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Small business basics
A practical starter guide to the main things you need to think about when running a small business. From knowing what you sell and who you sell it to, through to pricing, getting paid, finding customers and keeping your day-to-day work under control.
Start with the basics
A successful small business starts with clarity. Before you focus on growth, take time to understand the fundamentals of your business.
1. What do you sell?
2. Who is it for?
3. What problem do you solve?
4. Why should somebody choose you?
Understand your customers
The better you understand who buys from you and what matters to them, the easier it is to make the right decisions about what you offer, how you communicate and where you spend your time.
Who they are
Think about their age, location, job, interests and what they value.
What they need
Understand their problems, goals and what would make things easier for them.
Where they look
Find out where they search, who they trust and what influences their decisions.
Price your work properly
Your price needs to cover your costs, reflect the value you provide and leave room for profit. A simple way to think about pricing is:
Direct costs
Materials, software, etc
Overheads
Your share of running costs
Your time
For the work you do
Tax allowance
Set aside for tax
Profit
A reasonable margin
Price
What you charge
Example: a simple project
| Materials | £20.00 |
| Time (e.g. 3 hours at £15) | £45.00 |
| Overheads (e.g. 20% share) | £10.00 |
| Profit | £15.00 |
| Minimum price | £90.00 |
Be careful when comparing prices
It can be tempting to copy competitors’ prices, but if you don’t understand your own costs, you may end up undercharging and working for less than your time is worth.
Money, admin and legal essentials
Invoicing
Create clear, professional invoices and get paid on time.
Contracts and terms
Use clear terms and conditions for your work.
Record keeping
Keep records of income, expenses and important documents.
Insurance
Consider relevant insurance for your business.
Payment terms
Set clear terms (e.g. 30 days) and stick to them.
Privacy and data protection
Look after your customers’ personal data.
Cash Flow
Keep an eye on what’s coming in and going out.
Licences or permissions
Check if you need any licences or permissions.
Tax basics
Understand your obligations (e.g. self assessment, VAT).
Consumer responsibilities
Be aware of your rights and responsibilities when working with consumers.
Requirements can vary depending on your business type and location. Always check the latest guidance for your situation.
Finding and keeping customers
Winning new customers is important, but looking after existing ones is just as valuable. A simple process can help:
Be clear
Communicate what you do and who it’s for.
Be visible
Show up where your customers are.
Make it easy to enquire or buy
Remove barriers and respond promptly.
Deliver well
Do a great job and meet expectations.
Encourage repeat business
Stay in touch and ask for feedback.
Simple systems that save time
Good systems help you stay organised, reduce stress and give you more time to focus on the work you enjoy.
Files
Use a clear folder structure and consistent naming.
Tasks
Use a to-do list or project tool to stay on track.
Finances
Keep track of income, expenses and invoices.
Passwords
Use a password manager to keep things secure.
Customers
Store contact details and important notes.
Backups
Back up your important files regularly (e.g. cloud storage).
A simple monthly business check
Set aside some time each month to review how things are going.
☐ Have I recorded all income and expenses?
☐ Are any invoices overdue?
☐ Are my prices still covering my costs?
☐ Where did my customers come from this month?
☐ What sold well?
☐ What needs doing next month?
Before you try to grow
More customers are not always the answer. If your pricing, systems or finances are weak, growth can create more problems. Make sure you have a solid foundation in place first.
☐ I know my customers
☐ My pricing leaves room for profit
☐ My records are organised
☐ I have clear systems and processes
☐ Customers can easily contact me
☐ I can deliver consistent quality
☐ I’m in control of my finances
☐ I’m ready for more, without losing quality
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