Seizing the moment: Six factors for launching a successful business in the new year

In an era marked by economic fluctuations and increasing costs, launching a new business might seem daunting. But entrepreneurs often thrive in tough times and there is compelling evidence indicating that 2024 might be an ideal time to embark on your start-up journey. 

The Centre for Economics Business Research predicts a surge in small businesses by 2025, with the number of newly launched companies set to increase by 342,000. This potential growth is driven by factors including declining inflation rates and the advent of breakthrough technologies.  

Setting up a business in the UK is relatively easy and it comes with limited costs for many new founders. Unless significant equipment is required, it’s possible to launch a business within a few hours. 

The journey of each startup is unique though. Business owners mustshould carry out market research and have a plan so that they navigate entrepreneurship successfully. 

1. Economic landscape 

There is no doubt that the coronavirus pandemic and the cost-of-living crisis have put immense pressure on the economy and led to many challenges for business owners. But in challenging times come opportunities. Research by Mastercard showed that the number of UK micro businesses has grown every year in the last decade.  

When assessing if it’s the right time to launch a business, you should consider the economic environment and how you can use being a small business to take advantage of trends and out manoeuvre bigger players. 

Growth sectors for new businesses in 2024 

Here are some growth areas for aspiring founders to consider: 

Ecommerce 

Online retail is a major sector in the UK. In fact, it is the most advanced ecommerce market in Europe and the third largest in the world after China, and the USA.

This means Ecommerce is very competitive in the UK, but if you have the right product that customers are looking for and you make a success of social media marketing and other promotional techniques, you could achieve big success.  

Green technology 

The focus on reducing carbon emissions means there is a demand for environmentally friendly products and services.  

The Government aims to support up to 440,000 jobs by 2030 through its net zero strategy so there are opportunities for entrepreneurs to deliver solutions which benefit the environment. 

Pop-up retail 

Despite the challenges faced by traditional high street retail, there is an increasing trend of independent retailers taking over empty spaces with temporary pop-ups. As well as helping to revive local shopping areas, this approach is a good way to test a business and meet potential customers.  

According to The Guardian, the number of pop-ups increased by 18% in 2023. 

Government incentives and support 

To increase your chances of success and maximise cashflow, seek out government incentives and other business support.  

Tax incentives for new businesses 

There are various tax breaks for startups, including: 

• Expenses that are “wholly and exclusively” for the purposes of running your business can be deducted from your profits to reduce tax payments. To ensure you claim everything you are entitled to, speak to your accountant.  
• You can attract investors to your startup using the Seed Enterprise Investment Scheme (SEIS) which provides tax relief.
• If your startup is investing in science or technology projects, you may be able to claim research and development tax credits.
• If you decide to run a limited company and you gift money, equipment, land, property, shares, or employee time to a charitable cause, you can reduce your corporation tax bill. 
• Some non-domestic properties like pubs, shops and offices that are subject to business rates can claim relief and pay reduced or no rates. Find details for rates relief in England, Scotland, Wales and Northern Ireland.  

Support programmes and resources for new entrepreneurs 

There are lots of support organisations, programmes and resources that can be used by startups to connect with experts, learn new skills, form collaborations and solve challenges.

Examples include: 

• TaxAssist Accountants has articles, guides and other resources covering many business topics.
• Many business groups and trade associations provide advice, networking, legal helplines, discounts on products and more.
• Councils and other local organisations run support programmes for start-ups. You can find details on the Government’s website or by contacting your local council.
• Incubators and accelerators provide startups with access to space, advice and investors. Find a directory here.  

2. Market dynamics 

Emerging consumer trends 

Running a startup that responds to emerging consumer trends can be beneficial for sales. You can monitor trends by reading trade publications and tracking conversations on social media.   

One current trend is sustainability and environmentally friendly practices. Many consumers actively seek out brands that prioritise it and some are willing to pay more. 

This gives small businesses a unique selling proposition, with opportunities in upcycling, repairs, and recycling services potentially lucrative avenues. 

Get tips on green business initiatives and how to become more sustainable here. 

Advancements in technology 

Technology can benefit almost all businesses in some way so you should look to embrace technological innovations.  

The Enterprise Research Centre surveyed 6,000 micro businesses and found that the increase in sales per employee over three years was 13.5% using cloud computing, 18.4% using customer relationship management software and 11.8% using online accounting software such as QuickBooks and Xero. 

Developments in artificial intelligence (AI) is one of the most significant tech trends in recent years. 

AI tools such as ChatGPT and Google Bard can increase productivity and boost creativity. An Office of National Statistics study found one in six UK businesses already utilise AI tools for functions such as content creation, coding, and image production.  

AI is immensely beneficial, but you need to be aware of potential inaccuracies and ethical issues like privacy and bias.  

Read more about the benefits and risks of AI here. 

3. Business environment 

The UK has a supportive business ecosystem and a wide range of talent.   

Networking and collaboration opportunities 

Networking is a key activity for entrepreneurs. 

Attending events to meet and interact with other people who have similar interests has many benefits including: 

• Meeting contacts for partnerships and collaboration. 
• Identifying new customers, suppliers, contractors or employees. 
• Growing your personal brand. 
• Finding solutions to business problems and challenges. 
• Attracting referrals for your products or services. 

Read advice on how to make a success of networking here. 

Access to skilled workforce and talent pools 

If you decide to employ people, you’ll need to take steps to find them.  

You should prepare a job description and decide the salary, bearing in mind the National Minimum Wage and National Living Wage. 

You can advertise your job on websites such as LinkedIn, Indeed or by using a recruitment agency.  

Shortlist candidates from the applications and invite them for an interview. Do detailed preparation for the interview to ensure you employ the most suitable person. 

Read more advice on recruiting your first employee here. 

Legal and regulatory considerations 

There are regulations that startups need to follow. You should be aware of them so that you avoid penalties. 

You need to complete a self-assessment tax return each year and pay your taxes, and if you decide to run a limited company there are rules involved too. 

If you employ staff, there are employment regulations you need to follow. Read advice on the tax and legal aspects of recruiting your first employee here. 

Other regulations that might affect you include: 

• Health and safety 
• Food labelling and packaging 
• Product safety 
• Licences for events 
• Imports, exports and customs 
• Marketing and advertising 

4. Social and cultural factors 

The impact a business has on people and the environment in which it operates is an increasingly important factor in entrepreneurial success. 

The role of diversity for businesses 

There is lots of research to show that a diverse workforce benefits businesses. 

A McKinsey study found that companies in the top quartile of rankings for gender and ethnic diversity on executive teams were 21% and 33% more likely to have above-average profitability, while Boston Consulting Group showed that companies with more diverse management teams have 19% more revenue as a result of innovation. 

Having a diverse team, which includes external advisers and mentors as well as employees, opens you up to new ideas and innovations you might not otherwise have had due to the difference in backgrounds and experiences. It can also help your business to better reflect society which can lead to more sales.  

Building a brand with social impact 

As noted above, many consumers look to buy from brands that are sustainable and have a positive effect on the environment.  

Building a business with social impact has many benefits. By showing that your startup does good you can attract more customers as well as employees who share your values. 

Doing good doesn’t necessarily have to be big global issues, you can also do it closer to home by supporting local charities and causes. Other ways to have an impact are doing something for someone in need every time you make a sale. Use this in your marketing.    

5. Access to funding and investment 

Ensuring you have sufficient capital is essential to avoid financial pitfalls, but finding funding can be challenging. However, there are lots of options that founders can explore.  

Here are examples of startup funding: 

Grants 

This is money you don’t need to pay back. Grants have a wide range of eligibility and many are aimed at start-ups. Sources of grants include local councils and Government websites for England, Scotland, Wales and Northern Ireland.   

There are also lots of other organisations that provide grants such as Innovate UK, the Prince’s Trust, Arts Council England, Creative Scotland, UnLtd and National Lottery Heritage Fund. 

Start Up Loans 

Start Up Loans is a Government programme providing personal loans of between £500 and £25,000 to start or grow a business. There’s a fixed interest rate of 6.5%, with loans repayable over one to five years.  

Crowdfunding 

This type of funding allows you to pitch your business online in return for money from consumers or investors. Types of crowdfunding include: 

• Reward crowdfunding using sites like Kickstarter and Crowdfunder. You provide a non-financial reward in return for investment. 
• Equity crowdfunding on websites like Crowdcube and Seedrs which involves giving away an equity stake in your business. 
• Peer-to-peer loans which is money you borrow from multiple investors. You don’t need to give away equity or a reward, but you do need to pay interest. Peer-to-peer loans websites include Funding Circle and Lending Crowd. 

Business angels 

Angel investors are wealthy individuals who invest their own money in early-stage businesses in return for an equity stake.  

Venture capital 

Venture capital investors also back early-stage businesses but they invest larger amounts and expect a significant return on their investment. This means they are more suitable for businesses with high growth potential.  

For more advice on startup funding, read this guide.  

Business models 

The business model you choose plays a key role in the success of your startup. 

Keeping costs down is important for many early-stage founders operating on a tight budget so this should be taken into consideration when choosing your business model. 

You should include projected costs in your business plan and constantly monitor them to ensure they don’t have a negative impact on your cash flow.  

If costs are too high, you should look to reduce them by taking steps such as cutting back on travel and replacing it with online meetings. Startups can also benefit from working from home or using coworking spaces rather than buying or renting their own property. 

6. Local and global trends 

Understanding customer needs through comprehensive market research is crucial. 

Local market insights 

Defining and researching your business’ target audience is crucial from day one of your business. 

Market research is useful for analysing whether a new business is viable, as well as taking other steps such as adding a new product or service. 

There are various ways to do it including face-to-face interviews and focus groups, online surveys, polls and questionnaires and social media conversations. 

You can also read relevant reports and studies produced by other companies and organisations.  

When your business is trading you should continue to gather insights. Customer experience is vital, so engaging with them through feedback mechanisms and incentivising their input can convert one-time buyers into loyal patrons.  

Read more advice on market research and competitor analysis here. 

Positioning your business on the international stage 

Exporting can be tricky so you should do thorough research to check if there is demand for your product or service in the overseas market you are targeting. The Government has country guides here. 

There can be lots of complex regulations to deal with when exporting so you’ll need to research that too. 

Rather than doing the selling yourself, you could use a distributor or sales agent or set up a joint venture with another company. 

Another way to reach overseas customers is by embracing global connectivity and selling on online marketplaces like Amazon, Etsy and eBay.  

Conclusion 

There is no perfect time to launch a business, but if you embrace the UK’s much heralded entrepreneurial optimism, 2024 could be your year. 

The UK’s business environment presents a dynamic landscape for aspiring entrepreneurs. From leveraging AI and sustainability trends to focusing on customer experience and exploring alternative financing, there are many opportunities for success.  

With the right blend of innovation, strategy and resilience, 2024 could be the year you transform your business dreams into reality. 

Get help with starting your business

TaxAssist Accountants can help you with the right advice to support your business. While our expertise covers tax, accounting, bookkeeping and payroll, we can also connect you with other providers we work with.   

Contact us to learn more about our services and to book a free initial consultation.   

Date published 3 Jan 2024 | Last updated 20 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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