Your Own Business - setting up and keeping going
Being your own boss is one of those dreams that actually can be realised. Sometimes it starts with an idea that no-one else has thought of; more usually the incentive springs from a feeling that the current employer is taking advantage and not giving a fair day's pay for the dedicated work being done. Whatever the business, if we believe we can make a success of it on our own, that's the motivation. But bear in mind, this is merely an overview. The logistics of starting up a new business, or taking over an existing one, are quite complex and won't always be evident until they need addressing. That's when the initial momentum can stutter to a halt and it suddenly dawns that a boss has far more to consider than the end product.
The main consideration would have to be: what's in it for you? The bottom line I discussed in a previous issue has to be either profit, or at the very least viability. As frequently happens, the anticipated benefits are put on hold while establishing the business. The owner's initial drawings may be considerably less than hoped for because some, if not all of any income has to go back in to keep it afloat; just temporarily, of course. Nothing to worry about, you might think. The general consensus of opinion is that it can take up to two years for a new business to start paying its way. That's as may be, but wasn't this project supposed provide a better lifestyle? If it seems to be detracting from it instead, surely something's wrong. I read some good advice once - always pay yourself first. Everything and everyone else comes after. If a business can't sustain that from the word go, it needs a very serious re-think. That sounds selfish and mercenary, I know, but if it is a philosophy that conscience won't allow you to subscribe to, maybe you should think twice about being your own boss.
Having considered this and still confident that you can make it work, the next stumbling block is likely to be the misconception that selling a product or a service is all that matters and everything else will drop into place behind. It won't! So many small business owners, in particular the one-man-band kind, get bogged down and annoyed by the paperwork. Of course it doesn't make money, but it needs regular attention. Not only will it ensure the bills are paid, both incoming and outgoing, but it is the barometer for success or failure. Even before the business is operational, a trial set of books can be established for detailing income and expenditure. This will eventually be used to calculate profit and loss, tax, plus the all-important on-going viability; but in the meantime it can be employed to project how the business is likely to perform when it does get going. It won't be a wasted exercise. It is a taste of more complex things to come, and anyone who finds it hard going at this early stage should consider bringing in someone who can handle the accounts side for them.
Cash money, or the lack of it, is arguably the greatest cause of businesses failing. There's always something unexpected that pops up and puts a strain on available resources. Without spare cash, loans may have to be extended, or the quality of the end product might need to be reduced to the point where customers become dissatisfied. They'll just drift away, taking with them your dream and your self-confidence. So, make sure you have money in the bank over and above what it costs to get the business up and running. You will need it!
No-one knows this better than the person who is trying to go it on their own in the same kind of business that they used to manage for someone else. Maybe they actually bought the company off their former boss. Soon enough, the problems that they were previously able to off-load on a higher authority are theirs alone. More staff needed; extra stock; suppliers screaming for their money; machinery breaking down - the responsibility for all of these, and more, stops with the new owner. Time, money and the right attitude will be needed to fix the problems before they turn a good prospect into a financial disaster. My best advice to anyone contemplating this type of move is to get more involved while still an employee. Check out the accounts to see what's really happening. Follow through the logistics of any changes deemed necessary, noting what's involved to implement them, how long they take, how much the final cost is and the impact it will have on profits. Also, bear in mind that business premises are often rented and usually under a lease agreement to which you are legally bound for its duration, whether you are still operating or not. If you haven’t already, talk to customers and clients to find out if they are satisfied with the existing goods and service provided. These people will be the eventual making or breaking of a new proprietor.
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