Lets start with three inspirational facts for those who are going to start their business in the UK:
No idea where to start? We have prepared a step-by-step guide with detailed information on each step – from niche selection to getting a non-resident visa.
In early 2019, there were 5.9 million private businesses in the UK, more than 99% of which were small and medium sized. To choose your niche in this market, consider several issues: how competitive the industry is, how it has evolved over the last few years, and how long the businesses live.
According to the 2019 statistics, the construction industry accounted for the largest market share (over 17%), followed by professional, scientific, and technical services (over 14%). The third place was occupied by retail trade (over 9%). You can learn more about the main industries and market dynamics in the table below.
|Industry||Number of Enterprises||Percent of Total Number of Enterprises||Number of New Enterprises in 2019|
|Construction||1 037 280||17,68||344|
|Professional, scientific, and technical services||867 880||14,79||472|
|Retail trade||547 380||9,33||389|
|Business management and support services||512 160||8,73||229|
|Information and communication||369 545||6,3||226|
|Healthcare and social sector||360 670||6,15||102|
|Art, entertainment, and recreation||289 885||4,94||229|
|Accommodation and food services||201 745||3,44||157|
|Agriculture, forestry, and fishing industry||157 595||2,69||150|
|Real estate transactions||113 205||1,93||100|
|Finance and insurance||90 730||1,55||61|
|Mining and quarrying||36 285||0,62||15|
When choosing a niche, it is also important to consider which businesses are closed most often and which ones exist for a long time. In general, about 80% of British companies fail within the first year, and over a half do not survive even five years. Thus, according to the Office for National Statistics data, only 42.4% of the companies established in 2013 operated until 2018.
The largest number of companies opened and closed in 2018 were those in the transportation and storage industry. And the poorest situation was in healthcare: this is the only area where more companies closed than new ones appeared. Let’s take a closer look at the data for each industry.
|Industry||Number of businesses opened in 2018 (%)||Number of businesses closed in 2018 (%)|
|Transportation and storage industry (including postal services)||17,8||16,5|
|Business management and support services||17,2||15,4|
|Accommodation and food services||15,5||13,3|
|Real estate transactions||12,9||11,2|
|Information and communication||12,7||10,4|
|Finance and insurance||12,4||10,7|
|Professional, scientific, and technical services||11,7||11,3|
|Art, entertainment, and recreation||9,6||8,4|
A business plan is a detailed document that describes everything related to launching and developing your business. It states the business idea, the goals, the advantages and possible problems, the marketing and sales strategy, and other operations. You’ll need this document both to attract investment and to measure progress at every stage of business development.
These are the main items to be included in the plan:
Different types of funding may be available to you depending on your activity, goals, and experience.
The easiest option is to use personal assets or borrow from friends, relatives, or business partners. This option is suitable for any type of business. However, remember that the amount will be limited by the personal financial possibilities of people you borrow money from.
Private investors who invest in startups taking risks for potentially high returns. Investments can be one-off or regular. In exchange, you will have to donate a portion of the company’s shares. But in addition to money, business angels will share their skills and experience.
This type of investment is most often received by companies in healthcare, biotechnology, pharmaceutics, financial technology, software, and e-commerce.
An alternative way to attract money from the multitude of people who invest small amounts in promising projects with a powerful idea. You can register to collect money on one of the specialized online crowdfunding platforms.
There are two facts in favor of this method:
Investments from companies in exchange for participation in business management. Venture capital firms invest in companies with significant profit potential: you need to demonstrate a unique offer, innovation, or a strong competitive advantage. Investments are typically made in rounds and increase as your business and profits grow.
It is interesting that at the end of 2019 British companies attracted the largest amount of venture capital investments in Europe – 3.2 billion euros.
The Start Up Loans program funded by the British Business Bank offers loans to companies that have existed for less than 24 months. Each business partner can receive up to £25,000 (a total of £100,000 per business) as well as two months of mentoring and counselling.
Overdraft is a credit line from your bank. Similar to a normal loan, the money will need to be paid back with interest. An overdraft is the best option if you lack small amounts for short-term needs.
Suitable for large long-term purchases such as investments in transport or equipment. To get a bank loan, you need to prove that the company will be profitable and you will be able to repay the debt along with interest.
is an alternative to a bank loan. Lenders and borrowers are registered on P2P platforms and privately agree on loan amounts, interest, and terms. More information on P2P can be found on the website dedicated to this type of financing.
We have collected basic information about all types of financing available for starting businesses in the table. For more information, visit the official resource on finance for business.
|Funding type||Restrictions on amount||Number of transactions||What’s required in return||Bonuses|
|Equity||Own financial abilities||One||Nothing||No|
|Business Angels||No||One or several||Mostly, the company’s shares||Sharing experience and skills|
|Crowdfunding||No||One||Reward: your product, service, or bonus||No|
|Venture Capital||No||Several||Usually participation in company management||Business consulting|
|Startup Loans||£100,000||One||Interest||Mentoring and counselling|
In this article, we’ll talk about the main forms of ownership relevant to those who start a business (read more about them on the official website of the British Government).
Suitable for those who do business on their own, selling their goods or services. It can be dropshipping, cleaning houses, dog walking, goods delivery, custom cake baking, massage, photography, and much more. In this case, you bear full personal responsibility for the debts of your business. You need:
One of the most common forms of doing business in the UK. You can be either the sole shareholder and manager of the company at the same time, or you can engage an unlimited number of shareholders. They will have certain rights such as approving any changes in the business structure or strategy.
The company manager bears no personal responsibility for the debts but performs the following legal and financial obligations:
A way for two or more people to do business together and share personal responsibility, and namely:
The name requirements depend on the form of ownership. If you plan to register as an individual entrepreneur or partner, the name must not:
The name of a limited liability company should:
After the name, we advise you to come up with a logo, the main attribute of brand identity. The visual symbol of the company tells about business and helps to remember you better:
Registration rules differ depending on the form of ownership:
Additional business requirements define the scope of activities. Find out which licenses and insurances you need and what other regulations are specific to your industry.
Certain activities require a license. This may be a business dealing with alcohol, medicines, animals, some specific products, etc. To find out whether you need a special work permit, use this tool.
Insurance protects against possible risks such as property damage or legal costs. There are mandatory types such as:
Other business insurance types are optional, for example:
The types of necessary policies and their cost depend on many factors such as business specifics, annual turnover, number of employees. You can buy business insurance directly from an insurance agent or the British Insurance Brokers’ Association.
They refer to companies that:
To do business from home, you may need:
You can also claim tax breaks to defray utility costs. Check out the detailed terms for those doing business from home.
If you are renting a commercial property, the basic conditions will be set out in your rental agreement. This may be the responsibility for:
You can read about all the terms and conditions on this page.
If you hire employees, you have certain responsibilities for their health and safety such as:
Read more about the employer’s responsibilities and check what requirements must be fulfilled.
In addition to the requirements for starting a business listed in the article, foreigners must obtain a visa and a social security number and open a bank account. Let us tell you all about it in greater detail.
First, check the conditions of entry into the UK for the citizens of your country. This can be done on the UK government website: select your country from the list and find out what type of visa you need depending on the terms and conditions of your business.
The UK issues many types of work visas: short- and long-term, for startups and investors, for innovators and seasonal workers, etc. You can find all types of entry permits here.
You can either choose one of the types of business structures described in the article or open a regional branch of a foreign company. The latter option will suit those who already have a business in their home country. In this case, the foreign parent company will be responsible for all liabilities of the British branch. Visit the British Government website for all official information on branch registration.
Apart from the basic requirements, non-residents need to obtain a state social security number and have a physical address in the UK. After that, you can apply to the Companies House and HMRC.
To simplify financial transactions, it’s better to have an account with a British bank. The requirements for opening an account by non-residents may vary from one financial institution to another. Let’s consider the three largest banks and the conditions they offer:
Another option for foreigners is to use online banking services (such as Monese or Tide) offering a full range of standard banking services.