Starting Up A Business

Different approaches to starting up your own business

Every year, thousands of people decide to set up their own

business.

This module looks at why you might opt to run your own business

and different ways of making the move.

It considers the positive and negative aspects of each approach, and

tells you where you can find out more.

A good business idea

A good business idea could be an invention, a new product or

service, or an original idea or solution to an everyday problem.

It might also be:

A gap in the market that you can fill

A business related to the work you do already

An interest or hobby that you can turn into a business

Whatever your idea is, you need to be sure that it fits with your

needs as an individual, as well as being a viable business

proposition.

Questions to ask yourself

What is it that you will personally bring to the business in

terms of relevant experience and expertise?

Is there a market - a need for the idea, and customers

who will pay for it?

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How big is the market, and how will you reach it?

Who will be your main competitors?

What is special about your idea, making it different from

similar products or services already out there?

How will you fund your idea?

What might go wrong?

For information on turning your answers to these questions into key

documents for your business, see the modules on how to prepare a

business plan and write a marketing plan.

Other sources of help

You can get free professional help from your local

enterprise agency - find your local enterprise agency on the

National Federation of Enterprise Agencies website

Discuss your ideas with friends and colleagues,

particularly those who know about the business

Help for people under 30

Help with setting up your own business is available from

the Shell LiveWIRE scheme.

Find out about the Shell LiveWIRE scheme on the Shell

LiveWIRE website

If you have a good idea for a business but can’t get the

funding, the Prince’s Trust scheme could help you by offering

a low interest loan, a grant or a mentor.

Find out about the Prince’s Trust scheme on the Prince’s Trust

website

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A tried and tested business model

Some self-starters choose a well-trodden path - such as buying an

existing business or rights to a franchise - which can carry fewer

risks than going it alone.

Advantages

It is usually easier to get finance.

A market for the product or service will have already been

demonstrated.

A business plan and marketing method will be in place.

You should have valuable experience to draw on.

Many of the problems will already have been discovered

and solved.

A franchise comes with financial support too.

Disadvantages

Some businesses that are up for sale may be experiencing

difficulties.

Make sure you fully understand the reasons for selling, as you

may need to invest quite a bit more on top of the purchase

price to give it the best chance of success.

The rights to a franchise or to sell particular products or

services may be expensive.

With a franchise, there may be a particular way to run

the business that you have to stick with.

For more details of acquiring a going concern, see the module on

how to buy an existing business.

For more on franchises, see the module on how to buy a franchise.

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A specific business opportunity

Sometimes the possibility of owning your own business can come as

a complete surprise.

Perhaps you are offered the opportunity to buy out your employer,

or take on a family business.

Opportunities like these are like any other business start-up.

You still need lots of personal commitment, you may need to put

your own money on the line, and you'll need to do some careful

assessment to make sure that the business really is viable.

Advantages

Development, planning and market testing should already

be in place.

There may be established customers, a reliable income, a

reputation to capitalise and build on, and a network of

useful contacts.

You probably already have expertise in the product or

service and a good understanding of the business you're

taking on.

Disadvantages

You may be taking on someone else's problems when you

take on the business.

Ask yourself if there are problems with the business, and if so,

can you solve them?

If you are buying out your employer, you may lose support

services that you take for granted now.

You won't just be responsible for your core role, but for

everything else as well, such as accounting, staff

management and payroll.

More help

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You can get free professional help from your local enterprise

agency.

Find your local enterprise agency on the National Federation of

Enterprise Agencies website. 

You can find your local Business Link through our Contacts

Directory.

Talk to people already in the business about your plans and ideas.

What can they pass on from their own experiences?

A business with social aims

You may want to start a business that isn't just for profit but also

has a social purpose.

For example, you might want to provide a service for a

disadvantaged group in your local community, or help improve the

local environment.

Although any business can have social objectives, you might want to

consider setting up a specific type of business known as a social

enterprise.

Although a social enterprise is run as a business, and often operates

under the same financial and profit-driven pressures, it also aims to

provide a clear social benefit.

The profits are mostly reinvested, or used to support its social aims,

rather than being paid to the owners of the business.

Advantages

You earn a living doing something you feel is worthwhile.

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As your business grows and matures, your community or

beneficiary will also benefit.

Customers may be more willing to buy from a business

that supports a good cause.

It may be easier to attract and motivate employees (or

even volunteers) to work in a social enterprise.

You may qualify for a grant, or be able to raise finance

from people or organisations that share your social aims.

Disadvantages

Making profits and achieving your social aims can

sometimes conflict with each other. You may have to

make difficult choices.

Although you can earn a reasonable income working for a

social enterprise, you will not make your fortune - most of the

surplus profits are put back into the business or go to support

its aims.

See the module on how to set up a social enterprise.

A change in circumstances

A major life change can often enable you - or push you - to set up

your own business.

Maybe a dramatic personal event kick-starts you into action, or your

job situation means that now is the time to take the plunge.

Such changes might include:

Unemployment

Redundancy

A change of family circumstances

Coming into money

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Advantages

A change in your circumstances might be an opportunity

to start again or do something you've always wanted to do.

Redundancy payments or receiving a lump sum of money

can provide an opportunity to invest in the business.

At its best, being your own boss can give you the

flexibility to work around family commitments.

Disadvantages

Major life-changing events can be very stressful.

It maybe unwise to make further big decisions at times of

personal upheaval.

Starting your own business is unlikely to provide a speedy

return on your investment and you should be prepared for a

long haul.

In the early stages especially, running your own business

can mean putting in long hours and making sacrifices

elsewhere in your personal life.

Starting a business when you're unemployed

If you're on jobseeker's allowance and want to get back into

employment by starting your own business, find out how the New

Deal can help you by calling the New Deal helpline on Tel 0845 606

2626.

To check what would happen to any benefits you may be receiving if

you start a business, you can find out where you stand at your

local Jobcentre Plus  or Social Security Office.

Try not to be put off - there are many schemes designed to help

people on benefits start up their own business.

You can find out about local programmes through your

nearest Jobcentre Plus.

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Find your nearest Jobcentre Plus office by entering your postcode at

the Jobcentre Plus website.

You may also be entitled to Working Tax Credits.

These are payments to top up the earnings of working people on low

incomes, including the self-employed.

You can find out about the Working Tax Credit at the HM Revenue &

Customs (HMRC) website.

Taking control and changing your lifestyle

For many people, the biggest attraction of setting up a business is

the independence provided by being your own boss and the chance

to have the lifestyle you want.

Advantages

Starting a business can offer a career with built-in

independence and flexibility.

Being your own boss can give you the choice to work more

convenient hours - such as working around your children's

school hours and holidays.

You will be able to choose to do some professional

development or training.

You will be the one in the driving seat, making the

decisions that enable you to lead your chosen lifestyle.

If your business takes off, the payoff in financial and

lifestyle terms can be huge.

Disadvantages

You may find that you have to work longer hours.

You may find it difficult to separate work and home life,

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especially if you run the business from home and this can put

extra demands on your family.

Some business owners suffer stress when things are not

going so well.

You should be prepared for the loss of perks such as

pension schemes, holiday pay and sick leave.

It's quite common to have financial difficulties, especially

when you're starting up.

Going into business full time

The kind of business you've chosen - or your individual

circumstances - may mean that you want to take the plunge and

jump straight in full time.

Advantages

You can devote all your time and enthusiasm to your

business.

You can react to new developments as they arise.

If your business depends on a gap in the market or a new

idea, time will be of the essence.

Disadvantages

You will have to manage without an income while your

business gets off the ground.

If you decide to go into business full time you have a few options to

help you over the early days:

Live off your spouse or partner's income - however, it can

be hard to live off one salary if you've been running the

household on two.

Use your savings - if you've been putting money aside for

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a rainy day, this could be it. Ask yourself: if you have enough

to cover your living expenses and fund your business? For how

long? Will you have anything to fall back on if your business

fails?

Get a loan - banks will often help new businesses with a

loan. However, they can be inflexible. You may have to pay

back the loan immediately if your business fails, and there will

be expensive penalties if you don't make agreed repayments.

Use your home as capital - if you have capital in your

house, you could use it as security. However this is risky, your

house may drop in value and if you cannot keep up

repayments, you risk losing it.

Borrow money from family or friends - you can save a

lot of money if your friends and family don't charge you

interest. But if your business doesn't work out, it could put a

big strain on your relationship with them. For practical tips,

see our guide on loans from friends and family.

Going into business part time

If your business allows, you could decide to work on it part time,

fitting it in with your current job or other responsibilities.

Then, when the business is robust enough or circumstances change,

you can move over to it entirely.

Advantages

You can still earn an income while you're getting your new

business off the ground.

Technology such as answerphones, the Internet and email

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make it possible to communicate out of hours when you're not

available in person because you're doing your other job. 

It can make it easier for you to juggle your other

committments - such as childcare - by allowing you to choose

when you work.

Disadvantages

It can be difficult to manage the extra hours you need to

put in.

Putting in very long hours can be stressful and tiring.

There won't be time for much else.

It could take much longer for your new business to take

off.

You'll have to pay tax on both incomes if you continue

with your other job.

Many people who set up their own business decide to work on a

part-time basis to enable them to balance their home and working

obligations.

Some people decide that the safest option is to continue with their

current job setting up their business.

Legally you don't have to tell your employer that you are setting up a

business, although there may be a clause in your contract preventing

you from doing other work.

You might want to ask your employer for more flexible working

arrangements.

These could involve reducing or re-arranging your existing working

hours.

Related web sites you might find useful

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Find your local enterprise agency on the National Federation of

Enterprise Agencies website

http://www.nfea.com/

Download the guide to defining the purpose of your business from

the smallbusinessjourney website (PDF)

http://www.smallbusinessjourney.com/files/pdf/411_002_002_Define

Purpose_April.pdf

Find out about the Prince's Trust scheme on the Prince's Trust

website

http://www.princes-trust.org.uk/Main%20Site%20v2/14-30%20and

%20need%20help/start%20up%20in%20business.asp

Find out about the Shell LiveWIRE scheme on the Shell LiveWIRE

website

http://www.shell-livewire.org/

Read guidelines on choosing a franchise on the British Franchise

Association website

http://www.british-franchise.org/choosing.asp

Search for businesses for sale on the Daltons Business website

http://www.daltonsbusiness.com/AdvancedSearch.asp

Read about social enterprises on the Social Enterprise Coalition

website

http://www.socialenterprise.org.uk/

Find information about social enterprises on the Small Business

Service website

http://www.sbs.gov.uk/socialenterprise

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Search for grants for social enterprises on the

governmentfunding.org.uk website

http://www.governmentfunding.org.uk/

Find your nearest Jobcentre Plus on the Jobcentre Plus website

http://www.jobcentreplus.gov.uk/cms.asp?Page=/Home/AboutUs/Ou

rOffices

Find out about the Working Tax Credit at the HM Revenue &

Customs (HMRC) website

https://www.taxcredits.inlandrevenue.gov.uk/Qualify/WhatAreTaxCr

edits.aspx

Find out about business support for women in your area on the

Prowess website

http://www.prowess.org.uk/

Part timeFull timeUsaha dari awal, kita jadi bosStarting a business when you're unemployedA change in circumstances (pake pegawai pensiunan)A tried and tested business modelA business with social aimsA specific business opportunity

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