How to become your own boss: practical tips on getting started

Taking the leap to becoming your own boss is an increasingly popular move. In the UK alone, there are about 5.5 million private sector businesses, and nearly three-quarters of them are run by solo entrepreneurs. It just goes to show you don’t need a big team to succeed as a business owner.

Even better, you don’t necessarily have to be your own boss on a full-time basis, with many Brits now supplementing their main source of income by working on side hustle ideas. It’s a flexible approach that lets you become an entrepreneur while still enjoying a regular wage.

Whether you’re looking for ways to make money on the side or you’ve got bigger plans, this guide will walk you through how to be your own boss, from how to come up with a business idea to handling the legal side of things.

Pros and cons of becoming your own boss

Before we discuss the practical steps involved, it’s worth taking some time to evaluate if the time is right to be your own boss. Here are the main advantages and potential snags you should factor into your calculations. 

Benefits of being your own boss

There are a lot of upsides to running your own business, including:

• Flexibility – You can set your own hours and decide how much or how little you want to work.

• Creative freedom – You have full control over the direction of your business and the projects you take on.

• Earnings potential – There’s no limit to what you can earn. As your business grows, so can your income.

• Personal satisfaction – Running your own business and seeing it succeed can feel genuinely rewarding and fulfilling.  

Drawbacks of being your own boss

While the perks of becoming your own boss are pretty persuasive, it’s important to be aware of the inherent challenges too. These include:

• Mental load – All the decision-making, from managing small business finances to solving day-to-day operations management, will fall on your shoulders.

• Unpredictability – Your income may fluctuate, especially in the early days, unlike the steady salary of a traditional job.

• Time commitment – Running a business can take up a lot of your time, especially when you’re just starting out.

Overcoming these challenges and making a success of things as your own boss will require:

• Self-discipline – Without a manager keeping you on track, you’ll need to stay focused and manage your workload independently.

• Resilience – Things won’t always go to plan, so being able to recover from setbacks is important for long-term success.

• Adaptability – The business landscape changes quickly, so staying flexible and ready to adjust will help you stay competitive.

• Problem-solving skills – Whether it’s dealing with customer issues or managing cash flow,you’ll need strong problem-solving skills to keep things running smoothly.

Steps to becoming your own boss

While you can become your own boss by buying an existing business or joining a franchise, this guide will focus on starting something from scratch. We’ll cover the following steps:

• Choosing the right idea

• Doing your research

• Planning for success

• Securing funding

• Making it official

Choosing the right idea

Finding the right business idea can feel tricky, but it doesn’t have to be. Many of the best small business ideas may naturally stem from the skills or interests you already have. Here are a few ways you could turn what you know into a business:

• Freelancing – If you’ve got skills in areas like writing, design, or marketing, freelancing is a straightforward way to start working for yourself.

• Reselling – If you’ve got an eye for something like vintage fashion or rare books, you could start a reselling business by finding hidden gems at local shops, markets, or online, and flipping them for a profit.

• Monetise your hobbies – There’s no shortage of hobbies that make money. From baking and crafting to photography, you can turn these interests into a business by selling your creations online or at local events.

These ideas highlight how you don’t need a dramatic “lightbulb” moment to become your own boss, though it never hurts to keep an eye out for business opportunities. For example, if you’re exploring your local farmers’ market and notice no one is selling indoor herb garden kits, that could be a gap in the market.

Everyday problems can also be a great source of inspiration. For instance, you might find that small businesses in your area are struggling with their social media presence, or that there’s a lack of affordable eco-friendly cleaning services. Spotting these gaps and offering solutions could be your path to becoming your own boss.

How do you know your idea is a good one?

Once you have an idea you like, ask yourself these questions to see if you’re on the right track:

• Does the idea excite you? A business you’re eager to start is more likely to succeed.

• Is it easy to explain? Simplicity is often a sign of a strong idea, so if your business concept can be summed up in a snappy “elevator pitch”, that’s a good sign.

• Are the barriers to entry low? Starting a business with manageable costs and fewer obstacles makes it easier to get going.

It can be very useful to carry out a SWOT analysis for small business. This will allow you to fully weigh up the inherent strengths and weaknesses of your idea, and also anticipate the outside forces, such as the level of local competition, which could impact your success.

By thinking through these factors, you’ll get a clearer sense of whether an idea is worth exploring. Once you’ve found a winner, the next step is market research.

Doing your research

An idea with promise is a great start, but you need to make sure there’s real demand for what you’re offering, so you don’t end up launching a business with a limited customer pool. This is where knowing how to do market research for a small business comes in.

Identifying your target market

The better you understand your ideal customers, the easier it is to shape your products or services to their needs. The good news is that thanks to the internet, it’s never been easier to get insights into what potential buyers are thinking.

Be sure to check social media and online reviews to see what people love – or wish was different – about similar products currently on the market. This will help you spot areas where you can improve on what’s already out there.

Understanding your competitors

Carrying out a competitor analysis will give you an accurate picture of exactly who you’re up against in your chosen sector. Look at what they offer, their pricing, and where they might be falling short.

For example, if you’re launching an online store selling handmade candles, you might notice competitors have limited scent options or high shipping costs. By offering more variety or free delivery, you can attract customers looking for unique, affordable options.

Remember, your unique selling point doesn’t have to be groundbreaking – sometimes offering an existing product at a better price or with one bespoke twist is all it takes to stand out.

Planning for success

With your idea in place and research done, it’s time to get into the planning. At this stage, you’ll choose the right legal structure, develop a business plan, and, if needed, explore funding options to get started.

Choosing a legal structure

A key decision when becoming your own boss is choosing your business’s structure. This affects everything from taxes to how to pay yourself as a business owner, and it can even influence how clients or customers perceive your business.

The three main options are sole trader, partnership, or limited company. It’s important to pick the one that best suits your goals and situation. Let’s break down each option.

Sole trader

This is the most straightforward, fuss-free way to become your own boss, as the only significant formal paperwork is registering as a sole trader with HMRC for tax purposes.

As you and your business are legally the same entity, all profits are automatically yours. The downside of this lack of legal separation is that you’ll be personally responsible for any debts or losses the business incurs.

Partnership

Partnerships are a bit like being a sole trader, but with at least one other person sharing the load. You’ll split both the profits and the responsibility for any debts, with one partner managing the paperwork with HMRC.

This setup can work really well if you’re starting a business with a friend, colleague, or even a fellow student. It’s a great way to combine skills and ideas while sharing the ups and downs of becoming your own boss.

Limited company

Setting up a limited company creates a separate legal entity, and this will protect your personal assets if things go wrong. It also gives your business a more professional image, which can be crucial if you’re providing products and services to other businesses. 

This is the most complex of the three main entity types, as you’ll need to register with Companies House, file year end accounts documents, and pay Corporation Tax. To help with this extra admin, many entrepreneurs hire a small business accountant.

Writing a business plan

If you’re applying for loans or looking to attract investment, a solid business plan is a must-have. But even if you’re self-funding, it can still be important to map things out.

There aren’t any hard rules on how to write a business plan – it can be as simple or detailed as you need. If you’re thinking about how to start a side hustle, it might just mean jotting down key points. 

But if you’re aiming for something bigger, like opening a retail enterprise or starting a hospitality business, you’ll need a more detailed approach.

The good news is that much of the work you’ve already done – like defining your idea, researching the market, and choosing a legal structure – fits right into your plan. Here’s an overview of the main sections you’ll want to include:

Executive summary

This gives the big picture – what you do, who you’re targeting, and how your business is structured. If you’re seeking funding, include how much you need and how you’ll use it. Think of the executive summary as a snapshot that gives anyone reading a quick, clear overview of your business.

Market research

Here’s where you’ll put all your research to work. Start with your target market definition and explain why customers need your product or service. Then, highlight your key competitors and what sets your business apart – whether that’s pricing strategies, higher quality, or a unique approach.

This part of your plan helps show potential lenders or investors that you’ve done your homework and understand the market you’re entering.

Marketing strategy

This section covers your small business marketing strategy. Whether it’s through paid ads, local outreach, or learning how to use social media for small business, your strategy for attracting customers should match where they spend their time.

Think about whether your audience is mostly online or more local. For instance, an online clothing store aimed at young professionals might benefit from Instagram ads, while a monthly pop-up shop for handmade crafts could find success through community boards or partnerships with nearby businesses.

Operations and tools

In this part of your plan, you’ll outline the systems and tools you’ll need to keep your new venture running, from inventory management software to accounting tools for small business.

One key decision is how customers will pay you. For a freelance consulting business, invoicing software might work best, while a personal trainer taking advance bookings for group classes could benefit from payment links or taking card payments over the phone.

For in-person sales, like market stalls, there are lots of small business payment options to consider.You could use card readers, QR codes, or even a smartphone-based solution like SumUp’s Tap to Pay. If you’re opening a full-time physical store, a point-of-sale system like POS Lite could be the ideal fit.

Financial projections

Understanding your business finances is vital, whether you need outside funding or not. In this section of your plan, you’ll lay out the basics: your startup costs, ongoing expenses, and sales forecast.

Startup costs

How much does it cost to start a business? The answer will obviously come down to the precise details of the enterprise in question, and you should lay out as many details regarding startup costs as possible.

For a service-based business, costs might be as simple as a website and marketing materials. But for something like a quick-service restaurant, you might include things like cooking equipment and a self-service kiosk.

Be sure to account for everything you need, from equipment and inventory to licences and tools.

Ongoing expenses

Your business plan should also include the regular small business expenses you’ll pay to keep your business running. For some, this could be stock, wages, or rent for a market stall or workspace.

Or if you’re working on online business ideas, expenses might include software subscriptions, shipping costs, or credit card merchant fees.

Understanding your ongoing expenses helps with cash flow management and makes it easier to plan for your business’s future.

Sales forecast

Your sales forecast is your best estimate of how much you expect to earn over a set period, usually the first year. In this part of your plan, you should set realistic goals based on your market research and any early signs of interest.

Even if you’re a startup with no sales history, industry reports or search trends can help you spot seasonal patterns. Keep an eye on your competitors, too – what promotions or social media strategies are they using? These insights can help guide your stock levels and marketing approach.

Securing funding

While it’s possible to start a business with no money, many ventures will need at least some funding. How much depends on your idea – setting up a freelance copywriting business from home can be pretty inexpensive, while something like a shopwith a physical location will need a larger budget.

Writing your business plan should have given you a clear sense of how much capital you’ll need to become your own boss. Here’s how you could raise those funds:

• Personal savings – Ideal for starting small, with the option to reinvest profits as you grow.

• Loans – You could consider how to get a loan for small business from banks or specialist lenders, making sure you understand the interest rates, repayment terms, and other conditions before signing up.

• Grants – Some councils and business organisations offer small business grants that don’t require repayment. 

• Crowdfunding – Small business crowdfunding platforms like Kickstarter can help you raise funds from ordinary people who get perks and/or early access in exchange for their financial backing.

Making it official

Now it’s time to make things official, so let’s walk through the final steps to becoming your own boss.

Register your business

The process for registering your business – and how quickly you’ll need to do it – depends on the structure you’ve chosen.

If you’re starting as a sole trader, you’ve got some time to play with. HMRC requires you to register by 5th October after the end of the tax year in which you started trading. So, if you started your business in November 2024, you’d need to register by 5th October 2025 and file your first tax return by 31st January 2026.

A limited company comes with shorter timelines. You’ll need to register with Companies House before you start trading, and with HMRC for Corporation Tax within three months of launching. Since there’s more paperwork, it’s smart to give yourself extra time to get everything sorted.

Setting up operations

There are a few other practicalities to take care of in the run-up to launching your business and becoming your own boss. These include taking care of:

Insurance

Depending on your business, you may need specific insurance policies. For example, if you’re exploring how to hire employees, you’ll need to look into employer’s liability insurance. You might also need public liability or professional indemnity insurance based on your industry.

Licences and permits

Some businesses require specific licences or permits. For instance, if you’re starting a food and drink business, you must register with the Food Standards Agency at least 28 days before launching.

Be sure to check if your industry has any other legal requirements for starting a small business to ensure you’re fully compliant before you open.

Workspace considerations

Organising your workspace is just as important. Whether you’re launching business ideas from home, renting office space, or setting up a shop, having the right tools and systems in place, both in terms of software and hardware, will help things run smoothly from day one.

Get ready to launch

The final step before becoming your own boss is building interest around your business. Generating a bit of buzz early can help you get off to a strong start and attract customers before you even open.

Start by focusing on your online presence. Sharing behind-the-scenes updates, teasers, or sneak peeks on social media is a great way to connect with potential customers. Platforms like TikTok or Instagram, in particular, are ideal for quick, engaging content.

For example, if you’re offering handmade products, you can showcase how they’re made or share previews of your designs to get people excited.

Networking in your local community can also make a big difference. If you’re selling baked goods, you could offer samples at a local café or set up a pop-up stand at a market. It gives people a chance to try your products and spreads the word in your area.

What next?

When your business opens – whether it’s a side project or a full-time venture – all your hard work will have paid off and you’ll officially be your own boss.

Now that you’re up and running, you might be thinking about what comes next. To help you navigate this next stage, check out our guide on how to run a business. It’s packed with tips and strategies to help you succeed.