Do you dream of doing something you love and making money from it? Here are some top tips on how to make that dream into a reality.
Micro-businesses – small businesses run by sole traders or with a handful of employees – are the lifeblood of an entrepreneurial revolution that is gaining pace across Britain.
There has been a surge in start-ups over the last few years. But an increasingly entrepreneurial Britain is also part of a longer-term trend.
But whilst the glamour tech companies grab the headlines, it is the hundreds of thousands of micro-business that are the real story. The figures are stunning. 95% of British businesses are micro-businesses – employing over 7 million people and generating a combined annual turnover of £600bn.
Would-be entrepreneurs in their droves are taking the plunge for an exciting challenge, a flexible, creative and innovative way of working or to supplement the income from their day job. And if you run a micro-business you don’t need to think small – with the right idea, passion and drive, it can be a big success.
In other words, anybody can turn an idea into reality – indeed, they are already doing it. So are you ready to join the start-up revolution? Here are some top tips everybody should think about before they get started.
Is your bright idea a bright move?
Take a long hard look at yourself in the mirror. What are you good at? What do you really enjoy doing? Have you got a passion, skill or a spare-time hobby that you really enjoy? Any business takes a lot of hard graft – but loving what you do makes it a lot easier.
Then peel your eyes away from the mirror and go and ask your family and friends if they agree. Ask for a straight and honest answer. If you think you are a brilliant chef – but your partner would prefer a takeaway to tasting your cooking – then catering probably isn’t right for you. But if your hair styling is a cut above the rest – you might be in business.
Your competitive edge
What makes you different and how will you sell your service to potential customers? You might be brilliant at what you do, but so may thousands of others.
Do you have a particular product or service angle or something that sets you apart from the competition? Could you provide better quality, be more cost-effective or provide better customer service? Are you the only, or one of a relatively small number of local businesses that do what you do? Have you got a great way to reach your target market?
Customers are king
Your family and friends are good people to bounce initial ideas off – but the real test is potential customers. What would they buy and what would they pay for your product and service? What are they really looking for? Which competitor products do they buy at the moment?
Set yourself the task of speaking to at least ten potential customers. Try different types and sizes of potential customers and ask as many questions about your chosen market as possible.
How committed are you?
Now back to looking in the mirror again. How committed are you? Be honest with yourself. Is this a 9 to 5 job or a 5 to 9 job in the evenings (or indeed both). Is this a lifestyle business that will allow you to earn a nice living – but just that? Or do you see this as a business you really want to push with the aim of growing both revenues and a team around you? Both are fine but both require very different levels of discipline, priorities and commitment.
Appetite for risk
Also think about what you are willing to spend and risk. The chances are any business will take a fair amount of time and effort to get off the ground. You will probably need some starting capital to cover set-up. As you grow, you are likely to need working capital – money to fund the gap between payments going out (for stock and suppliers) and payments coming in from sales.
What is your risk appetite? Have you any savings and are you prepared to use them? Are family and friends prepared to help you out – and, if so,for how long?
A structured approach
Right, after some soul searching and mirror gazing, you decide to become your own boss on your own terms.
The next step is to consider what sort of structure you want to operate under. Broadly, there are three main options – a sole trader, partnership and limited company. What follows is a very broad-brush description of the three but you need to research each carefully to see what is right for you…
– A sole trader is the simplest for one-man or woman bands. In summary, you keep the profits but are liable for any debts. You need to register as self employed with the tax authorities and file a self-assessment return each year but there is not much red tape.
– A partnership is a relatively simple and flexible way for two or more people to own and run a business together. But remember, only go into business with someone you really trust. Partners are jointly liable for any debts owed by the partnership and so are equally responsible for paying off the whole debt.
– Setting up a limited company means you keep your business and potential liabilities separate from your personal affairs. This structure can appear more credible and professional to the outside world and can be a tax efficient way to pay yourself (through dividends rather than wages). The downside is, it is more costly, and there is more paperwork involved. However, the rise of online company formation agents have reduced costs and complexities in recent years.
So here’s an idea – if you are still interested you could well be ready to join the start-up revolution.