The advent of digitalization has ushered in a new era in the business world, offering unprecedented freedom for aspiring entrepreneurs to establish their ventures. Technological advancements have not only accelerated innovation but also presented a myriad of challenges that demand innovative solutions.
Nevertheless, various factors, including government incentives, private funding availability, and the recent COVID-19 pandemic, have contributed to fostering an environment conducive to entrepreneurial growth.
Across global metropolitans such as Berlin, New York, Los Angeles, Istanbul, and Amsterdam, vibrant startup and SME ecosystems have flourished, giving rise to distinctive brands, unicorns, and remarkable success stories.
For those seeking to launch their ventures, London and the UK stand out as highly advantageous locations. While competition is fierce, opportunities abound. A report by the Department for Business, Innovation & Skills in October 2020 revealed that the UK boasted nearly 6 million SMEs at the start of 2020, with nearly three-quarters of them being owner-operated enterprises. London and the South East alone accounted for 35% of the UK’s business population, comprising 1.1 million and 932,000 enterprises, respectively.
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.
What is the Cost of Starting a Business in the UK?
The initial investment required to start a business in the UK varies depending on the type of company you choose to establish. While the basic expenses may seem minimal, it’s wise to consider additional costs such as hiring an accountant, financial advisor, and acquiring a business mentor. If you opt for a physical office space, rental expenses will apply, and even as a sole trader working from home, purchasing necessary equipment can increase your overheads.
Beyond these essentials, other startup expenses include but aren’t limited to business insurance, HR services, and marketing efforts.
Although research from 2016 indicates that UK startups typically spend around £23,000 in their inaugural year, this figure isn’t a universal standard. For instance, Julie Deane, the founder of The Cambridge Satchel Company, only invested £600 in her first year, as reported by The Telegraph. Conversely, entrepreneurs like Rob Law of Magmatic may incur significantly higher costs, with Law reportedly spending £60,000 during his initial year of business.
Create Your 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.
Make Technology Part Of Your Business Plans
Nearly every industry experiences accelerated growth due to advancements in technology. Even if you’re running a small grocery shop, it’s crucial not to underestimate the impact of technological developments. Rather, it’s essential to stay vigilant and embrace technological innovations, as they can enhance the efficiency and growth of your business.
To stay abreast of these advancements, consider following social media accounts of tech leaders, top professionals in your field, technology blogs, podcasts, and relevant industry publications. By staying informed, you can discover tools and strategies that will streamline your operations and propel your business forward.
For more information, and as your business grows, 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.