Gold coin purse by Nat Thaker

What makes a business successful? Getting set up for success

starting out
By Holly Tucker


Whilst there's no secret formula for creating a successful business, there are certain common characteristics that successful businesses share. Want to make your business successful? Read my practical tips on what to do when you start out.

Busy does not equal success mug

What factors make a business successful? How do you create a foundation for success?

For most of us, the idea of setting up a business can feel like a minefield. But owning your finances, getting a grip on the legal side of things, and doing the initial groundwork properly are essential aspects to pin down in order to create a successful business, no matter what your venture is. While we often focus on the creative parts when finding our feet — from a perfectly curated Instagram feed to nailing our email marketing journey — none of this will create the impact you desire without feeling confident in the very foundations of your business.

Trust me, when it comes to how you establish the ‘essentials’ of your company, you’ll find it far harder to play catch up than taking ownership from the start, and the best part is, your business is an evolution. So if you get the groundwork right, you’ll always be building on it and improving. Here’s what to focus on:

  • Make a name for yourself and your business. This is one of the first decisions you’ll have to make when it comes to practically setting yourself up, and importantly, before you make any financial investments that tie yourself to that name.
  • Think about what makes your business yours. Choose a name that reflects that. Do you want your name to describe what you do, what you stand for or who you are? Or are you aiming for something more abstract?
  • Do your due diligence and check the business name isn’t in use. The name itself is down to you, but ALWAYS remember to check that it hasn’t already been taken. A quick Google search never goes amiss.

Choosing the right business structure: what is the best business structure for a small UK business?

When you've decided to turn your idea into a reality, one of the first steps is registering your business. There are two main options — registering as a sole trader or as a limited company. How do you know which business structure is right for you? Here are the options…

  • Registering as a sole trader — this involves letting the taxman know that you're self-employed and will be filing a tax return by the end of January each year. This option is straightforward and doesn't require a lot of paperwork or fees, making it a popular choice for those starting out on their own. However, it also means that you'll be personally liable for any debts or legal issues that may arise.
  • Registering as a limited company — this involves registering your business on Companies House for a £15 filing fee, which makes you an official company. The primary difference when becoming a limited company is that any liabilities are 'limited' to the business, rather than the individual. This means that you'll have more legal protection and your personal assets will be separate from your business assets. However, this option requires more paperwork and financial admin than registering as a sole trader.
Make a name for yourself. This is one of the first decisions you’ll have to make when it comes to practically setting yourself up, and importantly, before you make any financial investments that tie yourself to that name.

Payment terms and cash flow: how to get your business finances in order

From tax obligations to payment terms and financial boundaries, proper financial management is critical to the success of any business.

  • Dealing with the dreaded T word (Tax) — you need to be aware of tax requirements. I won’t go into it all here as you can easily Google it, but if there was one thing I wished they put in bold letters when you first register yourself as a sole trader, is that when it comes to your first years’ self-assessment, you are asked to pay a year in advance. This means that, for some people, almost two years will be due when you make your first payment. Do your tax return early to get it out the way. Give yourself time to prepare and prevent getting a shock.
  • Find yourself a professional — consider hiring an accountant. There’s nothing stopping you from handling your own finances and completing your tax return and company accounts yourself, but an accountant is often a wise business investment at the start. Not only will they save you hours of frustration and ensure that your accounts are legal and above board, but they can actually help you save money by ensuring that you’re making the most of any tax breaks.
  • Define your payment terms — consider negotiating payment terms with suppliers to ensure good cash flow, as fixed costs might still be required during slow sales periods.
  • Create financial boundaries — keep business and personal finances separate to avoid confusion and create clear spending boundaries (trust me, I know this is easier said than done). Start with a personal account dedicated to business, and consider opening a business account for expansion plans or borrowing.

What makes a business successful: key takeaways…

Benjamin Franklin famously said, “Failing to prepare is preparing to fail” and that is certainly true when it comes to starting a business. Remember, a bit of forward planning is NEVER a bad idea in business so…

1. Do your initial groundwork:

Choose a name for your business that reflects what you do and check that it hasn't already been taken. Also, register your business either as a sole trader or a limited company.

2. Get legally registered:

Registering as a sole trader involves informing the tax authorities that you're self-employed and filing a tax return every year. Registering as a limited company involves registering your business on Companies House. It's also advisable to find an accountant to help you with financial admin.

3. Focus on finances:

Remember to define your payment terms, negotiate with suppliers, and keep your business and personal finances separate. Keep an eye on your cash flow, and consider creating a business account from day one if you have expansion plans or will need to borrow money in the future. Wishing you all the luck!

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Images: 'Fun Sized Gold Leather Half Penny Purse' — by Natthaker, Sparkly calculator — by Team Holly & Co

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