Starting a digital business during such difficult economic times can create a lot of uncertainty amongst new entrepreneurs. However, by identifying market opportunities and creating a strong proposition you can build and develop a loyal customer base to drive your business towards success.
If you are considering starting a business, it might seem like a daunting prospect, but with a little planning, it’s often perfectly feasible. Once you have identified your business idea it is important to run a market analysis to ensure there is (1) enough customer demand for your idea, (2) low level competition and (3) easy ways to grow and expand your business.
From business idea to business plan
During the first stages of creating your digital business, you will perhaps speak to a mentor, accountacts, financial advisors, tech studios, growth agencies and banks which will ask you for your business plan, a document which contains the details of your idea, methods and processes. A good business plan will include the following:
- Company name
- Idea description
- Market analysis
- Management team
- Products and services
- Customer segmentation
- Marketing plan
- Operations plan
- Financial plan
Legal business structures
Ensuring initial business success will be the result of a sound and solid business plan and from this point you can decide the legal structure best suited to you. For UK registered businesses there are 4 main structures:
This is the simplest and easiest form of business to register. You are a self-employed sole trader if you start working for yourself and you must register this business with HMRC. You are therefore entitled to keep all of the profits as income but will be liable to pay tax and national insurance by filling out a Self Assessment Tax Return.
You will be responsible for all liabilities and this includes all personal assets as well as those jointly-owned with another person.
A Partnership involves two or more individuals that agree to share in the profits or losses of the business. They share the risks, costs, benefits and responsibilities of running an organisation. Partnerships are referred to as unincorporated entities in that the partners are self employed. They are personally responsible for the losses or debts that the business undertakes.
Each partner is also responsible or liable for the other partner’s negligence or misconduct. The profits or losses from a partnership will be shared between the partners. This will be in the agreed profit sharing ratio and each partner pays tax on their share of the profits.
Limited Liability Partnership (LLP)
An LLP is similar to a partnership except that the partner’s liability is limited to the amount of money they invest in the business. The LLP must be registered at Companies House and with HMRC.
An LLP can be incorporated with 2 or more members and a member can be an individual or a company. Members’ responsibilities and share of the profits are set out in an LLP agreement and all members must submit a personal Self Assessment Tax Return every year, pay income tax on their share of the partnership’s profits and pay National Insurance to HMRC.
A Limited company is a privately managed business, owned by its shareholders and run by its directors. The company is a separate legal entity with its own legal rights and obligations. This means the company is responsible for everything it does and its finances are separate to the personal affairs of its owner(s).
Any profits generated are retained by the company, after it pays corporation tax. Only then can the profits be distributed to shareholders in the form of dividends. Limited companies can be limited either by shares or by guarantee which is explained below, plus they have annual reporting and filing requirements with both Companies House and HMRC. Also, you can claim back expenses on the business
Build and market your business idea
Your big ideas must inspire people and create engagement, therefore it is your first priority to invest time in building your brand. This is the story behind the idea, the ups and downs, the why’s, where’s, what’s and how’s.
Your brand must ignite a clear vision where consumers can easily identify what is the brand purpose, story, key messages, personality traits, tone of voice, communication stralines, positioning statements and brand values.
This will lead to the front shop of your digital business, where you will bring to life:
- Logo design
- Posters and signage
- Marketing campaigns
- Social media templates
The digital marketplace is extremely competitive, the reality is that not everyone is ready to buy. You will need to keep visitors, leads and existing customers educated, engaged and delighted with your product/service idea. By integrating creativity and latest marketing automation technologies, you can gather online intelligence about customers, enlighten them with personalised content and push them along the sales funnel, ensuring every interaction generates a business goal for your business.
Growing a business is an enjoyable challenge and you will need the right support, so it is important you are surrounded by specialists that understand the market and your business idea.