Advice for microbusinesses

Strategy and planning

General advice

Whatever your organisation type or current trading status, there are always opportunities to develop your brand and support your customers and your people. This should be your priority.

Support your clients

Avoid sending out generic emails telling them you’re there for them, offer to give them a call or book in a video catch up. This is much more effective in maintaining relationships and your clients will appreciate you being there for them.

Grow your online presence

Use this time to develop a strategic plan to grow your brand and online presence. Develop content for your channels which supports your customers, keeping it relative, positive and concise. Share your knowledge and expertise and signpost to other helpful content too.

Stay present and keep networking

If it’s a key part of your business, bring it online by facilitating digital networking. Ensure it’s well-managed and structured and connect with other industry leaders to host informative networking sessions which will add value for your clients and guests.

Communicate regularly

Ensure regular communication with your customers and teams so they know the current status of the business, and your plans for the future.

Starting a business

If you’re thinking about starting a business for the first time, here is a helpful guide with some hints and tips to get you started.

  1. Decide if running a business is really for you

    Know yourself, your true motivational level, the amount of money you can risk, and what you’re willing to do to be successful.

    How many hours a week will you work on an ongoing basis? How far out of your comfort zone are you willing to stretch? How far will your family stretch with you? To be successful, keep your business plans in line with your personal and family goals and resources.

    Running a business can often be a difficult and lonely experience so it’s important that you look after your personal wellbeing and build support networks for you and your business.

  2. Do your research

    Before you seriously start to plan the setting up of your business, it's useful to conduct market research to establish whether there is a real opportunity to turn your idea into a successful business.

    It may be worth also considering:

    • if there is a market and strong enough demand for your product or service
    • who is already selling your product or service and how are they doing it
    • what the cost to produce your product or service and the average selling price
    • if you are selling an existing product or service or introducing a completely new one
    • if you are selling something that already exists, how will you do things differently and stand out in the market

    You will need to consider what your unique selling point (USP) is. This is what sets your business apart and keeps customers returning. It may be high quality products, your expertise, excellent customer service and even you as an individual.

    You should aim to develop and do something unique and different, even if the products and services you sell are already available.

    Keep up to date with what is going on in your industry by signing up to relevant industry body newsletters and blogs and free business news sites.

    Completing your research should ensure you know your industry, your customers, your competitors and a little about the wider business environment.

    Listen and learn from everyone around you. Friends, family, potential customers, other business owners, competitors, business leaders. Everyone has valuable and unique experience and insights to share with you – use this to help shape your plans.

    You should also adopt this approach with your marketing and communications too. Listen to your customers and engage in meaningful, two-way conversations, which focus on the needs of your customers, not you and your business.

  3. Draft a business plan

    A business plan will provide you with a solid foundation for running your business and will get you thinking about all the different elements required.

    This should be reviewed and adapted on an ongoing basis. It doesn’t need to be overly detailed, 3 to 10 pages plus a financial plan should be enough. Your business plan should be a working and usable document that supports you in the running of the business, not a huge task that’s forgotten about as soon as it’s complete.

    Find further advice and example business plan templates.

  4. Cost your startup and plan how you will fund it

    Total up all the costs associated with launching and running your business. This includes premises, production, marketing, legal, IT, staffing and more.

    Don’t forget to factor in your personal living expenses too, listing your absolute must-pays like mortgage, rent, food and fuel and then the nice to haves such as entertainment and socialising.

    Whilst you should always aim to generate income for yourself and take a wage, be prepared for this taking a while to happen and ensure you can survive whilst building your business.

    This may mean fitting in your startup around an existing job and putting in additional hours, but at least it will ensure you have a regular income and can focus on growing the business steadily, without becoming desperate if the money doesn’t come straightaway.

    You might wait to start your business until you have saved up a financial reserve or borrow the necessary funds to pay expenses until your business becomes profitable.

    Small business loans or grants can also help you finance your startup and if you feel it will be profitable, you may also want to seek out some investors.

  5. Start up Loans

    Government backed Start up Loans of £500 to £25,000 are available to start or grow your business.

    You’ll also get free support and guidance to help write your business plan, and successful applicants get up to 12 months of free mentoring.

    To apply for the loan all of the following must apply:

    • you live in the UK
    • you’re 18 or over
    • you have (or plan to start) a UK-based business that’s been fully trading for less than 24 months

    Find out more about Government backed start-up loans external list.

  6. Register your business

    Most businesses register as a sole trader, limited company or partnership.

    Sole traders

    It’s simpler to set up as a sole trader, but you’re personally responsible for your business’s debts. You also have some accounting responsibilities.

    Find out more about being a sole trader and how to register external link.

    Limited companies

    If you form a limited company, its finances are separate from your personal finances, but there are more reporting and management responsibilities. They’re called limited companies as this means your personal liability in relation to the business is more limited than if you are a sole trader.

    Some people get help from a professional, but you can set up a limited company through GOV.UK.

    Partnerships

    A partnership is the simplest way for 2 or more people to run a business together.

    You share responsibility for your business’s debts. You also have accounting responsibilities. Find out more about being in a partnership and how to register external link.

  7. Understand relevant rules and regulations

    You may have other responsibilities depending on what your business does.

    Check if you need:

    • licences or permits, for example to play music, sell food or to trade in the street
    • insurance

    There are also rules you must follow if you:

    • sell goods online
    • buy goods from abroad or sell goods abroad
    • store or use personal information

    Where you work

    Check what your responsibilities are if you:

    • run your business from home
    • rent somewhere to run your business from

    If you rent or buy a property, you may have to pay business rates. Small businesses can apply for a discount on business rates and some may pay nothing.

    Check if you can claim office, property and equipment as expenses.

    Taking on people to help

    If you take on agency workers or freelancers you have some responsibilities, for example their health and safety.

  8. Keep things simple at first

    Focus on a simple proposition and product range, then grow this gradually.

    Keep your communication simple too. You should be able to explain to someone what your business does in 30 seconds so that they understand who you are, what you do and how it benefits your customers.

  9. Put yourself out there

    You need to be able to effectively sell your business and communicate with customers, peers and suppliers, both online and face to face. If you’re not as confident with this, start small and practice, practice, practice – it does get easier.

    Attend networking events wherever possible to build up your networks and use videos to showcase your brand and your story online. It can take some getting used to at first but it’s a free marketing and brand tool and will enable you to showcase your passion and expertise.

Writing a business plan

Why you need a business plan

Planning what you want to do in your business is an important part of making your business a success. A business plan is your roadmap, guiding the direction your business takes, and helps you to stay on track and measure your success.                             

Your business plan defines exactly what you want to achieve and how you plan to do it, helping to keep you focused on your goals.                             

A good business plan sets out:                             

  • your key objectives for the next 2 to 3 years
  • the strategies you plan to use to achieve your objectives
  • your priorities

You can then plan, implement and measure what you are doing against your business plan, making adjustments to ensure you achieve what you set out to do.                             

Many people think of a business plan as a document used to secure external funding. This is important because potential investors, including banks, may invest in your idea, work with you or lend you money as a result of the strength of your plan.                             

The following people or institutions may request to see your business plan at some stage:                             

  • banks
  • external investors – whether this is a friend, a venture capitalist firm or a business angel
  • grant providers
  • anyone interested in buying your business
  • potential partners

It is also an excellent tool for giving others an overview of your business and to demonstrate how you are performing. This is why most banks or investors ask for a business plan.                             

Unfortunately, too many businesses only do a business plan when they have to. They often claim they don’t have enough time to plan as they are too busy getting things done. However, the busier you are, the more likely you are to need a plan.                             

Presenting your business plan

To make sure your business plan has maximum impact, there are a number of points to observe.                           

Keep the plan short and to the point.                           

Think about the presentation and keep it professional, even if you only intend to use the plan in-house. A well presented plan will reinforce the positive impression you want to create of your business.                           

When you present your plan:                           

  • start with the executive summary
  • ensure it’s legible – make sure the type is 10 point or above
  • ensure you use email friendly format
  • write as if it’s intended for an external audience, even if it’s for internal use only
  • edit it carefully and get at least 2 people to read it to check it makes sense
  • show the plan to expert advisers such as your accountant, and ask for feedback
  • avoid jargon and put detailed information, such as market research data or balance sheets in an appendix at the back
  • do not include detailed plans for specific areas of your business, such as a sales plan or a staff training plan – though it is good practice to mention that they exist

While it is sensible to seek advice from external advisers, it is not a good idea to get them to write the plan for you. Investors and lenders need to have confidence that you personally understand your business plan and are committed to the vision for the business.                           

Make your plan is realistic. Once you have prepared your plan, use it. If you update it regularly, it will help you keep track of your business’ development.                           

Business plan template

Business plans generally follow the same structure. Here is an outline you can follow:

  1. Executive summary

    The executive summary is a snapshot of the key points of your entire plan. It should include highlights from each section of the rest of the document, from the key features of the business opportunity through to the elements of the financial forecasts.

    Its purpose is to explain the basics of your business in a way that both informs and interests the reader. If, after reading the executive summary, an investor or manager understands what the business is about and is keen to know more, it has done its job.

    It should be concise. No longer than 2 pages at most and interesting. Write this section of your plan after you have completed the rest.

    It is not a brief description of the business and its products. It’s a synopsis of the entire plan.

  2. Introduction and company overview

    A short description of the business opportunity. Includes who you are, what you plan to sell or offer, why and to whom.

    Start with an overview of your business, including:

    • when you started or intend to start trading and the progress and investment you have made to date
    • the type of business and the sector it is in
    • any relevant history, for example, if you acquired the business, who owned it originally and what they achieved with it
    • the current legal structure
    • your vision for the future

    Then describe your products or services as simply as possible, defining:

    • what makes it different
    • what benefits it offers
    • why customers would buy it from you instead of your competitors
    • how you plan to develop your products or services
    • whether you hold any patents, trade marks or design registration
    • the key features and success factors of your industry or sector

    The person reading the plan may not understand your business and its products, services or processes as well as you do, so try to avoid jargon.

  3. Market and competitors

    In this section you should define your market, your position in it and outline who your competitors are. In order to do this, you should refer to any market research you have carried out. You need to demonstrate that you’re fully aware of the marketplace you’re planning to operate in and that you understand any important trends and drivers.

    You should also be able to show that your business will be able to attract customers in a growing market despite the competition.

    Key areas to cover include:

    • your market - its size, historical data about its development and key current issues
    • your target customer base – who they are and how you know they will be interested in your products or services
    • your competitors – who they are, how they work and the share of the market they hold
    • the future – anticipated changes in the market and how you expect your business and your competitors to react to them

    It is important to know your competitors’ strengths and weaknesses as compared to your own – and it is good practice to do a competitor analysis of each one. The market is not static – your customers’ needs and your competitors can change. As well as showing the competitor analyses you have undertaken, you should also demonstrate that you have considered and drawn up contingency plans to cover alternative scenarios.

  4. Sales and marketing strategy

    Why you think people will buy what you want to sell and how you plan to sell to them.

    Describe the specific activities you intend to use to promote and sell your products and services. It’s often the weak link in business plans so it’s worth spending time on it to make sure it’s both realistic and achievable.

    Your plan will need to answer:

    • how do you plan to position your product or service in the market place?
    • who are your customers? Include details of customers who have shown an interest in your product or service and explain how you plan to go about attracting new customers
    • what is your pricing policy? How much will you charge for different customer segments, and quantities
    • how will you promote your product or service? Identify your sales process methods, for example: direct marketing, advertising, PR, email, e-sales, and social marketing
    • how will you reach your customers? What channels will you use? Which partners will be needed in your distribution channels?
    • how will you do your selling? Do you have a sales plan? Have you considered which sales method will be the most effective and most appropriate for your market, such as selling by phone, over the internet, face-to-face or through retail outlets? Are your proposed sales methods consistent with your marketing plan? And do you have the right skills to secure the sales you need?
  5. Operations

    Your business plan also needs to outline your premises, production facilities, your management information systems and IT. There are certain areas you should focus on.

    Details about your location should include:

    • any business property
    • your long term commitments to the property
    • whether you own or rent it
    • the advantages and disadvantages of your current location

    Details about producing your goods and services should include:

    • whether you need your own production facilities or would it be cheaper to outsource any manufacturing processes
    • how modern your facilities are
    • the capacity compared with existing and forecasted demand
    • investments, if any that will be needed
    • suppliers

    Details about your management information systems should include:

    • established procedures for stock control, management accounts and quality control
    • ability to cope with any proposed expansion

    Information technology (IT)

    IT is a key factor in most businesses, so include your strengths and weaknesses in this area. Outline the reliability and the planned development of your systems.

  6. Financial information

    This section translates everything you have said in the previous sections into numbers.

    Look carefully at:

    • how much capital you need if you are seeking external funding
    • the security you can offer lenders
    • how you plan to repay any borrowings
    • sources of revenue and income

    You may also want to include your personal finances as part of the plan at this stage.

    Financial planning

    Your forecasts should run for the next 3 or 5 years and their level of sophistication should reflect the your business. The first 12 months’ forecasts should have the most detail associated with them.

    Include the assumptions behind your projection with your figures, both in terms of costs and revenues so investors can clearly see the thinking behind the numbers.

    What your forecasts should include

    Cashflow statements – your cash balance and monthly cashflow patterns for at least the first 12 to 18 months. The aim is to show that your business will have enough working capital to survive so make sure you have considered the key factors such as the timing of sales and salaries.

    Profit and loss forecast – a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads.

    Your forecasts should cover a range of scenarios. New businesses often forecast over-optimistic sales and most external readers will take this into account. It is sensible to include additional forecasts based on sales being significantly slower than you are actually predicting, with 1 for sales starting 3 months later than expected, and another forecasting a 20% lower level of sales.

    Risk analysis

    Alongside your financial forecasts it is good practice to show that you have reviewed the risks your business could be faced with, and that you have looked at contingencies and insurance to cover these.

    Risks can include:

    • competitor action
    • commercial issues – sales, prices, deliveries
    • operations – IT, technology or production failure
    • staff – skills, availability and costs
    • acts of God – fire or flood
    • global events such as the coronavirus pandemic

Moving to online selling

Making the switch from face to face selling to online sales can be daunting. If done thoughtfully and properly, you can continue to serve your customers.

Here are 5 tips for online selling:

Choose your channels

Whilst your website could be a powerful selling tool, you may not necessarily need to build a full new website or add on e-commerce ordering capabilities to your existing one. If you already have an online presence via social media, you can use your pages to showcase your products and offer sales via email or telephone, depending on your product.                                   

If you want to explore selling via a website, Shopify, Squarespace and Wix will enable you to start from scratch with a number of free and paid-for service offerings.                                  

Sell the right products

Sell the right products. Consumer demand has changed in recent weeks and pressures on supply chains mean that businesses may be experiencing issues with limited or delayed stock. It’s therefore important to review your product range and decide what to sell online.                                   

You might wish to sell a limited selection of products or specialist products which are reflective of the current situation. Keeping in touch with your customers and engaging with them online will help you understand their needs and wants at this time, so you can adapt your offering accordingly.                                   

Implement a process

Ensure your sales and ordering process is clear at the outset. Highlight your delivery costs, order timings and returns policy. You should also provide contact details and information for customers wishing to amend or cancel their orders.                                    

Find further government guidance on the rules around online selling. external link                                   

Collaborate

You may be able to partner with existing online retailers such as Just Eat or Etsy to get your products to market. Or can you work with neighbouring businesses in your area to share customers and resources.                                   

Examples of this include:                                   

  • a bar teaming up with a local deli to offer hampers and wine and cheese boards
  • a restaurant working with a local taxi firm to offer home delivery services

Maintain service standards

Just because you can’t see your customers, doesn’t mean your service doesn’t need to be less than perfect. Ensure you maintain communication with your customers throughout the purchase and add a personal touch wherever possible.                                   


Communities and support

You can get involved in local start up communities and get support from:

  • the ide@ community - an online space and support programme for anyone starting a business
  • AD:VENTURE - coaching, work spaces and low rate loans for start ups and young businesses in their first 3 years of trading

Retail trends emerging from coronavirus

Digital acceleration

There has been a vast acceleration of digital within retail, with UK shoppers buying 35% more than before the lockdown, due to the closure of non-essential stores and a reduction in social contact.                                                  

This varies by category – online sales of garden products, DIY and home entertainment have soared, whereas spending on clothing and non-essentials has declined, with some exceptions such as gym and sportswear.                                                  

Online grocery sales have surged and are set to increase by 25% in 2020. Tesco has doubled its home delivery and click & collect capacity to over 1.2m slots in six weeks and Sainsburys has increased its number of slots by over 75%. A number of older shoppers have tried online grocery shopping for the first time, increasing their online grocery spend by 94% YoY.                                                  

55% of online shoppers say they’ve shopped more during lockdown, with 77% stating that they will continue to shop online more. 39% have bought items they wouldn’t normally buy online such as shoes and pet food and 25% have had a positive experience with a new retailer who they will continue to shop with (PFS).                                                  

In-store social distancing, consumer concerns about visiting stores and the potential need for the people currently shielding to keep doing so, means that the surge towards online grocery shopping is going to continue well into 2020 and beyond.                                                  

If bricks and mortar stores are to remain, they will have to work harder than ever to compete with or complement online, to create a ‘phygital’ retail experience. This is in addition to implementing social distancing measures and navigating customers through a positive store experience.                                                  

Community focus

A greater sense of community is being felt by many people in the UK, as lockdown has limited our human contact outside our houses and brought us closer to our neighbours.                                                  

  • 3% of people say they have felt closer to their neighbours & and local community since the lockdown began
  • 43% have shopped for older or vulnerable neighbours
  • 50% say they simply smile or wave at each other more (John Lewis)

As consumers pull together to support their communities, they are also looking to businesses to play their role too, therefore, sustainability and community will be a key focus in the future when making purchasing decisions.                                                  

77% of people feel more positive about brands that are making the effort to support society during this time (Twitter) and 54% of online shoppers say they will be less likely to shop with retailers that have treated their staff poorly during the COVID-19 pandemic (PFS).                                                  

Businesses must therefore be mindful of how they treat their staff, customers and communities and consider their role in wider society and their local communities. Communications must be meticulously planned and supported by authentic policies and practices.                                                  

Shopping locally

Whilst online retail is flourishing, consumers are expressing appreciation for their local businesses along with those independents who have ‘stepped up’ to support their communities.                                                  

Take for example, the Javeds, convenience store owners in Falkirk made headlines and received widespread praise in March 2020 after spending £2,000 of their own money on care and hygiene packs for the elderly and vulnerable.                                                  

At Nisa, average transaction value was up 52%, with the volume of transactions up 15% (Revolut), indicating a trend towards customers buying more at their local shops. Selected Nisa stores also launched local home delivery services, with one in Southampton accepting orders via social media and using local taxi drivers to distribute them.                                                  

This presents an opportunity for small businesses to build a localised online offering for their communities which combines the ease and convenience of online shopping, with the familiarity and personal service of a community store.                                                  

A renewed focus on British goods has also been prevalent, with retailers such as M&S showcasing their ‘pride in backing home grown talent’. This is great news for independent British businesses and producers, who should use their heritage to tell their brand stories, to cement their places as proudly British brands, within in their local communities.                                                  

Happy at home and self reliance

With our homes now the backdrop to all aspects of our lives, they’ve become offices, schools, gyms and (virtual) events venues. As a result, we’ve seen a shift towards DIY lifestyle products, covering things like cooking, entertainment, crafting, exercise and socialising.                                                  

John Lewis saw sales of gym equipment rocket by 496% in recent weeks and as families seek to entertain themselves during lockdown, there has been a huge increase in spend on craft items and home baking products, with 40% of consumers saying they are doing more home baking now (Kantar).                                                  

When bars pubs closed, alcohol sales rose by a third, with tequila sales up 175% at John Lewis, as consumers, host ‘Zoom cocktail parties’ and their own at-home events. It remains to be seen how this trend will develop now a number of bars and restaurants have reopened, but consumers have certainly proved that they’re able to create their own fun.                                                  

This trend towards creating at home extends to the garden too – Waitrose.com has seen a 63% increase in searches for ‘grow your own’ vegetable seeds and sales of garden products have also increased. This has been fuelled in part by the sunny weather but may also reflect a deeper yearning amongst consumers to feel more self-sufficient after seeing empty supermarket shelves during the initial stockpiling which took place in March, following the outbreak of covid-19.                                                  

Businesses will therefore have to work much harder to drive sales of non-essential items and look to accommodate changing customer demands.