How to Start a Business in the UK – Key Considerations

Are you planning to set up a new business in the UK in 2025 or 2026? If so, you are in excellent company. There are approximately 5.5 million private sector businesses in the UK, of which 5.45 million are classified as small, 37,800 are medium (with 50 to 249 employees), and 8,250 are large (with 250 or more employees). No matter the type or scale of business you plan to establish in the UK, there are several aspects of your business that warrant careful consideration and planning. As a sole entrepreneur, partnership, or company, you will need to consider your business strategy, branding and marketing, funding, location, accounting, IT, legal, and human resources requirements. In this article, we will explain some of the key business areas that successful business owners pay attention to when starting a new venture in the UK.

Draft a comprehensive business plan

Drafting a detailed and well-thought-out business plan will almost certainly be the best investment of your time. Unfortunately, too many ‘would-be’ business owners view drafting a business plan as an unnecessary waste of time, but nothing could be further from the truth. There is no one right way to draft a business plan; what matters is that you have thought out all aspects of your business before you proceed, including:

• Business description 
• Market analysis
• Products and services
• Marketing and sales strategy
• Operation plan
• Management and organisation, and
• Financial plan (including funding and cash flow forecast)

You can write a traditional written report or use alternative methods, such as mind maps, to outline your new business’s vision. Once you have a solid draft, it can be extremely useful to have it reviewed by someone whose opinion you truly value (preferably someone positive and inspiring). Before you can put together a business plan, you will need to conduct market and competitor research, assess your funding options, and investigate other aspects such as premises and locations. 

How to carry out market research for a new business in the UK

Market research is about taking the time to understand your chosen sector, the needs of potential clients, pricing, and competitors. It is no exaggeration to say that market research can make the difference between success and failure. Indeed, it is common for businesspeople to start a new enterprise even before speaking to potential clients about their needs, or even worse, before knowing who their customers are. If you think you know who your customers are, talk to them. Ask them open questions about where they are struggling or receiving poor service, such as: 

• What challenges do you currently face in this area?
• What would make your life easier when it comes to [task/problem your business solves]?
• Have you ever had a really good or bad experience with a provider? What happened?
• Would you consider using something like this? Why or why not?
• What concerns, if any, would you have about using this?
• How much would you expect to pay for something like this?

The key when asking customers about their views is to ask a question and then let them speak freely. Listen to what they are telling you without interruption. The information you receive may be absolute gold for your new venture. 

Where can I get funding for a small or medium-sized business?

Securing funding for start-up costs, capital costs, stock, wages, or marketing comes naturally to some entrepreneurs but less so for others. If you have a solid business idea or a successful background in business, getting the money you need to launch your business will be all the more straightforward. In the modern business world, there are many ways to secure funding, including:

• Start-Up Loans – available from banks or government-backed lenders, such as the British Business Bank Start Up Loans scheme. Typically unsecured with fixed interest rates.
• Business Grants – non-repayable funds provided by UK government departments, local councils, or private organisations. The aim is to support certain sectors, innovation, and/or job creation.
• Crowdfunding – allows business people to raise small amounts of money from a large number of people via platforms such as Kickstarter, Seedrs, or Crowdcube. Can be donation-based, rewards-based, or equity-based.
• Family and Friends – informal loans or equity investments from personal contacts. Often used at the start to get new businesses off the ground.

Which is the best business funding model for my needs?

Each funding source comes with a number of advantages and key considerations to bear in mind before proceeding:

Funding Source	Advantages	Key considerations
Start-Up Loans	Predictable repayments Often come with free mentoring Builds business credit history	Debt must be repaid Business owners may be personally liable Sometimes involves a long application process
Business Grants	No repayment required May include business support and advice Can improve credibility	Highly competitive Often have strict conditions or outcomes Sometimes involves a long application process
Crowdfunding	Generates publicity and early customer interest No repayment for donation/reward models May attract more investors	No guarantee of securing the funding needed Can take time to secure funding  Your business idea will be open to the public
Family and Friends	May offer more flexible terms Lower pressure than commercial lenders Offers quick access to funds compared to loans and grants	Can lead to strain in family and friendship relationships Disputes can arise if no proper agreement is in place May not raise large sums

How should I choose a location for my new business?

When deciding where to locate your new business, there are many factors to consider, including:

• Ease of access – if your business relies on footfall, it is important to make it as easy as possible for customers to find you. Consider choosing premises within reach of your main clientele, parking, transport links, and the needs of those with disabilities. 
• Cost – research the price of commercial space in your chosen area, including rent, service charges, business rates, utility costs, insurance, stamp duty, registration fees, and fit-out costs. 
• Transport networks – the UK has an excellent road, rail and air transport network. Consider the operational and practical needs of your business when choosing a location. For example, if you have a business with lots of stock in a warehouse, it may be advantageous to locate yourself in the Midlands near the main motorway network.
• Proximity to similar and competitor businesses – being near your competitors can sometimes help attract shared customer traffic, but in other cases, it may lead to market saturation. Nearby businesses offering complementary services or products may also increase footfall or lead to potential partnerships.
• Planning use and legal considerations – check that the premises have the correct planning use class for your type of business and they they comply with any local regulations, restrictions, or licensing requirements that could impact your operations. 

How can I find the skills necessary for my new business?

An often overlooked aspect of starting a new business in the UK is how to find the skilled personnel needed. One route adopted by many businesses that prefer to remain agile is to outsource business functions to external providers. In the modern economy, many business functions can be outsourced for a fixed monthly fee, including IT, legal, accounting, marketing, logistics and warehousing, food, customer service, recruitment, secretarial, manufacturing, market research, and training. 

It can be useful to carry out a skills gap analysis to determine where you need additional staff and then decide how best to fill those gaps (i.e. in-house full-time/part-time or outsourced). For businesses at the cutting edge of research, it may be prudent to choose a location near academic and research hubs in your area of specialism. 

How can I build a strong brand for my new business?

In 2025, the best way to build a strong brand is by focusing on authenticity, personal connection, and visibility across digital channels. Remember, your customers need to see or hear your message several times before they are likely to take action or make a purchase because familiarity builds trust. For this reason, ensure that your brand is seen on several platforms such as YouTube, Facebook, LinkedIn, Instagram, TikTok, Reddit, and X. 

Other ways to build a strong brand for your new business include:

• Investing in high-quality content that stands out from the crowd and is noticed by AI search and LLMs such as ChatGPT and Google AI Mode
• Use the technique of storytelling – People remember stories more than facts—they create loyalty.
• Use testimonials and case studies to show real-world results from happy clients or customers, which in turn builds social proof and credibility.

Remember, the ultimate goal of your branding and marketing efforts is to create visibility and convert leads into customers. Having a diversified marketing approach that encompasses both online and offline methods can be extremely beneficial. Be adaptable and test different methods to see what resonates best with your target audience.

How to choose the right business structure

The first step in ensuring that your business conforms with the law is to choose the most suitable business structure for your needs. The main business structures used in the UK include:

• Sole trader
• Limited company (Ltd)
• Partnership
• Limited liability partnership (LLP)
• Community interest company (CIC) 

Each structure has its own implications in terms of taxation and administration. Limited companies, for example, offer legal and financial protection to owners and directors due to the legal separation and limited liability provided. Limited companies also come with more legal duties and obligations for directors when compared to sole traders. 

Other legal considerations when starting a new business

Other legal considerations include:

• Licences and permits – check if you require a permit or licence to operate your business
• Tax – speak to a trusted accountant about the tax implications of each business structure when deciding which is best for you. You may need to register and pay self-assessment, PAYE, corporation tax and VAT, in addition to national insurance
• Business Insurance – you may need protection against unexpected events through public liability insurance, professional indemnity insurance, and health insurance
• Employment law – including providing a written employment contract, paying at least the National Minimum Wage, complying with working time limits and rest breaks, providing statutory holiday and sick pay, etc.

Final words

We hope you found this guide to starting a new business in the UK insightful and useful. Having worked with thousands of new businesses, we know that starting your business can be an exciting journey filled with opportunities. By carefully planning and following these steps, you will lay a strong foundation for success. To make the process of setting up your new business as smooth as possible, we have a range of professional company formation packages to choose from. 

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