Starting a business isn’t easy. The statistics are sobering – around 80% of businesses survive the first year, but by year five, 50% of them have shut their doors for the last time. Poor cash flow is the main reason why businesses fail. If you don’t have any money in the kitty, you can’t pay your creditors or staff salaries. But there is more to running a business than maintaining a positive cash flow. Read on to find out about a few more things you need to be aware of when starting a business.
Do something you’re passionate about
Running a business is hard work. Make no mistake about how many hours you’ll be spending marketing, chasing clients, tying up the accounts, and a million and one other things. For the first few years, you will eat and sleep your business. Family, friends, and a social life will all come second. Expect to put in 15-hour days as a matter of course and then it won’t come as quite so much of a shock.
However, if you don’t love what you’re doing, all the hard work and slog will be ten times harder. The only way to make a business work long-term is to be passionate about what you do. Hard work never seems so bad when you enjoy it and it’s a lot easier to put in the hours when you are enthused about the job.
Have a business plan
Whilst a business plan is essential if you need to borrow money to get the business off the ground, don’t underestimate its importance in other areas too. A business plan is more than a strategy for persuading a loan manager to hand over some cash. Its primary purpose is to provide a roadmap for you to see where the business is going.
You wouldn’t drive to Europe without taking a Satnav or road atlas, so don’t try running a business without creating a detailed business plan first. Outline your goals, where you see the business going in six months, a year, and five years. Think about what might happen, how you expect to achieve your goals, try to plan for unexpected events, and look closely at your capital to check you have enough money for the journey.
Review your business plan every month or so to check you are on track. Tweak it to fit new goals and, if you’re off target, think about how you can address the situation.
Understand the legalities of running a business
Running a business is a legal minefield. From hiring and firing to contract law, sooner or later you will need to take some professional advice from a national commercial law firm such as hjsolicitors.co.uk. Before you start a business, make sure you are up to speed on the legalities of debt collection, insurance, and licensing. Ignorance is never a good defence in the eyes of the law.
It’s a good idea to have a business solicitor lined up to take care of legal issues before they happen. Protecting your business in this way will save you money. Most of us don’t make sensible decisions when our back is against the wall, so interview solicitors before you actually need someone to protect your business from an expensive lawsuit.
Choose the right business structure
Although this is something an experienced accountant can advise you on, it is sensible to look at the different types of business structure so that you have a good idea about which one is right for you.
Sole traders work alone. If you’re a plumber or mobile hairdresser, setting up your business as a sole trader should work just fine. But if you want to protect your personal assets, a limited company might be a better option.
There are also other structures, for example, partnerships and franchises. Take advice before you make a final decision and weigh up the pros and cons. A poor decision now could cost you money in extra taxes and be difficult to change if you later decide it isn’t working out.
There is no shame in admitting you need help
No man or woman is an island. There is no shame in admitting that you can’t do it all. People who are too proud to seek help are far more likely to jeopardise their business, not to mention burn out.
Be sensible. There is no way you can wear all the hats in your business. Sure, you might be a whizz with numbers, but how hot are your marketing skills? Probably not so hot at all. Tackle the jobs you are good at and outsource the rest. These days, it is incredibly easy to find experienced freelancers via online sites. Hire a freelancer to fill your skills gap and spend your valuable time doing the tasks you’re good at.
The more well-prepared you are, the more likely it is that you’ll be running a successful business in ten years. Hold on to that thought!
