How to start a business in the UK: Your guide to streamlined operations

Starting a business is an unbeatable feeling. It could be your first or your fiftieth, but there’s still that little buzz of excitement as it all comes together.

You’ve got a brand to build, customers to meet, and success to achieve.

There’s also the less glamorous side, like infrastructure and operations. Whether it’s your bookkeeping or company policies, these are the necessary foundations for success. They’re just not quite as much ‌fun.

We’ve brought together vital tips for building strong operations and infrastructure in this article. Think of it as a helping hand for your first steps in business. Soon, you’ll be sprinting towards success.

The biggest challenges facing new businesses in the UK

Before we start solving problems, we should know which ones to prioritise. We’ve looked at dozens of sources, surveys, and studies to uncover the most common issues for entrepreneurs:

• Financial management, from borrowing to cash flow

• Accuracy and compliance with tax

• HR, recruitment, and employment

• Tech overwhelm

• Simply making it through

Those are the biggest challenges facing new businesses. Now, let’s look at how to overcome them. Knowing how to approach these issues from day one will give you the confidence to start, build, and scale your business.

How to feel confident about your business finances

If the only financial work of running a business was getting paid, we’d be a nation of entrepreneurs. Alas, you also have to balance debtors, creditors, and working capital needs.

35% of small businesses believe it will be difficult to secure funding. Of the businesses that do borrow money, 45% do so to manage cash flow.

Confidently and consistently managing money is crucial for small businesses.

Tip 1: Have a central source of truth

Bring all of your accounts into one place using accounting software like Xero. You’ll also want to make sure it integrates with platforms you use for payments and corporate cards.

The more accounts, stores, and payment services you have, the more important it is to have a central place to see them all.

Once all your numbers are aligned, you can stay on top of cash flow and manage spend.

Tip 2: Build an emergency fund

Setting a ‘new zero’ for your bank balance is a great way to build emergency reserves.

Growing your cash reserves might take time, but you’ll feel much more secure once it’s done.

If your new zero is £10,000, then you’ll aim to never go below that number. In an emergency, you can use it and build it back up.

Tip 3: Negotiate payment terms

You agree to payment terms with both vendors and suppliers. If the terms don’t work for you, you can always try to negotiate. This can be one-off or for an ongoing relationship.

You may have to make some concessions to get what you need, but that’s the cost of doing business. One conversation could completely change your cash position.

Staying on top of taxes when you start a business

45% of small businesses file incorrect Corporation Tax returns. Clearly, tracking tax liability is a challenge for many. This hurts businesses and the country as a whole – the Corporation Tax gap is estimated to be over £13 billion.

Nobody wants the emotional and financial costs of a tax issue or investigation. If you want your business to succeed, staying on top of your taxes is essential.

Tip 1: Know your limits

Some key rates and their thresholds for business owners to be aware of include:

• Value Added Tax (VAT): If your total taxable turnover exceeds £90,000 over 12 months, you’ll need to register for VAT.

• Corporation tax: UK businesses pay 19% corporation tax on their profits.

• Dividend tax: Dividends are one way of taking an income from your limited company. The standard tax rate on dividends is 8.75%. Higher-rate taxpayers pay 33.75%, and it’s 39.35% for additional rate taxpayers.

These aren’t the only tax rates to know about, though they are important.

Tip 2: Don’t ignore your taxes

Every business and self-employed person has to submit tax returns. It shouldn’t have a surprise when your tax bill is due.

You could stick your head in the sand and make it a future problem.

Or you can put money aside regularly for taxes. This way, tax season will no longer be a time of panic and worry.

Tip 3: Turn to the professionals

If you’re really worried, hire an expert. HMRC reports that 70% of SMEs use a third party to manage at least some of their taxes.

A trained and qualified accountant can make sense of your tax situation. They can even use their knowledge to legally reduce your tax bill.

Their services come at a cost; however the savings they help you make might (more than) pay it back.

Building your team: What SMEs should know about HR

Growing a team of dedicated, talented staff should be one of the best parts of running a business. Instead, 64% of SME owners say that managing HR is “extremely challenging”.

Hiring means policies, payroll, holiday management, HR services, training, compensation, and more. The benefits are huge, but it isn’t always easy.

If you hire staff who operate overseas, as many UK businesses do, the complications add up. That is, unless you have a global payouts platform that can pay staff in local currencies.

Tip 1: Contracts matter, don’t overcomplicate them

You can purchase contract templates from legal firms or hire a lawyer to draft them for you.

Pricing shouldn’t be prohibitive and you could save time, stress, and money in the future. Out of all investments, watertight legal documents are one of the most worthwhile.

Tip 2: Payroll software will save you time, energy, and risk

Payroll software doesn’t just save you time, it prevents costly mistakes.

Paying employees is more than bank transfers. You need to process net pay, calculate gross pay, and redirect all of their deductions. And lots more beyond that.

Technology for technology’s sake isn’t smart (more on that later), but payroll software is essential if you hire staff.

Tip 3: Insurance and compliance

You probably aren’t jumping out of bed to write a health and safety policy. It still needs doing, though.

You have legal duties to your team and if you don’t meet them, the costs can be huge. Fines for non-compliance and expensive legal battles are frustrating at the very least. They’re certainly not why you got into business.

Many insurers have calculators on their websites for you to work out what cover you need and its cost. As with contracts, paying for professional support is a sensible expense.

Use tech, don’t be used by it

Over two-fifths of SMEs worry that they’re failing to capitalise on emerging technologies, despite a similar percentage believing they’d improve productivity, efficiency, and speed.

There are so many options available, from essentials like accounting software to niche project management tools and AI agents.

Finding a way to integrate and scale with technology can unlock huge growth and value for SMEs. Cutting through all the noise is the challenge.

Tip 1: Beware of shiny object syndrome

Some tech investments will transform your business. Many will not.

New technology is exciting and usually comes with big promises and a flashy sales pitch. Before you know it, you’re a paid-up customer who never makes full use of it. Often, you end up back with your old (better) way of doing things.

Start out sceptical and you’ll avoid the worst of it. Being a Luddite won’t help, but you shouldn’t feel pressured to have every latest bit of tech. And remember, asking your network for tech reviews is free!

Tip 2: Automate the tasks you do most

The best business tech can be boiled down to one truth: It makes our work easier. Automation is the epitome of this.

In the day-to-day running of your business, your time gets eaten up by tasks and busywork. You end up with a full calendar, yet never get anything meaningful done.

These tasks are prime candidates for automation. The sooner you can do away with repetitive admin, the sooner you can get back to what matters – growing your business.

DIY tools like IFTTT or Zapier are great starting points. Otherwise, you can try tools built for specific areas, like email marketing or customer onboarding.

Tip 3: Abundant experiments, cautious commitments

You need to try something to know whether it’s useful.

In this sense, you shouldn’t hold back. Try new tech out, at a low cost, wherever possible. Spending every week learning about new systems or processes isn’t advisable, but you’ll know when something’s worth trying.

When it comes to committing to new tech, be more discerning. You need to be sure that it will be value for money, as well as worth the time it takes to embed into your business.

Starting a business that survives

Two-thirds of adults believe it’s easy to start a business. Yet, 84.3% say they wouldn’t try because they worry they would fail.

Even when we believe there are fewer barriers to entry, our fear of failure is powerful. It’s understandable – under half of businesses formed in 2018 survived beyond four years.

Businesses fail; you can’t let fear stand in the way of your potential.

Tip 1: Insurance, licences and permits, and regulatory compliance

If you're unfortunate and have to close down, don’t let it be because of an admin error.

Getting insurance, securing necessary permits/licenses, and meeting industry and governmental regulations are non-negotiable.

If you don’t, you’re not giving yourself or your business a fair chance. Setting yourself up on the right foundations will help your business thrive.

Tip 2: Lean on your community

Building a business can get pretty lonely. The good news is, 5.5 million business owners in the UK know the feeling.

Building a network of business owners in your local area or industry could be life-changing. Their knowledge, experience, and neutral view are invaluable. Their support can fix problems you didn’t even realise you had.

If nothing else, they’ll empathise when you need to rant about an overdue invoice.

Tip 3: Make peace with what you can’t control

You can start an exceptional business and still be caught out by unfortunate timing. In the last few years, businesses have had to deal with a pandemic, a war in Europe, and economic chaos. 

We can’t control everything that defines our success. We can control how we respond to it all.

If your business fails, you’re in the majority. Depending on your perspective, that’ll be disheartening or liberating. Yes, businesses can fail. That doesn’t mean their owners have failed.

Entrepreneurship is a long and winding road. Don’t let a few potholes stop you from chasing your dreams and building a business you’re proud of.

Businesses use Airwallex to simplify, streamline and save

Can we add in a bonus tip?

If your business does anything internationally – supply chains, staff, currencies, or expenses - then you may want to read this.

With an Airwallex business account, you can manage business expenses, instantly generate corporate cards, access market-leading FX rates, and transfer in and out to almost every country in the world.

Simplify, streamline, and save your way to success

Every business is different. Your recipe for success will be unique, but the fundamentals stay the same.

You’ll be in a good place if you can get confident with your finances, tackle taxes head-on, look after your team, use tech wisely, and have faith in the process.

We wrote this article to give you a shortcut to a strong business, so there are lots more details to explore. The fact you’re reading this, though, tells us you’ve got the right attitude.

Wherever that attitude takes you, we’ll be here to support.