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Speculate To Accumulate

The UK is open for business: new research from EuroNews puts the country among the top five destinations for those looking to start a business. 

But while the UK is very much a well-connected, internationally-focused country, it does have its own peculiarities worth noting for anyone keen to expand into its fertile market. Getting the plan right is key to opening up the opportunities in store for the ambitious, growing company. And as everyone in business knows, fail to plan, plan to fail 

So what are the key elements of a successful UK growth plan? 

Market research 

If the stat that four out of five companies fail upon entering a new market, then being an SME is even tougher. Typically, the reasons cited for failure include underestimating the target market, a lack of understanding of the target audience, and a shortage of a decent plan. 

Even small businesses can do some basic market research to get a clear sense of what they’re in for. But it’s important that any research you do must be carefully weaved into a plan so that you can utilise the information accordingly. Key types of market research include:

  • Consumer research

Conducting primary research is a great first step. You can gather data from your target consumers in the form of surveys, focus groups, and interviews. It is good to be as diverse as possible whilst ensuring you gather as much information as possible about your target audience. This research can lead to many strands of data, including demographic, psychographic and behavioural data, all of which can significantly help your business. 

  • Competitor analysis 

Even if you meticulously plan for your audience and you have a niche business idea, there is a high likelihood you will not be entering an empty market. The United Kingdom is a very competitive place to do business, with many excellent companies striving for success. It’s important to identify what makes your company different. You’ll also be able to gauge factors such as pricing and whether there is space for your product(s) in the market. 

Access to finance

One of the most important parts of growing a business of course, is accessing the right kind of funds at the right time. new research has shown that despite the string financial sector in the UK, a majority of startups still rely on their own funds to scale up. 

The Ambitious UK Start-Ups Report from Starling Bank, which draws from data gathered from 1,219 applicants for the 2023 UK StartUp Awards revealed that 85% of new businesses relied on the founder’s personal capital as the initial source of funding, allowing entrepreneurs to maintain full control and ownership of their company and avoid debt.

But there is help at hand. In the UK, a number of government agencies offer a range of grants to help smaller firms to grow and prosper. The grants are typically designed to support innovation, encourage job creation, and underpin growth. In the last few years, a number of new initiatives have emerged, including grants aimed at boosting green technology and digital transformation. 

The following list isn’t exhaustive, but gives an indication of some of the grants available

The grants system can be confusing. But with basic research and some effective help you can find what you’re looking for. Eligibility often depends on factors such as the size and nature of your business, the specific grant’s requirements, and your ability to demonstrate how your project aligns with the grant’s goals. 

Alongside these schemes are two pillars of financial support available from government: R&D (research and development) tax credits and EIS (Enterprise Investment Scheme) tax relief. R&D tax relief was introduced in 2000 in order to support small and medium-sized businesses (SMEs) when they invest in equipment that will help them to innovate. EIS was introduced in 1994 and makes start-ups who qualify more attractive to investors. It allows shares to be bought in a more tax-efficient way.

Visas

There’s a good chance that if your business grows you may want to bring in employees from overseas. When attempting to hire individuals from overseas for a UK business on a long term, permanent basis, it is essential that the business obtains a Sponsorship Licence.

That means that when an individual applies for a working visa, they must provide their Certificate of Sponsorship, a digital document which confirms to the Home Office that the applicant has a valid job in the UK. 

The “Certificate is provided by employer to the applicant, and to allow a business to assign “Certificates of Sponsorship”, it must have a Sponsorship Licence. To obtain this licence, in most circumstances, the business needs to be registered at Companies House, have a UK bank account and be registered with PAYE and VAT. 

Banking

Opening and operating a bank account in the UK can be a challenge. In order to open a bank account, an overseas company needs to have a registered office and a UK business address. Additionally, the company may need to provide documents such as a certificate of incorporation and a business plan. Be warned: this can be a time-consuming process, especially if the company is not familiar with UK company formation requirements. A UK based resident director may also be required, in some circumstances, depending on ownership structure together with expected turnover of the UK Company.  

It’s also worth noting that banks in the UK are required to verify the identity of their customers as part of their anti-money laundering (AML) and counter-terrorism financing (CTF) obligations. This can be a challenge for overseas companies, especially if they do not have a physical presence in the UK. The bank may require the company’s directors and shareholders to provide proof of identity and address, such as a passport or utility bill. 

UK banks will also expect to see your credit history – something that may prove complicated if you’re from outside the country. UK banks use credit scores to assess the risk of lending money to customers, so without a UK credit history, an overseas company may struggle to convince a bank that they are a low-risk customer. This can make it difficult to open a bank account or access other financial services, such as loans or credit cards. 

The UK banking system may be very different from what overseas companies are used to. For example, many UK banks do not offer the same types of services that are available in other countries. Additionally, the bank may have different policies and procedures for opening an account or accessing financial services. This can make it difficult for overseas companies to navigate the UK banking system. 

The different banking options

  • Fintechs: Digital-native banks like Starling, Monzo, and Revolut offer streamlined services and advanced digital features.
  • High St Banks: Well-established players like Barclays, HSBC, and Lloyds continue to provide comprehensive business banking services. More hoops to jump through to get an account, but they offer a wider range of services, including business lending. 
  • Credit Unions: Local credit unions often offer a community-focused banking experience with competitive rates.
  • Specialised SME Banks: Some banks specialise in serving SMEs, offering tailored financial solutions to meet your business’s unique needs.

Culture matters

Last but not least, remember that while the UK might welcome businesses and entrepreneurs from all over the world, it does have its own specific business culture. For instance, measurements and Units: The UK uses a different system of measurements and units compared to other countries. Brands should ensure that their products and packaging are labeled in the appropriate units to avoid customer confusion.

Then there a cultural and social norms: Brands should familiarise themselves with the cultural and social norms of the UK, including holidays, traditions, and customs. This will help them to avoid offending customers and create a positive brand image in the market.

Finally, the UK consumer does have particular preferences: so you should research the consumer preferences of the UK market to ensure that their products and services meet the needs and wants of their target audience. This includes everything from product features and design to pricing and marketing.

If you plan to grow your business in the UK, we can help. Whether you’re in need of advice or support in this or any other area, Paul Beare Ltd is right here for all your needs. You can contact us for help from tax and payroll to accounting and banking.