What Does Running A Business Mean To You?
For me, running my own business is about freedom.
Freedom from working for corporations, freedom from having to answer to someone, freedom from feeling vulnerable with a lack of job security, freedom from a lot of things really!
I love the freedom my own business gives me, the opportunity to get excited about new ideas, try them out and if they fail to re-design them and try them again. I'm passionate about getting it right and running my own business allows me to develop this.
Freedom & Challenges Of Running A Business
Freedom
When it's your business, it's your chance to make your mark in the world, to stand up and be proud of the solutions that you bring to people.
Thomas Edison, when asked about his 1,000 attempts to make a lightbulb stated that he had not failed 1,000 times. In his eyes, he found 1,000 ways "not to make a lightbulb".
Notably, Mr Edison did a lot of his experiments on his own, he was not an employee when he did this. And yet, although he never succeeded the first 1,000 times, he loved the freedom to experiment.
Challenge
I love Mr Edisons sentiment. Running a business will throw lots of challenges at you. If you love challenges and problem solving you are going to love running a business!
That glorious moment when you start to figure things out, make things work, solve problems and provide solutions to others, that's a glorious moment, a victorious one!
Business gave me resilience, stamina, determination. This is what I love about running my business.
The 4 Steps To Starting A Business
Step 1 - Research
You need to determine what aspects of your market you need to know. What are the critical components of it? Being extremely detailed at this stage will save many problems later.
Next, perform detailed research of the most important elements, understand what would make your target market desire your product/service.
Step 2 - Forecast
Projections would typically be: how many units, at what cost, at what selling price fixed overheads, variable overheads etc. The projection should be week on week for the first 6 months and monthly thereafter.
Projections need to be carried out in MS Excel or similar to get a true understanding of the numbers.
Step 3 - Plan
You need to plan what sequence the startup phase will go through. The best plan is to minimise overhead whilst maximising potential for growth. Don't cut corners on cost at the expense of potential growth. Acquire capital (loans) if this will be of real use in early growth but don't undertake un-necessary expense at this point.
Step 4 - Launch
An exciting time! Don't "open the doors and wait for customers", heavy marketing and promotion should precede the launch instead of being an afterthought once opened.
Focus on as much marketing and promotion as you can at this stage, most other things can wait. Your seedling is growing at this stage, keep watering and nurturing it!
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How To Stay In Business
Passion
Having a passion and belief for your venture will drive you forwards to success. Keep the passion alive by reading material specific to your sector.
Increase your skill level and find ways of adapting to your market. Listen carefully to customer complaints and adapt accordingly.
Sweat
Relish problems. Solutions (highly desirable) can only exist where there is a problem (undesirable). So learn to love problems, think of them as difficult homework.
Never lose the drive to understand every problem of your business in depth. Don't make excuses, figure out the real cause and fix it. Then smile!
Time
Rest is important, don't risk burnout. However, even on a holiday, you can get quiet moments to think deep about your business and how to improve it. Just 5 minutes thinking in the sun can be more productive than hours in an office.
Refreshment from a holiday can be just the ticket to increased drive and vision when you get back to work.
Focus
Without customers you have no business. Keep asking yourself what it is they want and whether this is something you can provide. Don't diversify too much, stay in your niche becuase too much diversification can cause loss of focus.
You can't please all customers but do listen to them, really listen!
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Deciding On The Legal Structure
Sole Trader
Setup costs for a sole trader are minimal, normally all that is required is just registering with HMRC.
The benefit of trading as a sole trader is that it is quick, easy & cheap to setup with minimal legal regulation.
The downside is exposure to personal liability (for debts, insurance claims and suchlike). Some firms will not trade with sole traders.
Limited Co
It can cost up to £150 to get a Ltd Co fully setup and registered with all the departments of HMRC.
Good for saving on tax, protecting you from liability and giving you access to services you could not otherwise get.
Compliance with accounting & tax law requires you to use an accountant, which increases costs. However this gives you "limited liability"!
Partnership
You will need a partnership agreement drawn up with a solicitor which has a cost. Apart from that there are not normally any setup costs.
The benefits are having a business partners to share responsibility as well as liabilities.
Fallouts or being left to pay debts of the partnership are real risks. 2 in 3 marriages fail, partnerships are worse and not advisable. Consider a Ltd Co.