribers to fill in on your sign-up form. More fields tend to result in fewer signups. 
  • Offer people discounts if they sign up. This can be done via social media posts or through a pop up you add to your home page, like the one below from shopping website Shein.
Example of email signup on Shein website

Be aware that there are now strict rules surrounding who you can and can’t email and what you can and can’t email them about.  

People on your contacts list are entitled to: 

  • Set their email preferences 
  • Opt out of marketing emails at any time 
  • Be ‘forgotten,’ which requires you to delete any data you have on them from your systems 

To find out more about email privacy laws, visit the Information Commissioner's Office website. 

Help your website speak to Google 

Search engine optimisation (SEO) is the process of adding the right words to your website so that it can be found more easily by the search engines.  

There are whole companies dedicated to providing SEO services, but that doesn’t mean it’s off limits to beginners. 

Adding keywords to a website is a task anyone can have a go at.  

Keywords are the words and phrases that help the search engines’ algorithms work out what your website is about. They can help the search engines decide whether your site is a good fit for a person’s online search.  

Example of how to discover new keywords on Google Keyword Planner

The art here is in finding the right keywords for each page of your website and adding the right balance of them to your pages — too many and you’ll be penalised.  

It’s possible to do keyword research manually using tools like Google’s Keyword Planner. 

However, in most cases you won’t need to learn how to use these tools, as many website builders come with their own in-built SEO tools.  

GoDaddy’s SEO wizard identifies terms we know customers are searching for, based on the millions of sites we manage across sectors. The wizard will also help you add these keywords to the right places on your site. 

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You’re nearly there, but there’s some essential admin to carry out before you officially launch your business. You’ll need to: 

Decide on a legal structure 

There are three main business structures in the UK: 

  • Sole trader or proprietor
  • Limited company  
  • Partnership 

Of all of these, sole proprietorship is the quickest to set up. Note that those who start off as sole proprietors may change their legal structure later, when their businesses have outgrown sole trader status.

To find out more about each of these, visit the Set up a business page of the Government website. 

Register your startup with the authorities Neon red sign that reads “Tax”

Whichever business structure you choose, you’ll need to register your business with HMRC so you can pay tax on your new business. 

If you choose to set up as a limited company, you’ll also have to register your business with Companies House. 

To find out more, visit the Government’s web pages on Setting up as a sole trader and Setting up as a limited company. 

Business insurance 

There’s a range of business liability insurance out there that can protect your company from everything from stock damage to legal costs.  

Some types of business insurance are required by law, such as: 

  • Employers’ liability if you have staff  
  • Commercial motor insurance if your business uses vehicles 

To dive deeper into the subject, visit the Association of British Insurers 

Managing money

It's a good idea to open a separate business bank account for your new venture. This way, you can keep your business finances separate from your personal accounts. It will also make your life easier come tax time.

Which brings us to the topic of funding your new venture.

While some rely on crowdfunding, credit cards or loans from family and friends to start their ventures, others seek loans. You can learn how to approach business lenders in this informative article.

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3 business set up myths busted 

There are some common doubts entrepreneurs have that can ultimately put them off the idea of launching their business. 

Here, we bust a few: 

I’m too old 

Age is no barrier to setting up a business.  

GoDaddy’s own research has revealed that the average age for starting a business as a side hustle in the UK is 32 years old. What’s more: 

  • 18% of those surveyed said they set up their businesses when they were 45 to 54 
  • 11% launched their side hustles when they were 55 to 64 
  • 9% started their businesses when they were over 65 years old 

I’ve not got enough money 

Don’t be put off by the example of the cost of setting up a McDonald's franchise mentioned above.  

According to our research, the average cost of setting up a business as a side hustle with the intention of turning it into a full-time venture is £2,509.10.  

58% of side hustlers, meanwhile, spend less than £500 on start-up costs.   

It’s not the right time 

There’s never a perfect time to start a business. Ask any small business owner who’s done it. We have — and they often say their only regret is that they didn’t start sooner. So, stop waiting for that ideal moment and go for it.  

Summary 

Feel like you’re ready to start your own business journey? 

Use this checklist to guide your start up: 

  • Sketch out a rough idea for your business 
  • Carry out buyer persona research 
  • Learn about your competitors 
  • Consider your pricing 
  • Do some simple market research 
  • Draft a business plan 
  • Pin down a business name 
  • Get a web address 
  • Pick out your business colours, fonts and tone of voice 
  • Build a website (it’s easier than you think) 
  • Set up your social media sites 
  • Get a professional email 
  • Tie up all your business admin 

Then shoot for the moon!

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