Starting in Business – Are you ready?
This series of blogs is for whether you have already decided to start a new business, or if you are simply considering your first move into self-employment. What do you need to think about before taking the plunge?
We hope these blogs will guide you in making a number of crucial initial decisions and choices. We have touched on some of the marketing issues but the main focus is on business planning, financial and tax issues.
The second in this series of blogs “Structure and Essentials” helps you to get the basics right regarding business structure and the essential bits you need to put in place when starting up. The final article will help clarify the tax implications of your new business and how to deal with tax.
Are you sure?
Most people who set up their own business will tell you it was more of a challenge than they expected and that it took longer to achieve business success than they anticipated. Based on our experience of helping new businesses here are some of the challenges you need to think about.
Be ready for the physical and emotional demands of starting up in business. Starting a business is a life-changing event and will require hard work and long hours, especially in the early stages.
Careful cashflow management is essential. Failure to do this will often result in a big drain on your savings, the loss of your investment and any security as well as the early failure of the whole business. It is recommended that you have some savings to meet you living costs, as in the early stages cashflow may not allow you to pay yourself a wage.
Loss of employment rights
You will need to take care of yourself as you will no longer receive sick pay or be paid when you are on holiday – indeed you may not even have time for holidays in the early years.
Pressure on close relationships
You will need the support of your family and friends to help you cope with the pressures of building your new business. You may also need more ‘hands on’ help beyond simple emotional backing.
All businesses need a mix of managerial, financial, technical and marketing skills. If you do not have these skills personally, you will need to learn these skills or find people who can provide the necessary input and support.
Being your own boss can be a satisfying experience. However, most successful business people need to have or develop a network of contacts with whom to share ideas and challenges.
The business plan
A commercial business plan is the key to making a success of your new business. You will need to show it to anyone whom you ask to invest in your business. You will also need to show it to the bank or anyone else who you ask to lend you money. They will all want to know that your ideas have been thought through and that there is a good chance of getting their money back in due course.
Even if you do not need anyone else’s money, a business plan is still a good idea. It can help you avoid many of the most common business mistakes and enable you to achieve success faster.
You may have your dream of what you want to achieve in your business. Can you express it in terms of target income over the next 12 months? And in the next year and the one after that? What will you need to do to achieve those objectives and what will be the consequences and cost of doing so? Drafting the plan and incorporating cashflow projections will force you to consider related issues. For example what actions you will need to take to achieve your objectives.
Writing a business plan will also help you to focus on all of the costs that will arise and when you will need to have the money available to pay for these. You may need to cover premises related costs, support staff, marketing and promotion, a website, business insurances and so on.
Your plan should include an explanation of how your business will start, build and develop. You also need to know who are you competing with and what will enable you to be successful. The plan should describe the business, product or service, your marketplace, mode of operation, capital requirements and projected financial results.
It’s your business and your ideas but we can help you with much of the content of your business plan to ensure it is presentable to investors and/or lenders.
How can Essex Abel help?
Essex Abel’s team have many years of advising people in starting up in business and offer a FREE consultation to discuss your plans, if you would like to take advantage of this offer, please contact us.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Neither Essex Abel Ltd nor the author accept any responsibility whatsoever for any action taken based upon the information included in this article.