We’ve all dreamed of breaking free of the corporate shackles and going it alone, but before you turn the dream into reality, ask yourself: Have you really got what it takes to be your own boss?
You may have the money and the idea, but if you’re going to succeed in running a business you’ll need a certain flair and a generous helping of good luck. Otherwise you run the risk of becoming one of the estimated 315 budding entrepreneurs a week who go bust. To avoid that, focus on how you can fill a market niche, and ways in which you can make your expertise work for you or how you can turn your hobby into a money-spinner.
Small business start-ups
The good news is that it’s never been easier to set up your own business and there’s plenty of help out there to lighten the load. As ever, groundwork is important, so researching your business idea is vital, as is developing a plan that will assist you in growing the business as well as convincing investors that you’re a safe pair of hands for their money.
Before you take the plunge, though, ask yourself the following questions:
Are you motivated to succeed?
It’s not enough just to want to escape a boring job or a demanding boss. You need to be committed to succeeding in your chosen business and to making a living that will support your needs.
Are you focused?
Be clear about your goals. If you want to expand or start a chain, you must choose a business that is capable of such growth. Understand that it will require perseverance and tenacity to set something up from scratch. You can’t be the type of person who gets bored when the chips are down.
Will you be able to work hard?
You’ll have to be your hardest taskmaster. Running your own business means it’s hard to switch off from work. It can mean unlimited working hours, few holidays, and even less money than before.
Are you self-reliant?
If you’ve worked with a bunch of people in the past, setting up on your own might mean following a more isolated path. Also you won’t have the luxury of financial cushions such as sick pay and paid holiday leave that you will have had as an employee.
Do you have family support?
Going it alone is much easier if you have the support of family and friends. Their security will depend on your success, and they need to understand that and the pressures you’ll be under. All businesses need:
- Adequate finance
- A sound business plan
- A suitable business structure
- A way of reaching potential clients
- An accounting system
- An understanding of tax
Financing your business requires a masterplan. You must consider the overheads; what your time is worth; whether your supplies can be bought for less; your production capacity; what you’ll do if sales flop or boom.
How much money do you need to make and how much can you afford to lose? The good business plan not only takes into account the possible success but has a contingency plan in case of failure. And moneylenders like to see what they can recoup if you fail.
Where’s your niche?
First, you need to establish a niche in the marketplace. Are you supplying a service, selling a product or marketing your own invention? Having a great idea is only the beginning. Before you launch a business you must research the market you want to be in. What’s the competition? What will make you special? Define your Unique Selling Point. Who will your customers be?
Broaden your appeal
Try doing a survey of people in your target market and get their feedback about how your business or concept would work in their eyes. Visit your local library and access as much information about your sector as possible. Get your hands on reports from organisations like Mintel, which specialises in market research. The British Library runs a business centre with such specialist information, much of it free, which is also accessible via its website.
Be creative and open-minded about opportunities. Increasing numbers are being drawn to the global marketplace offered by the internet – over 10,000 people in the UK are now making a living online. Could that be the way forward for your business?
Your strengths and weaknesses
Take stock of your strengths and weaknesses. Be honest. If you’re missing a key skill (e.g. bookkeeping) then it is often cheaper and more efficient to buy in that skill from an expert. Definitely learn basic accounting and computer skills. Check out local evening classes or correspondence courses that will give you a competitive edge. Find out if there are local ‘starting your own business’ courses in your area – they are often subsidised and are an excellent way of making contacts with other entrepreneurs as well as great learning tools.
Don’t be too proud to ask for help or advice – even if you think it’s something so basic that you should know it already. Speak to friends who have professional skills or who are running their own business and ask for their guidance. If you’re naturally a shy person, swallow your inhibitions and start learning to network – you’ll meet more clients that way and your business can only benefit. Don’t be afraid to acknowledge that you need a helping hand – find a mentor who can help guide you through the ups and downs. But be positive and enjoy yourself – and take heart from a recent survey by Panasonic which found that 80 per cent of self-employed people believed their lives had improved since becoming their own bosses.
How to write your business plan
Once you’ve established what your goals and objectives are, decided on your business and carried out an honest assessment of your strengths and weaknesses, you’re ready to start work on what will be one of your key resources in setting up your company – your business plan.
This is not simply a document that you need to throw together to satisfy the bank manager then consign to a filing cabinet – it should be a living, breathing plan that you build on when you’re making your business dream come true. It’s about setting down your longer term objectives and forecasts on paper and gives you something to measure your success against as well as being a vital document to show to outsiders who might be able to help raise money.
It needs to include information about: