Enterprise Nation have reported that 54% of Londoners are thinking about starting a business in 2025. Well, we admire the initiative, and we’re here to help, so we put our heads together to compile some of the most common errors new business owners make. Of course, everyone makes mistakes, and that’s how we learn, but avoiding some of these will give you a head start on success.
Not doing enough research
You’ll want to begin by doing market research and coming up with an initial plan for your business. This will help you understand who your customers are, their habits, who you’re competing against for their attention, and so on. It will be a core part of your business plan.
You can use this to find your niche – something that’s important if you want to stand out from the crowd.
For example, instead of opening another café or restaurant that’ll be more difficult to draw attention to, why not come up with a unique concept? A 24-hour diner in the West End would likely go down a treat among the theatre community and attract a loyal customer base.
Naming your business and creating a brand
You should also take the time to familiarise yourself with the rules around naming a new business. For example, a ‘same as’ name is one with only minor differences from a company name that already exists (e.g. punctuation or special characters). A ‘too like’ name, on the other hand, is one that’s notably similar to an existing business name.
It can be a bit confusing, so make sure to do some thorough research before choosing a name for your business. If you don’t, you could end up in hot water – as well as dealing with the cost of a rebrand!
Thankfully, your trading name and your registered name can be different.
Choosing the wrong business structure
For most UK businesses, this is a choice between being a sole trader, a limited company, or a partnership.
It can’t really be overstated just how important this decision is, as it affects pretty much everything, from how you pay tax to your ability to access funding.
The process of becoming a sole trader is the least involved out of the three (mainly because you don’t have to register with Companies House), but there are other considerations to make. For example, if you’re a sole trader, there’s more risk to your personal assets if the business suddenly can’t pay its debts. This is because you’re not legally separate from your business; in a sense, you are the business.
A limited company, on the other hand, is legally separate from the people in it, and so any liabilities are separate from your own. Your personal assets are protected if the business ever finds itself in financial trouble, but there are other considerations such as tax efficiency and admin. Take a good look at the options before deciding anything! You can always switch later on; it will just take a little more time.
No marketing strategy
A marketing campaign is a form of organising marketing activities and can apply structure that otherwise may not be present. The nature of a campaign means it’s not defined by any one activity, but rather by the larger goals to be achieved and the plan put in place to achieve them.
It will also refer to cost, helping the business to get the best possible return on its spending.
In terms of how soon you should start planning your marketing strategy, a business needs metrics and methodology in place from the start in order to be able to track the progress of its campaign, so the sooner the better really. It’s important to be adaptable, but a plan will give you some focus.
Trying to go it alone
Now, it’s not strictly necessary to hire an accountant to set your business up for you, but there are many reasons why it’s recommended.
First and foremost, it gives you peace of mind that the process has been done correctly and that you’re using the best structure for your business. But that’s not all…
Good bookkeeping and accounting practices are pivotal to the long-term success of any business – without them, you can’t possibly sustain a robust financial reporting system, which is important for things like budgeting, cash flow management, and business development.
Hiring an accountant will also give you access to ongoing advice from a qualified expert in the field (for example, claiming expenses or making any changes to your business). This could prove invaluable.
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