How to Start a Small Business in London? | Startups of London (2023)

By Ali Halit Diker

The transformation of the business world by digitalisation brought a lot of freedom for people looking to establish their businesses.

Recent developments in technology accelerated innovation, maybe a little because the same developments created numerous problems that need to be solved. But, of course, other factors drove innovation, prepared the right circumstances for more SMEs to pop up, increased the number of entrepreneurs such as government incentives, availability of private funding, and recently COVID-19 pandemic.

Almost all of the metropolitans worldwide, like Berlin, New York, Los Angeles, Istanbul, and Amsterdam, established unique startup and SME ecosystems. As a result, they created their global brands, unicorns, and exceptional success stories.

You’re one of the most advantageous places if you’re looking to start your business in London or the UK in general. Sure, there is a lot of competition, but so are the opportunities. The number of SMEs at the start of 2020 was nearly 6 million in the UK, and almost three out of four did not employ anyone aside from the owners, according to a report published by Department for Business, Innovation & Skills in October 2020. The report also shows that 35% of the UK business population is in London (1.1 million) and the South East (932,000).

How to Start a Small Business in London? | Startups of London (2)

(Video) 5 MOST PROFITABLE BUSINESS IDEAS IN LONDON 2020 | RateUsOnline

1. What Are The Different Types Of Small Business Structures?

You should decide which type of business structure you want to build. Do you want to keep it simple, small, and local? Or do you want to be a future global enterprise?

There are three types of business structures you can choose from, whichever fits the short-term or long-term goals you are trying to achieve. All of them have their pros and cons of tax regulations, limitations, and employment aspects. You have to pick the best one for you so you won’t have any problems if you want to change the size and goals of your business.

Sole Trader

It’s the simplest form of business structure. There’s no difference between your own and your company’s assets, including those you jointly owned with another person.

You can start your business as a sole trader if you don’t plan to employ anyone, but still, you can have sub-contractors if you need additional support with your clients’ work, as well as with your accounting and financial management. Also, you can work as an employee during the day and run your own business during the evening.

You have the right to keep your company’s profit as income, but you’re obliged to pay tax and national insurance by filling out a Self Assessment Tax Return.

Partnership

You can understand by the name that this type of structure requires two or more people to run a business. A partnership is roughly a joint of sole traders. All partners share risks and achievements; they have responsibilities and liabilities to one another. Each partner is considered self-employed and pays their taxes according to their share in the business.

Limited Company

The main difference between a sole trader, a partnership, and a limited company is that a limited company is another legal entity other than its owner(s). There are two types of limited companies. They are limited by shares or limited by guarantee. A company that is limited by share;

(Video) 5 side hustle ideas to earn money quickly + how to start them [UK edition]

  • is for-profit
  • is legally separate from the people who run it
  • has separate finances from your personal ones
  • has shares and shareholders
  • can keep any profits it makes after paying tax

A company that is limited by guarantee:

  • is not-for-profit
  • is legally separate from the people who run it
  • has separate finances from your personal ones
  • has guarantors and a ‘guaranteed amount’
  • invests profits it makes back into the company

2. How Much Does It Cost to Start A Business In The UK?

The cost of starting a business in the UK depends on which type of company you decide to form. The amount you need to start your company is not much, but you might want to consider getting an accountant, a financial advisor, and a business mentor. Also, there will be expenses if you want to rent physical space for your office. The equipment you need to buy and use at home will push up the bills, even though you decide to work from homeas a sole trader.

Other expenses of starting a business include but are not limited to business insurance, HR, and marketing.

Research conducted in 2016 shows a UK startup spends nearly £23,000 in its first year, but this doesn’t necessarily mean that you have to spend thousands of Pounds. For example, the Telegraph reports that the founder of bagmaker The Cambridge Satchel Company, Julie Deane, spent only £600 in her first year. There are much more expensive starters, too, such as Magmatic’s Rob Law, who spent £60,000 in his first year.

3. What Are The Steps To Start A Small Business In London?

It’s time to take the steps required to create your own business when you feel confident about the services or goods you’re selling, and of course, your finances.

Consider Your Small Business Structure

You need to follow similar but different paths to set up your business depending on the business structure which is best for you. This is also the first step to start your business. There are roughly four steps:

  • Choose the right business structure for you
  • Choose the name you want to operate under
  • Check which records you have to keep
  • Register for tax

Each step has its own complex set of necessities depending on your business structure. You should consider the following steps if you want to be more prepared for what’s coming.

Define Your Unique Selling Point

Your unique selling point (USP) neither have to be a peculiar product, service, nor solution. Your lower-than-average price might be a special strength that could get you new leads, too.

(Video) running my small business abroad - a [ fun ] work day in London 💼

What’s important about your USP is its differentiating factor in the market that will give you a competitive advantage.

You should define your target audience and how they will avail you and your company when you try to find out what your USP is, so your potential customers should understand the benefits of working with you clearly.

It’s always a good idea to review your USPs regularly to enhance the performance of your business.

Consider Finding A Business Mentor

Most of the entrepreneurs might have experience as an employee and think that they know the market they’re about to get in well enough. It’s always for your benefit to be a little humble but not overconfident, even if you spent years in a market. Try to find other entrepreneurs and SME owners who have been trading in your market for years.

There are many ways to find a business mentor. You can go online, conduct in-depth research on social media platforms like LinkedIn, Twitter; you can visit startup incubators, co-working spaces, and networking events; you can even ask your friends and family.

Startups of London published a comprehensive guide about the London Startup Ecosystem, including a list of reliable and successful Mentors, Experts, Consultants and Advisors.

Create A Business Plan

Writing a business plan is one of the most crucial steps in starting your business. You should define each of your trading activities carefully. You might be in trouble if you sell services or goods that are not indicated in your business plan. Also, you have to set your goals straight. You can review and adjust your business plan each year, but it’s good to have a realistic and solid start. You can view the British Business Bank’s business plan template and guide, also read example business plans on the Internet.

Register Web Domains And Trademarks

Digital presence is one of the most important aspects of our time to build trust. You should think about your domain name when you are choosing the name of your business. You should consider matching names not to confuse your customers. You should consider registering your web domain even before you registering your trademarks.

Set Up A Business Bank Account

You might want to open a business bank account even if you’re a sole trader because of two main reasons. Your bank might tell you that they can close your account, especially if they see large amounts of business transactions going on. Also, having the same account as a business account and personal account might complicate things when it comes to the taxation of your income.

Find The Ideal Insurance Company For Your Business

There are mainly two types of insurances for companies. One set of insurances are required by law. You should have:

The other set of insurances are optional. Those are:

  • commercial property insurance to cover the expenses of repairing or rebuilding your business premises, or replacing your stock or equipment.
  • liability insurance against compensation claims following fault or negligence brought against you or your business by clients, customers, shareholders, investors, or members of the public.
  • cyber insurance to cover your losses relating to damage to, or loss of information from, IT systems and networks.

Here you can read more about getting business insurance in London.

Complete Your Registration For Taxes

Registering for tax is the last step to start a business but you will still have some work to do after you are officially ready to trade in the UK. You should either apply for a National Insurance number and/or register for Self Assessment.

How to Start a Small Business in London? | Startups of London (3)

(Video) How to Open a Cafe or Coffee Shop in London

Consider Hiring A Business Accountant

You should seriously consider hiring an accountant if you want to have a long-lasting business and strong finances that will help you grow. According to the same research published in The Telegraph, almost two-thirds of small businesses are hit with unexpected costs during their first year. So find someone you trust to keep your books straight.

Create Your Website

Creating a website is not as complicated and time-consuming as it was in the past. Approximately since WordPress introduced us website templates in 2003. You can always hire someone to set up a website for you, but there are many options that you don’t need any expertise in creating websites. You can use services like Wix, Squarespace, Heroic, and Weebly, as well as other tools.

You can read our article on creating a website for your business to learn more about hosting providers and other details.

Define Which Social Media Profiles You Need And Create Social Media Accounts

As we mentioned earlier in this article, digital presence is almost everything in today’s world. Having a website is not enough because your target customers should know about your brand. That’s why you should go where they are instead of sitting and waiting for them to find you. Analyse and find where your potential customers hang out. Set up social media profiles that can attract them and make them come to you.

Think About Your Employee Plans And Consider Where To Find The Right Employees For Your Business

Setting up social media accounts is not useful because you can find customers. You can find your future most valuable assets, who are your employers, online. You can look for professionals on LinkedIn and Twitter, too. It’s almost the same process as finding customers. Know where the quality professionals are for your business, and connect with them. You can also use more traditional methods such as print ads or contacting recruitment agencies.

Make Technology A Part Of YourSmall Business GrowthPlans

Almost every industry grows faster because of developing technologies. Don’t think you’re going to be different, even if you plan to operate a small grocery shop. On the contrary, you should keep an eye on technological developments, whatever your profession is because there’s always something that will make your business more practical and help your business grow in a much efficient way.

Follow social media accounts of tech leaders, the best professionals in your field of expertise, technology blogs, podcasts and publishers, as well as publications about your industry.

(Video) How to Get Around The 90 Day Rule in London for SA | Samuel Leeds

FAQs

Is London good for starting a business? ›

When choosing where to do business, London meets all the right criteria. It's home to all the right people, the highest-quality services and a multitude of opportunities. When you look at it all together, London becomes even more than the sum of its parts.

How do I start a small business with no experience? ›

Here are a few quick tips to help you can launch a business with zero experience and no money:
  1. Start a business based on what you know.
  2. Avoid irrelevant expenses.
  3. Take advantage of free marketing.
  4. Be willing to put in the hours.
  5. Spread the word.
13 Sept 2017

Which is the best business to start in London? ›

List of Business Ideas for the UK
  1. Brexit Business Lawyer. ...
  2. Personal Budget and Money Management Service. ...
  3. Affordable Seniors Living Complex Company. ...
  4. Smart Technology Property Management Group. ...
  5. Import and Export Trade Consulting Firm. ...
  6. Employment and recruitment specialist. ...
  7. Warehouse and Storage Company.

How do I start my first business? ›

  1. Conduct market research. Market research will tell you if there's an opportunity to turn your idea into a successful business. ...
  2. Write your business plan. ...
  3. Fund your business. ...
  4. Pick your business location. ...
  5. Choose a business structure. ...
  6. Choose your business name. ...
  7. Register your business. ...
  8. Get federal and state tax IDs.

Can I start a business with 500? ›

Business books and advisers might recommend having at least six months of runway saved before launching your own company. But it's possible to start a business on a budget as low as $500.

What is the most successful business in London? ›

Most Profitable Industries in the UK in 2022
  • Pension Funding in the UK. Total Profit for 2022: $24.1B. ...
  • Banks in the UK. Total Profit for 2022: $17.4B. ...
  • Legal Activities in the UK. Total Profit for 2022: $12.4B. ...
  • Management Consultants in the UK.

What is the most common business in London? ›

Financial services

London's largest industry remains finance, it is the largest financial exporter in the world which makes a significant contribution to the UK's balance of payments.

What is the easiest business to start UK? ›

Here are the top 10 most popular ideas for a small business:
  • Craft stall.
  • Market trader.
  • Online retailer.
  • Photographer.
  • Handyman/handywoman.
  • Caterer.
  • Teaching/tutor.
  • Home baking.
19 Jan 2022

What is the easiest business to start? ›

Sole Proprietorship: A business owned and operated by a single person. One of the simplest and easiest business types to set up.

Can I start a business with no skills? ›

Anyone, skills or not, can start a business. Way too many businesses fail. If you are determined to start a business, make sure you look at how much work is involved, and in how many areas. Make sure that either you can cover the work, or that you have a workable plan for someone else to do it.

What are the 5 most profitable businesses? ›

Most Profitable Business Ideas
  1. Business Consulting. If you're an expert in your industry and have been working at it for years, you should consider consulting. ...
  2. IT Support, Technology Consulting, and Repair. ...
  3. Cleaning Services. ...
  4. Accounting and Tax Preparation. ...
  5. Auto Repair. ...
  6. Real Estate.

What are the most successful small businesses UK? ›

30 profitable small business ideas in the United Kingdom
  1. Street Food Stall. ...
  2. Affiliate Marketing. ...
  3. Make and Sell Handmade items. ...
  4. Sell digital product. ...
  5. Stock photos sales. ...
  6. Bed-and-breakfast business.
19 Jun 2022

How can one start a business with no money? ›

Here are some tips on how to start a business with no money.
  1. Vet Your Business Idea. ...
  2. Tap Into Free Resources. ...
  3. Network With Communities of Support. ...
  4. Live on Personal Savings. ...
  5. Look for Alternate Funding Options.
6 Jul 2022

Can I start a business by myself? ›

The seemingly obvious choice for a one-person business is a sole proprietorship, which are the simplest forms of business available. There's a solid amount of flexibility with a sole proprietorship, as you can be an independent contractor or operate a small business in a more traditional sense.

What makes a business successful? ›

“One thing successful businesses have in common is … a strong customer focus,” said John Stevenson, marketing specialist at My GRE Exam Preparation. “They create a culture that is centered around their customers and focus their processes, products and services around their services needs.

Which is the cheapest business to start? ›

If you want to start a low-cost business, these 25 ideas will help inspire your entrepreneurial passion.
  1. Content creation. ...
  2. Personal or virtual assistant. ...
  3. Event planning services. ...
  4. Errand/concierge service. ...
  5. Professional reviewer. ...
  6. Social media consultant. ...
  7. Etsy shop. ...
  8. Online courses and tutoring.

What business is easy profitable? ›

Businesses in high-growth industries with lower startup costs, however, may have greater profitability potential.
...
Most profitable small businesses
  1. Food trucks. ...
  2. Car wash services. ...
  3. Auto repair. ...
  4. Personal trainers. ...
  5. Newborn and post-pregnancy services.
3 May 2022

What is the easiest business to start and run? ›

Get free resources and everything you need to know to start, run, and grow your small business.
...
  • eBay Business. ...
  • Virtual Assistant. ...
  • Tutoring Service. ...
  • Interior Room Painting/Wallpapering. ...
  • Car or Boat Resale. ...
  • Social Media Service. ...
  • (Bonus Idea) Party Planner.
1 Sept 2022

Which businesses grow the fastest? ›

Fastest Growing Industries to Start a Business
  • Travel & Hospitality – 201% aggregate growth rate.
  • Media – 198%
  • Energy – 174%
  • Security – 171%
  • Real Estate – 168%
14 Feb 2022

What business makes the most money a day? ›

Most Profitable Companies Ranked
CompanyProfit per Day
1Apple$157,290,411
2Microsoft$121,317,808
3Berkshire Hathaway$116,495,890
4Alphabet$110,326,027
6 more rows

Which business made the most profit? ›

The World's 50 Most Profitable Companies
RankCompanyFortune Global 500 Rank
1Saudi Aramco6
2Apple7
3Berkshire Hathaway14
4Alphabet17
46 more rows

What small businesses are in demand UK? ›

Best small business ideas to start in 2022
  • Start a dropshipping business.
  • Design and sell print-on-demand t-shirts.
  • Launch your own book.
  • Create digital products or online courses.
  • Sell print-on-demand posters, greeting cards, and prints.
  • Start a charitable business.
  • Sell a service.
  • Create an online fashion boutique.
3 Jun 2022

Why is London so rich? ›

The City is linked to other golden egg-laying entities – numerous tax havens, flows of international capital and so on. Much of this goes on in a high trust, low regulation environment designed to capture this wealth and maintain a powerful homegrown industry on the back of it.

What business can I start with 5000? ›

If you need a little more help brainstorming, here are six businesses you can start for under $5,000.
  • Tutoring or Online Courses. ...
  • Make a product and sell it online. ...
  • Open a consulting business. ...
  • Create an app or game. ...
  • Become a real estate mogul. ...
  • Virtual Assistant.
1 May 2022

What business can I start with no money UK? ›

The easiest way to start a business with no money is to sell your services. Even if you haven't mastered a specific area, being better than the average person at something means you can start a business that helps them.
...
Sell your services
  • Freelance writing.
  • Virtual assistant.
  • Social media marketing.
  • Handyman services.
21 Mar 2022

What can I sell to earn money? ›

What Can You Sell to Make Money Fast?
  • Old clothes. If you're looking for things to sell to make quick cash, your clothes just might top the list. ...
  • Sneakers. Have some cool sneakers you want to get rid of? ...
  • Jewelry. ...
  • Watches. ...
  • Your wedding dress. ...
  • Baby items. ...
  • Home décor items. ...
  • Holiday decorations.
8 Sept 2022

What are at least 2 things needed to start a business? ›

Some of the basic things you may need to start a small business include:
  • Idea backed by market research.
  • Business plan.
  • Funding and bank account.
  • Business structure (corporation, LLC, etc.)
  • Doing business as (DBA) name.
  • Employer identification number (EIN)
  • Business location.
  • Licenses and permits.

What are the 3 most important skills for starting a business? ›

Essential business skills
  • Financial management. Being able to effectively manage your finances is critical. ...
  • Marketing, sales and customer service. ...
  • Communication and negotiation. ...
  • Leadership. ...
  • Project management and planning. ...
  • Delegation and time management. ...
  • Problem solving. ...
  • Networking.

What stops people from starting a business? ›

They didn't have access to business tools—29 percent. They weren't sure how to work with the tools/technology needed to run a business —26 percent. They didn't have enough time for a new venture—25 percent. They didn't have support from friends, family, and/or peers—23 percent.

How much does it cost to start a business in London? ›

Fees and timelines in 2022

Incorporation costs in Year 1 amount to £1,450 and annual company costs in Year 2 and thereafter amount to £600. The average fee per UK company registration engagement amounts to £8,990, which includes company incorporation, opening a local corporate bank account, and all government fees.

Can a foreigner open a business in London? ›

Yes. It may come as a surprise, but anyone of any nationality can start a business in the UK. You don't need residential status or even to be living in the country. The only stipulation is that the company must be registered to a UK address.

What is needed to start a small business UK? ›

Follow our checklist below for how to start a small business in the UK.
  1. Register business name. ...
  2. Choose a legal structure. ...
  3. Write your new business plan. ...
  4. Secure funding and finance. ...
  5. Plan your advertising strategy. ...
  6. Buy your new business insurance. ...
  7. Work out what you need to do for tax. ...
  8. Create a system for keeping business records.
11 Mar 2022

Can a foreigner start a business in London? ›

You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK. Some types of company cannot register as an overseas company in the UK, including partnerships and unincorporated bodies. Contact the Department for International Trade if you need advice.

Which business is most profitable in London? ›

The 7 Most Profitable Industries in the UK in 2020
  • Construction Contractors in the UK. ...
  • Open-Ended Investment Company Activities in the UK. ...
  • Residential Building Construction in the UK. ...
  • Legal Activities in the UK.
6 Jul 2020

What is the cheapest way to start a business? ›

If you want to start a low-cost business, these 25 ideas will help inspire your entrepreneurial passion.
  1. Content creation. ...
  2. Personal or virtual assistant. ...
  3. Event planning services. ...
  4. Errand/concierge service. ...
  5. Professional reviewer. ...
  6. Social media consultant. ...
  7. Etsy shop. ...
  8. Online courses and tutoring.

Can I live in the UK if I start a business? ›

Business Visas in the UK

As long as you have the right to work and live in the United Kingdom, you can work as a freelancer, be self-employed, or start a business.

Do I need a license to start a business UK? ›

Business licence – do I need one in the UK? In general, you can set up a small business without a business licence. All you need to do is set up as self-employed, choosing a legal structure for your business and registering with HMRC. But many specialised business activities need you to have a business licence.

Do I need a visa to start a business in the UK? ›

You can apply for a Start-up visa if: you want to set up an innovative business in the UK - it must be something that's different from anything else on the market. you meet the other eligibility requirements.

What are the 4 things you need to start a business? ›

The point is to always take the next step.
  • Determine Your Business Concept. ...
  • Research Your Competitors and Market. ...
  • Create Your Business Plan. ...
  • Choose Your Business Structure. ...
  • Register Your Business and Get Licenses. ...
  • Get Your Finances in Order.
6 days ago

What are 5 things you need to start a business? ›

Some things that should be on your to-do list include:
  • Secure financing.
  • Apply for federal/state tax ID numbers.
  • Open a business bank account, credit card, and line of credit.
  • Obtain a business license and/or permits.
  • Apply for business insurance.
  • Consider what tools and software you'll use.
15 Jul 2022

What kind of business I can start in UK? ›

60 UK home business ideas for 2022
  • Website consultant. These days it's rare for a business not to have a website. ...
  • Upholstery/furniture repair. ...
  • Medical billing. ...
  • Herb farming. ...
  • Voice over. ...
  • Babysitting. ...
  • Bed & breakfast. ...
  • Car cleaning.

Can anyone set up a UK company? ›

Foreign nationals can become the company director, shareholder, or company secretary of a UK business, and you do not even have to live in the UK. Like UK residents, however, your company will need to be registered with Companies House and have a UK address that corresponds to where the company is based.

Where is the best place to start a business in the UK? ›

Leeds is Yorkshire's largest city and is rapidly making a name for itself as one of the UK's top business hubs.
...
2. Leeds.
Business survival rate40.8%
Active business population30,390
Monthly rent of one-bed apartment£750.00
Population estimate798,800
5 more rows
3 May 2022

Videos

1. Growing Small Business and the Economy in London | J.P. Morgan
(jpmorgan)
2. How to Start a Business from NOTHING
(Ali Abdaal)
3. LONDON DELIVERIES AS A SMALL BUSINESS; MICRO BAKERY VLOG
(Lily's Loaf)
4. Angel Investors: How to Find Investors [in 2021]
(Raw Startup)
5. "I Make £1,000 A Day Baking Brownies" | How To Get Rich
(Channel 4 Entertainment)
6. How you can help London's small businesses during lockdown
(Mayor of London, Sadiq Khan)
Top Articles
Latest Posts
Article information

Author: Tyson Zemlak

Last Updated: 10/29/2022

Views: 5919

Rating: 4.2 / 5 (63 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Tyson Zemlak

Birthday: 1992-03-17

Address: Apt. 662 96191 Quigley Dam, Kubview, MA 42013

Phone: +441678032891

Job: Community-Services Orchestrator

Hobby: Coffee roasting, Calligraphy, Metalworking, Fashion, Vehicle restoration, Shopping, Photography

Introduction: My name is Tyson Zemlak, I am a excited, light, sparkling, super, open, fair, magnificent person who loves writing and wants to share my knowledge and understanding with you.