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How to start your own business in Scotland: Seven steps to consider

Read time : 10 mins        Added:  30/11/2023

Starting your own business is an exciting time, but there are lots of things you need to consider at the planning stage. In this guide, you’ll find seven steps that will help ensure your start-up idea becomes a sustainable and successful business.

7 things you’ll learn from this guide:

1.Laying the foundations for your new business
2.Understanding your target market
3.Bringing your new business idea to life 
4.How to name your new business 

5. Finding the right home for your new business
6.Setting up a company that’s right for you
7. Ready to get started? A handy checklist of who to contact

1. Laying the foundations for your new business

Once you’ve decided on your new business idea, you’ll need to refine your offering by carrying out competitor research. Here are three quick questions to ask yourself:

  • How will my product or service stand out?
  • What problems am I solving for my target audience?
  • Is there an untapped gap in the market?

Lots of new business ideas are brought to life every year in Scotland. So it pays to look at the bigger picture around how your start-up can disrupt the market by doing things cheaper, faster, or more sustainably, for example. Being competitive from the outset will put you in a much stronger position to navigate the early stages and gear up for future growth. 

Setting up a business will pose challenges and bring up lots of questions. But don’t worry; nobody knows everything when they start out, and learning and adapting are part of becoming a new business owner. 

2. Understanding your target market

In the excitement of setting up a business, making time for the fundamentals, such as market research, is essential. Investing time and energy into an idea only to discover later that a competitor is already providing the same product or service for cheaper can be demoralising and put you back to square one.

Get to know your ideal customer

Think about your target customer’s age, gender or likely profession. 

  • What’s the size of your target market? 
  • What drives their buying behaviour? 
  • What objections or concerns might they have about buying? 
  • Why would they choose your business over your competitors?
  • How important is it to them to buy from an ethical and sustainable company? 

Don’t rely on assumptions

When launching your new business, hearing the thoughts of your target audience first-hand can give you many invaluable insights. Some suggestions for this include:

  • Speaking to people in shopping centres
  • Going to trade fairs to get feedback on your product
  • Running focus groups.

It’s easy to get too close to your new business idea, especially in the early stages. However, listening to the thoughts of your target customers can give you fresh insight and ideas. 

See our guide to Understanding your market.

Sustainability matters

This is an issue of growing importance as Scotland moves towards its 2045 Net Zero target. Your customers may be aware of it, and partner businesses may demand you have sustainable policies in place if you’re part of their supply chain. What's more, taking a proactive approach to sustainability from day one could give you more control over your energy costs and help you embrace the circular economy. 

Learn more about  Net Zero in Scotland.

3. Bringing your new business idea to life

Covering all your bases

When starting a small business, it pays to consider every scenario to help guide you through the initial uncertainty. So here are some questions to ask yourself:

  • Do you have enough of a financial contingency if your business starts slowly? 
  • How quickly could you scale up if things go better than planned? 
  • How could seasonal demand and the infamous Scottish weather impact your sales?
  • Have you considered sustainability in terms of your products, supply chain and marketing?

Make marketing a priority

A common mistake start-ups make is not having a detailed marketing strategy in place from the beginning. You must also budget for the time and expense associated with marketing activities. 

For example, if you’re selling artisan foods, you should factor in the cost of travelling to markets and other events, the time it takes to promote your attendance on social media, and getting flyers designed, printed and handed out. 

You must be in the right place with the right offer for the right people. If you’re selling artisan foods, that could mean a well-located market stall at various local and national events. 

If your business provides online courses, you could try social media posts and paid adverts that drive prospects to your website. Find out what works for your business – and don’t be afraid to experiment to get noticed at the outset. 

Putting a clear plan in place

Every start-up needs a formal business plan. You can use it to raise funding, get a business grant, sign up suppliers and negotiate with potential customers. 

See our guide to writing a business plan.

Do you need financial help to get started?    

Once you have your business plan, you can look for funding. But remember that many successful businesses started on a shoestring, so it pays to consider whether you need help getting your new business off the ground. For example, looking at interest rates and the affordability of any loan repayments is wise before making any decisions.

See our guide to financing a start-up business.

4. How to name your new business

Take the time to find a name you feel comfortable with, and don’t be afraid to ask potential customers, friends and family what they think. It can be helpful if your name summarises what the business does, but that won’t always work in, say, a premium sector. Sometimes it’s good to have a name that sits well within an industry, but not if you want to disrupt it. 

Ideally, your business name should be:

  • Easily searchable online 
  • Easy to pronounce
  • Memorable 
  • Not too similar to any other businesses in the same sector
  • Scalable.

Check the name you’d like is available by searching through Google and Companies House. And, if possible, choose something with available social media handles and domain names such as .co.uk, .com, or even .scot. 

5. Finding the right home for your new business

Another important consideration at the planning stage of your new business is whether or not you need premises. When you're uncertain of your revenue and profits in the early stages, it might be wise to explore all your options to keep costs down. For example, co-working spaces, market stalls and pop-ups can allow you to test your concept without being tied into an expensive lease agreement. 

Starting out from home is the best option for many new business owners. You should check first if you need planning permission. However, this shouldn’t apply, providing:

  • You don’t need to make significant alterations to your home
  • It remains primarily residential
  • You don't inconvenience your neighbours through issues such as noise and odours.

Also, check that running your business from your house or flat doesn’t invalidate your home insurance policy.

6. Setting up a company that’s right for you

Seeking professional advice from an accountant or business advisor before setting up your company is important. There are different options depending on your future plans and circumstances. Three of the most common types are: 

Sole Trader – as a sole trader, you’ll be responsible for any business debts. This is the simplest of the three options with the lightest regulatory and tax burden. 

Partnership – in a partnership, you’ll share financial responsibility, including losses, but are taxed as individuals. 

Limited Company – this can be a good option if you’re looking to scale your start-up further down the line. The business is a separate legal entity from its directors. One advantage of this is that you’re not held personally responsible for any debts. 

Discover more about setting up as a Sole Trader, Partnership, or Limited Company. 

7. Ready to get started? A handy checklist of who to contact

  • An accountant – there’s so much to do when you’re starting your own business. Getting an accountant on board early in your journey can help you manage your finances, free up time to focus on the day-to-day, and ensure you meet your legal obligations with HMRC.
  • Your bank – regardless of your chosen company structure, it’s wise to keep your personal and business finances separate. This is a legal requirement if you’ve set up a Limited Company. 

Bank of Scotland has a range of business accounts, including the Business Current Account, which can help you grow your start-up. It comes with one year of day-to-day business banking without fees. There’s also our Business Finance Assistant tool to steer you on the right track with your accounts and relevant HMRC returns. 

  • Companies House – if you set up a Limited Company registered in Scotland, your company registration number will have an “SC” prefix. Every Limited Company or Limited Liability Partnership (LLP) must register with Companies House. 
  • HMRC – your accountant will be able to help you navigate your tax matters and things like import/export tariffs with HMRC. 
  • The Information Commissioner – if your new business processes or stores personal information, you must register with the ICO. There’s a self-assessment tool on their website which will help you find out if you’re exempt. 
  • Your local council – before you take out a lease on any premises, you need to find out if you’re liable for business rates. If so, you will need to register with your local authority. 
  • Specialist registrations and permits – for example, new food businesses in Scotland must register with their local authority at least 28 days before opening. There’s more information available at Food Standards Scotland. Make sure to research the requirements for your sector.

Free day-to-day business banking includes cheques, standing orders, cash, UK Sterling Direct Debits, deposits and withdrawals. All we ask is that you operate your account in credit or within agreed limits.

While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Bank of Scotland for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.