By Nicky Larkin, Goringe Accountants

With multiple job cuts across the board, the future looks uncertain for much of the UK’s workforce. For some it’s undoubtedly a worrying time while for others it’s a good time to reconsider their career and start up a business. Some of the world’s greatest businesses, such as IBM, Disney and Fedex were started during a recession.

For those that are considering launching a business here are 10 top things to consider.

  1. Choose something that you enjoy.
When you run your own business, you become fully immersed into it. Therefore, it’s essential to work 24/7 on something that you enjoy and then it won’t feel like work.
  1. Consider the structure.
Before starting your business, consider how you would like to structure it at the start and in the future e.g. sole trader, partnership, LLP (Limited liability partnership) or limited company. Think about what size you would like it to become and whether you want to have other partners or shareholders involved.
  1. The importance of market research.
Before starting a new venture, it’s essential to research your market. If you’re offering a product or service that already has a market, learn as much as you can about the market, from how big is it to what are the price points? If it’s a brand new product or service, utilise focus groups to understand how viable it is and don’t be afraid of talking to potential competition. See if there are any trade or professional or networking groups that can make friendly introductions.
  1. Decide what your perfect customer looks like.
This is particularly useful when you run a services business as you will have a large amount of client interaction. By choosing your clients carefully, your work time will be much more enjoyable, and you can ensure that your marketing is well targeted to attract them.
  1. Structure your pricing carefully
This is really important. You cannot run a successful business long term if you get this wrong. Calculate the right price point for your product or service using market research and check that these prices work for your finance model. If you discount to start building momentum, make it clear what your normal pricing is and show the discount that you’re giving. For example, if your daily rate is £1k per day but you want to discount by 20%, still invoice the £1k amount but show the £200 discount on the invoice.
  1. Choose your employees wisely
The old adage that one good employee is worth three mediocre ones is completely true. Good employees will show their worth - coming up with ideas, requiring minimal management time whilst being productive and earning client respect. Take time to find the best person, think about the culture you want your business to have and ensure that your employees fit within that. Also ensure employees have clear roles and responsibilities and are measured regularly via appraisals.
  1. Effectively fund the business
Having a solid financial forecast will enable you to calculate funding gaps. Funding could be sourced in a variety of ways:

Savings - perhaps from a redundancy – put into the business as capital, as a loan or a mix. As with any investment you have to decide how much you’re willing to risk.

Investors – they may also offer other services besides cash and they will have a vested interest in your business to make it a success. This money doesn’t also have to be returned. Think carefully about how much equity you’re willing to give up to investors and don’t overinflate the value of your company.

Debt - but this is particularly difficult for start up’s because without security it may not be possible to borrow traditionally. You could look to friends or family to borrow from, but this can be risky.

Alternatively, local Enterprise Partnerships (LEPS) or public bodies like Innovate UK are good for potential options and grants, particularly if you have an innovative product or service.

  1. Select some trusted confidantes outside of the business
Running your own business can be lonely and stressful so ensure you have trusted people around you to discuss work issues. These could be respected friends, family, or a former colleague. Also, have a professional network of experts that you can access when needed, such as a commercial lawyer, accountant or bank manager. Carefully choose who you want to confide in. Do you trust them? Do they provide good advice?
  1. If you fail to plan you plan to fail
If you have a vision for your business, ensure to have a high level plan for what direction you would like it to go in. What do you want to achieve and how are you going to execute your plan? Knowing this will help you and your customers achieve your goals and vision. The process of putting a plan together can sometimes be just as important as the actual plan. Think about different scenarios and what you would like your business to look like.
  1. Think about how and when you want to leave the business.
It may seem strange before you’ve even started your business to think about how you are planning on leaving it, but this will help shape the business plan. How long do you want to work in your business? Would you like to eventually sell it and for how much? It’s never too early to consider these questions.

Building a business is hard work so really consider is this what you want to do? If you aren’t fully committed it is much better to stay as an employee. But if this is your passion, go for it, but be sure to find time for your family and friends and exercise. You need to keep healthy to keep your business healthy.