Running your own business can be immensely exciting and rewarding. It could well be the best way to earn an income, especially if you have saleable skills, an innovative idea or an interest that could be turned into a profitable business.
However, it is important to ask yourself why you want to do it. It isn’t for everyone. Remember that it can be lonely being the boss and that you are likely to have to jump through a lot of hoops to get going; you most likely will have to work long hours, tackle paperwork and regulations and be Jack-of-all-trades to get your new venture off the ground.
Nevertheless, if you believe you have a strong business plan, the necessary resources and the determination to succeed, why not give it a go?
I have put together the below top ten tips for budding entrepreneurs as a list of things to consider before diving in:
1. Research the market. Find out whether customers will buy what you are offering, and use feedback to refine your product or service.
2. Write a business plan. Describe your business, how it will operate and its finances for the first two years. Ask your chartered accountant if you need help writing your business plan. He or she will also be able to advise you about the appropriate structure for your business. The regulations and costs of setting up a business can be complex and off putting. Get an expert to help you.
3. Raise finance if needed and build in contingencies. Being under-financed often leads to poor performance at the start. As setting up always takes longer than you think, you also have to ensure your financing has built in flexibility.
4. Choose the right staff. Unless you are planning to be a one-man-band, pick the best people you can afford. They may work for less than the market rate initially if they are convinced of the potential for growth of the business. Consider share option schemes to attract the best staff and to motivate them to work to achieve your business goals.
5. Find a mentor. It is helpful to have someone to bounce ideas off. Learn from customers and suppliers and ask the views of your chartered accountant and other advisers.
6. Ensure you have the right financial information. This is vital, not least to understand your trading performance. Set up records from the start, using software if you are comfortable with it. Employ a good book-keeper or talk to your chartered accountant about outsourcing accounting services.
7. Monitor key performance indicators. Ensure that you have right data, such as turnover, gross margins, overheads, finance costs, net profit, cashflow and working capital, on a daily, monthly and annual basis.
8. Be alive to possibilities and dangers. Don’t exclude taking the business in a different direction if you see potential elsewhere or there are problems ahead. Watch out for competitors in difficulty and listen to your customers, suppliers and staff.
9. Learn. Absorb all that you can from the experience of being an entrepreneur and from those around you, and – not least – learn from your mistakes.
10. Reduce the chances of failure. Do something you already know, or employ people with experience in the sector. Manage your overheads and working capital. Appoint a chartered accountant with experience of start-ups before you launch your new enterprise.
This post was contributed by Mark Billington, Regional Director, Institute of Chartered Accountants in England and Wales (ICAEW) South East Asia.