There can be many rewards from running your own business but there can also be many pitfalls. One of the key ways of minimising risk is to do some planning before you commit yourself to self-employment.
What business will you start? Generating business ideas is an integral part of business start-up, for example:
- to find one that is more interesting and therefore more motivating
- to adapt an idea to make it different to the competition.
It is also an invaluable skill when actually in business to help spread the risk, encourage growth, prolong the life span of a product or service and adapt to a changing marketplace.
You will need not only the technical skills related to your product or service but also the financial skills to maintain control and selling skills to generate business. Business ownership requires tremendous commitment.
If you have no market you have no business. Product, price, place and promotion are the key components of marketing.
Financial backers will want evidence of this market but you need to convince yourself that self-employment is a better option than working for someone else. So, you will have to do market research; ideally even have a skeleton order book.
Is your idea financially viable? Will you be able to maintain a healthy cash flow?
Many good ideas don't make money. Only by drawing up a plan will you find out if yours makes financial sense. Financial backers will want a financial plan but even if you don't need an injection of cash, make sure you are not wasting your own time or money.
Minimise your overheads. Only buy essential equipment; consider leasing instead. Taking on a lease on premises can become a millstone - would it be possible to work from home or from a friend’s premises? Make sure you are able to cover your living costs as well as your business ones.
And finally… If you are going into business with a friend, a partnership drawn up by a lawyer is vital. A 'gentleman’s agreement’ is a thing of the past.
AGCAS Self-employment: a very useful guide for students and graduates who want to start and run a successful business or social enterprise.
There is information for those who want to set up a business, either full-time or part-time, work as a freelancer or contractor, or buy into a franchise. The advice covers a wide range of areas including business plans, funding and sales and marketing.
This article was published on May 9, 2013