NNCO_SMB Starting your small business

Introduction and guidance

About this free course

This free course is an adapted extract from the Open University course .

This version of the content may include video, images and interactive content that may not be optimised for your device.

You can experience this free course as it was originally designed on OpenLearn, the home of free learning from The Open University –

There you’ll also be able to track your progress via your activity record, which you can use to demonstrate your learning.

Copyright © 2015 The Open University

Intellectual property

Unless otherwise stated, this resource is released under the terms of the Creative Commons Licence v4.0 http://creativecommons.org/licenses/by-nc-sa/4.0/deed.en_GB. Within that The Open University interprets this licence in the following way: www.open.edu/openlearn/about-openlearn/frequently-asked-questions-on-openlearn. Copyright and rights falling outside the terms of the Creative Commons Licence are retained or controlled by The Open University. Please read the full text before using any of the content.

We believe the primary barrier to accessing high-quality educational experiences is cost, which is why we aim to publish as much free content as possible under an open licence. If it proves difficult to release content under our preferred Creative Commons licence (e.g. because we can’t afford or gain the clearances or find suitable alternatives), we will still release the materials for free under a personal end-user licence.

This is because the learning experience will always be the same high quality offering and that should always be seen as positive – even if at times the licensing is different to Creative Commons.

When using the content you must attribute us (The Open University) (the OU) and any identified author in accordance with the terms of the Creative Commons Licence.

The Acknowledgements section is used to list, amongst other things, third party (Proprietary), licensed content which is not subject to Creative Commons licensing. Proprietary content must be used (retained) intact and in context to the content at all times.

The Acknowledgements section is also used to bring to your attention any other Special Restrictions which may apply to the content. For example there may be times when the Creative Commons Non-Commercial Sharealike licence does not apply to any of the content even if owned by us (The Open University). In these instances, unless stated otherwise, the content may be used for personal and non-commercial use.

We have also identified as Proprietary other material included in the content which is not subject to Creative Commons Licence. These are OU logos, trading names and may extend to certain photographic and video images and sound recordings and any other material as may be brought to your attention.

Unauthorised use of any of the content may constitute a breach of the terms and conditions and/or intellectual property laws.

We reserve the right to alter, amend or bring to an end any terms and conditions provided here without notice.

All rights falling outside the terms of the Creative Commons licence are retained or controlled by The Open University.

Head of Intellectual Property, The Open University

Contents

- Introduction and guidance

- Guidance for accessing alternative formats

- Structure of the course

- Why study this course?

- Learning outcomes

- Before you begin

- Glossary

- References

- Acknowledgements

Introduction and guidance

Starting your small business focuses primarily on very small business structures, where one to nine people are employed, but many of the ideas are applicable to larger businesses as well. This will develop your knowledge of the general points and principles of small business start-up and operations. You will have the opportunity to reflect on how these principles might be applied in practice.

If you are looking at this course because you are considering working for yourself in some capacity, you will find lots of information of interest. You may notice that some activities ask you to think about a business you are planning to start. You may or may not have a business in mind, but this shouldn’t stop you from completing the course, as you can consider any potential business for the exercises.

We will be featuring a number of micro-businesses as case studies as we move through the course. These are based on real businesses but the names have been changed. Each section of the course offers short, interactive quizzes to test your knowledge and provide you with the opportunity to earn a digital badge.

Each section of the course offers short, interactive quizzes to test your knowledge and provide you with the opportunity to earn a digital badge.

Successful completion of the course will enable you to gain a suite of online badges and a statement of participation. The badges are validated by the Social Partnerships Network (SPN), a group of organisations with a shared commitment to extending education opportunities to all those that wish to benefit. These courses do not carry any formal academic credit. However, they do provide a way to help you progress from informal to formal learning.

Starting your small business is one of a suite of six free online SPN-badged courses that aim to provide you with an opportunity to engage with learning informally, studying as much or as little of the course and at your own pace.

Guidance for accessing alternative formats

You can download this section of the course to study offline. The alternative formats offered that will best support offline study include Word, PDF and ebook/Kindle versions of the materials.  The other alternative formats (SCORM, RSS, IMS, HTML and XML) are useful to those who want to export the course to host on another learning management system.

Although you can use the alternative formats offline for your own convenience, you do need to work through the online version of the course for full functionality (such as accessing links, using the audio and video materials, and completing the quizzes).  Please use the downloads as convenient tools for studying the materials when away from the internet and return to the online version to ensure you can complete all activities that lead to earning the section badge.

In order to access full functionality in the online course, we recommend that you use the latest internet browsers such asInternet Explorer 9 and above and Google Chrome version 49 and above.

If you have difficulties in streaming the audio-visual content, please make use of the available transcripts.

Structure of the course

This course consists of five sections, with each section focusing on a particular aspect of starting a small business:

1. Small business structures looks at the different ways in which a small business could be set up and operated in the United Kingdom. The section will encourage you to consider a small business you are planning to set up or one that you are interested in. You will then select an appropriate structure for the business.

2. Small business and marketing looks at sales and marketing approaches for small businesses and how to nurture effective customer relationships. You will then take your small business idea and create a plan for the business to improve the relationships with customers.

3. Small business responsibilities covers legal requirements and financial aspects of small businesses. These include how to transfer money within a business and relationships with regulatory organisations. You will review your business idea and consider the most appropriate legal structure and the financial and legal responsibilities for your chosen business idea.

4. Succeeding in a small business looks at the common features shared by successful small businesses and some of the potential pitfalls in running a small business. You will use this information to produce an action plan to improve the potential for success for your business idea.

Together they amount to approximately 15 hours of study time. Each section has a mixture of reading, video clips, activities and quizzes that will help you to engage with the course content.

A further section, Taking my learning further, will enable you to reflect upon what you have learned within this course. It also directs you to relevant websites and resources, which further relate to the development of your learning and career prospects.

Once you have studied a section, you will be asked to complete a short online quiz of no more than five questions per section. This helps to test and embed your learning. If you pass the quiz (and you do get more than one attempt!), you will be awarded with a downloadable badge for that section.

Starting your small business is designed to allow you to dip in and out of the resources and collect badges as you wish, so that you can study in small chunks to fit around your work and life commitments. If you choose to complete all sections of Starting your small business and collect the full set of badges, you can download a statement of participation that recognises your achievement. You may find this useful to show your employer as evidence of your learning. For more information on how to obtain your badges, read What is a badge?

Navigating the website

To find your way around this course, you simply click on the links. The home page has links to all the sections, quizzes and relevant resources. When you are in a section, the left-hand menu has links to that section’s topics and its associated quiz. The menu also has links to the other sections of Starting your small business and to the resources section.

If you feel unsure, practise hovering your mouse over a link in the menu and clicking on it. This is the easiest way to move from page to page. You can also click on the ‘Next:’ link at the end of each page of text. Don’t worry about breaking a link or damaging the web page – you won’t. Have a go as soon as you can before you begin your study.

Why study this course?

According to the Department for Business Innovation and Skills (BIS, 2015):

- there were a record 5.4 million private sector businesses at the start of 2015 – an increase of 146,000 since 2014 and 1.9 million more since 2000

- small businesses accounted for 99.3% of all private sector businesses at the start of 2015; 99.9% were small or medium-sized enterprises (SMEs)

- total employment in SMEs was 15.6 million; 60% of all private sector employment in the UK

- the combined annual turnover of SMEs was £1.8 trillion, 47% of all private sector turnover in the UK

- 76% of businesses did not employ anyone aside from the owner.

Small businesses are essential to the financial health of the UK and the opportunities to start up or work for a small or micro-business have never been greater.

The proportion of small businesses that stop trading within two years is high – anecdotal evidence suggests it is as many as 50%. This course is designed to help you decide if running a small or micro-business is worth exploring further. This course should be seen as the first step in the journey, leading to more research and self-reflection. It provides challenges and areas of reflection coupled with clear signposts to the help and advice that is available, most of it free.

Rob Moore, the author of this course, will now give you a bit of background into why you might like to study this course.

Video content is not available in this format.

View transcript - Uncaptioned interactive content

We will be using the five short case studies throughout this course – you may wish to familiarise yourself with them now. You would find it helpful to have the case studies page open in a separate tab whilst working through the sections.

As you start this course, you may have a business idea in mind or might even be running a small business. Each of these is fine. This course will ask you to apply the different ideas to a business idea of your own – this could be one you are running or thinking of running, or one you will create.

This is a good point to consider your business idea. If you have not considered one yet, the Entrepreneur Handbook website has 100 business ideas to consider (Pursey, 2014).

Throughout course you will find activities that ask you to write down your thoughts and feelings based on the issues being discussed. There will be a few simple questions which encourage you to focus your thinking. It would be helpful for you to you spend some time thinking about what you have learned within each section, and how it relates to your current role. We encourage you to record your answers and thoughts as you go along. We will not be using these in the course but they will be very helpful if you wish to take your ideas further.

The activities are not there to test you. They aim to help you reflect on what you have read in more depth. These activity spaces are entirely for your own use to help you recognise what you have learned, even if you haven’t yet encountered it within your role. Nobody else will see what you write here. The aim is to help you become more reflective, by bringing together aspects of both your personal and professional experience so you can review and learn from them.

Learning outcomes

After completing this course, you will be able to:

- explain what business structures are available and suitable for a small business in the UK

- recognise the ways in which a small business can gain and keep customers

- identify the financial and legal obligations of running a small business

- explain some of the common aspects of successful small businesses.

Before you begin

Spend a few moments thinking about your current learning needs and opportunities by doing Activity 1 below.

Activity 1

Allow about 15 minutes

Below is a link to a short questionnaire to get you thinking about:

- What are your current priorities for learning?

- How does studying a short online course fit into your everyday lifestyle?

- What goals are you hoping to achieve by studying this course?

Questionnaire about your learning (1)

Hopefully, by the end of the course you will be able to reflect on your answers.

We hope you enjoy the course!

Glossary

business structures

These define the way that a business is set up, how it is managed and the reporting responsibilities.

customers

Individuals or businesses purchasing products or services from the business. A customer could also be a client and consumer.

micro-business

A small business or enterprise with fewer than ten employees.

References

Department for Business Innovation & Skills (BIS) (2015) ‘Business population estimates for the UK and regions 2015’, 14 October. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/467443/bpe_2015_statistical_release.pdf (Accessed 4 July 2016).

Pursey, J. (2014) ‘100 business ideas you can start today for less than £5k’, Entrepreneur Handbook, 10 November. Available at: http://entrepreneurhandbook.co.uk/100-business-ideas-start-today/ (Accessed 4 July 2016).

Acknowledgements

This free course was written by Robert Moore (tutor at The Open University). Contributions were made by Moyra Riseborough (Chair of the Workers Educational Association North-East region) and Roger Merritt (Senior Consultant at the National Extension College).

Except for third party materials and otherwise stated in the acknowledgements section, this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence.

Every effort has been made to contact copyright owners. If any have been inadvertently overlooked, the publishers will be pleased to make the necessary arrangements at the first opportunity.

Uncaptioned interactive content

Transcript

Hi and welcome to the ‘Starting your small business’ course.

I am Rob Moore, the author of this course. For the past 14 years I have been a lecturer with the Open University Business School and I run two small limited companies which I set up.

In this introduction I want to cover three main things: first, the broad content of each of the sections and explain my thoughts for including the different things I did; second, I want to tell you what I hope you will get out of studying the course; and finally I want to give an overview of how the course works and fits together.

So starting with the broad content. The course is split into four sections: ‘Section 1: Small business structures’; ‘Section 2: Small business and marketing’; ‘Section 3: Small business responsibilities’; ‘Section 4: Succeeding in a small business’.

If you complete the short assessment at the end of each section you will be able to collect a section badge. These virtual badges provide a form of recognition for your learning and you can display them on your social media profiles, for example, on LinkedIn or Facebook. The course is flexible and there’s no time limit for completion. This means you can study at your own pace and when it suits you best to do so. We recommend you try to engage with all of the sections, as this will enable you to receive a Statement of Participation that recognises the learning outcomes you have met. There is a natural flow between the sections but they can be studied in any order.

In the first section, ‘Small business structures’, we will look at what a small business is and how it is formed. We will look at the different legal structures (for example, Sole trader or Limited Company) and how to determine which of those structures is most suitable. We mention the process for thinking up or coming up with a new business idea and we point to some great resources to help in doing this.

In the second section, ‘Small businesses and marketing’, we look at the relationship between the small business owner and their reason for existing, the customers. We look at how you reach customers, how you keep them and we look at different ways a small business can market itself.

In the third section, ‘Small business responsibilities’, we look at the legal and financial responsibilities of the small business owner. We touch on the subject of VAT (value added tax) in a very basic way. We also discuss how money moves from the small business to the owner.

In the final section, ‘Succeeding in a small business’, we look at some of the common reasons why small businesses fail and some of the pitfalls to avoid. We then look at some of things that can be done to improve the chances of success, calling on advice from top business people.

So, what do I hope you will get from studying this course? In a nutshell I want you to have an appreciation of what is required to set up your own business and enough information to take the next steps. I have tried to include the sort of things I wish someone had told me when I started my businesses.

If you complete all four sections, you should have a set of notes that form the starting point for taking an idea forward, and enough information to plan where to go next.

The last point is about how the course works. We use five case studies to illustrate how the topic fits into the real world. Then in each section we ask you to apply the ideas to an idea of your own. This could be a business idea you have thought of, an idea you are already working on or an idea based on someone you know. You then summarise what that topic means for your business idea, these are the notes you will be able to take away and use later.

The case studies form the basis of the practice activities. Each case study represents a different type of small business. The numbers in the case studies are all fictitious, but each case study business is based on a real business run by friends and people I know.

So thank you for listening and now it is time to start studying, I hope you enjoy the course and if you are inspired to set up your own small business please let us know how you get on.

Back