Starting up in business - 5 Key Considerations when starting your business

Ask yourself these questions before you start your own business

There are a number of aspects involved in running a business, which should be thought through before you even start.

They can be divided into:

• Knowledge
• Ability
• Personality
• Family
• Lifestyle

If any one of these factors gives you cause for concern our advice is NOT to take this route forward.

1. Knowledge

In any job there are a number of things you need to know or to have considered before you take this important step. Running your own business means that many things covered by colleagues previously now need to be done by you or at an expense if you ask someone else to do them for you.

2. Marketing

What exactly is the product or service you hope to provide?
Who do you expect to buy this service or product?
How will you find them?
How will you approach them?
Are you sure that there are sufficient customers inside the area where you can work profitably?
What is your competition and what can they “do” to you?

3. Finance

How much capital will you require to start the business?
How long will it take until you have earned enough after expenses to pass the point where you can recoup your first investment?
How much net profit do you require to compensate for the additional work and stress of running your own business?
Where will you find the initial capital to start? Have you any assets you could sell or borrow against?

4. Accountancy

Can you estimate your likely income in 6 months, 1 year, 3 years?
Can you determine the net income?
Do you know much about bookkeeping?
Do you understand VAT?

5. Legal

Will you be a sole trader - a limited company - a partnership?
Do you know the advantages and disadvantages of each of these?

6. Lifestyle

Are you prepared to dedicate yourself to your business - really above all else to make it work? Running your own business is a full-time occupation. It will take over your life since there are always extra tasks that you can do. If you are unwilling to make this sort of commitment then it is better to work for someone else.

A number of people whom we have counselled were already running a small business in addition to their main job. Our experience is that those people had a much better chance of success than those who had not run their own before.

7. Advantages

There are a number of advantages in self-employment.

• All the energy you expend is devoted to making your business a success - not in protecting your position.
• No one can make you redundant.
• You can change the product that you offer very quickly - larger competitors take much longer.
• There is a high personal sense of satisfaction when you are successful.
• When you succeed you can make a lot of money either from the company or by selling out to a larger rival.
• When you reach a certain size you can focus on your strengths and buy in expertise to cover areas where you are less confident.