Starting Up Module 2

7/28/2019 Starting Up Module 2

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Starting a BusinessThe No Nonsense Guide

Module 2: Is starting a

business right for you?



This module will help you to:

decide whether setting up your own•

business is likely to suit youdecide whether you’re in a good•

position to start.

Even if you have already decided to startor have already started your business,you may find this module useful.

Module 2: Is starting a business right for you?

2 .1

2 .1

2 .2

2 .2

2 . 3

2 . 3

2 .4

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2 . 5

2 . 5

2 . 6

2 . 6

2 .7

2 .7

2 . 8

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2 .9

2 .9

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The rewards of starting a business 2

Reality check 3

What do you want from your business? 4

Will business suit you? 7

What skills do you need to run your business? 10

Is your financial position strong enough? 12

Does your business idea have potential? 14

What next? 15

Action plan 17

What you will learn and understand asa result of working through this module

How to use this module

This is a self-help module, with bothreference and worksheet material to helpguide you through starting a successfulbusiness.

As you go along, there are worksheetsto complete, and you can make notes inthe action plan about what you need todo next.

You’ll find icons throughout the module tohelp guide you:

Tips for how to make the most ofyour business

Colour-coded links to other modules Links to the Business Link website

An action plan at the end of this module tohelp you plan your activity for starting up.

Starting a Business - The No Nonsense Guide is produced by Business Link as part of itsStarting a Business service. Business Link provides impartial advice and information tohelp you start, grow and succeed in business. Help and support is also available online,through local workshops and over the telephone.Visit businesslink.gov.uk or call 0845 600 9 006, for further details.



Starting your own business can be anexhilarating, liberating and rewardingexperience. Many people love doingsomething they’re passionate about andbeing their own boss, and they find thatthere’s always something new to learn.

They appreciate setting their own hours,they enjoy the variety and feel justly proudthat starting and running a business is areal achievement. It’s also often much lesscomplicated than they’d feared.

Being in control of your working life is fullof challenges. There are millions who’vedone it successfully, but there are manywho, for one reason or another, have hadto accept that it isn’t for them.

Before you start, it’s important that youknow what you want your business to giveyou. If you know what you want to achieve,this can give you the motivation to keepgoing when the going gets tough. It wil lalso enable you to think carefully, at thisearly stage, about whether the realitymatches the dream.

If you haven’t identified them already, hereare some of the challenges you mightconsider before starting your business.

Personal sacrifice: Don’t underestimatethe physical and emotional demands of

starting up in business. It’s a life-changingevent and will require hard work and longhours, especially in the early stages. Financial insecurity: There can be timeswhen money is tight and this may havea knock-on effect for both you and yourfamily. For example, you may have to dowithout holidays. You may have to put inyour own savings or use your family homeas security and, at worst, you could risklosing your investment or even your home. Loss of company perks: Setting up yourown business means that you’ll no longerbe able to take advantage of the usualbenefits of a permanent job. This includesthe loss of ‘safety net’ benefits such aspension rights, sick pay, paid holiday andother company perks.

I thought my business wouldgive me more leisure time.It hasn’t worked out likethat. I now work far longerhours than I ever imagined.But I still love it! I really lookforward to going in each day.I would never go back tobeing an employee!

2.1 The rewards of starting a business 2.2 Reality check

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TipAsk people you know who are alreadyin business what the day-to-dayrealities of running a business are.

Pressure on close relationships: You mayneed the emotional and practical supportof your family and friends. Before you goahead with launching your business, youshould discuss with them the effect thatstarting up a business is likely to haveon your life. It’s crucial that they’re rightbehind you. Isolation: Being your own boss canbe a satisfying experience. However,

shouldering all the responsibility for thesuccess of the business can feel lonely.Developing a network of contacts willhelp you to feel more like a part of acommunity.

Starting a business can give you immensesatisfaction, but it’s important to berealistic and consider the above factorscarefully.

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2.3 What do you want from your business?

Bearing in mind the reality check, take some time to think about whether your businessis actually what you want or need.

Think about the reasons why you want to start a business. What are your short andlong-term goals? These could range from more independence and a larger incometo excitement and concentrating on the sort of work you enjoy.

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Wh at d o y o uw ant f r om y o ur b u s i n e s s ?

What do you want fromyour business?

Importance(high or low)

Things to consider

Now that you’ve thought about what you want from your business, take some time toconsider whether these business goals are compatible with your life (and family) goals.

Where do you picture yourself in 5 years’ time and what will you have achieved?

Think about your life goals. List 3 that you feel are important for you to achieve.

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How will your business help you achieve your goals?

What aspects of owning a business may hamper your goals?

Worksheet: What do you want from your business now?List and rate how important each of your factors are and the factors you needto consider to make them a reality.

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Compare your life goals and desired achievements against what your business canbring to you. In what ways can you shape your business idea to support your life plans?

Do you need to make actions from any of your things to consider?If so, add these to your action plan.



How I decided to setup my own business

Name: Julie ComberCompany: Julies Tiaras

When mother of four Julie Comberpromised to help her daughter shop forher wedding dress and accessories, shenever thought that the trip would leadto a new career and the launch of a new

business. But that was exactly whathappened.

What I did“We quickly found a dress my daughterloved, but she just couldn’t find the righttiara. I decided on the spot that I wouldmake one for her.

“I quickly found a supplier of highquality crystal beads from the Swarovskicompany, and used them to make my veryfirst tiara. I loved doing it and my daughterwas really impressed. My husband saidthat I should make them for other bridesas well.

“To test the market I took the tiara toPlymouth bridal shop PB Gowns, whereI was told not only that it was easily ofa marketable standard but that the shop

would happily stock whatever I couldmake. This was a new venture at thetime, so I couldn’t be paid up-front, but weagreed instead that I would work thereas a volunteer in exchange forgiving me a sales outlet, which suited usboth perfectly.

“It was an arrangement that gave me theopportunity to start properly planningmy business.

Another useful check is to think aboutwhether you have the right personalqualities to start your own business. It’soften said that a successful entrepreneurwill have the following qualities:

Self-confidence: A self-belief andpassion about your product or service.Your enthusiasm should win people overto your ideas.

Self-determination: Believing that theresults come from your own actions,rather than from other people’s actions oroutside forces.

Being a self-starter: The ability to take theinitiative, work independently and developyour ideas.

Judgement: The ability to be open-mindedwhen listening to other people’s advice,but still working towards your objectivesfor the business.

Commitment: The willingness to makepersonal sacrifices through long hours

and loss of leisure time.

Perseverance: The ability to continuedespite setbacks, financial insecurity andexposure to risk.

Initiative: The ability to be resourceful andproactive, rather than taking a ‘wait andsee’ approach.

Don’t worry if you don’t have all thesequalities. If you have most of them that’spretty good.

2.4 Will business suit you?

Wi l l b u s i n e s s s ui t y o u?

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I could actually see my creations selling,and it was wonderful to see the happinessthey brought as part of a really joyfulexperience for everybody.”

See how Business Link can help“I rapidly decided that I needed to learnabout setting up and running a business,and went on to the Internet to find outwho could help me.

“This was when I discovered the BusinessLink website and I signed up for a placeon its business start-up course. Itwas absolutely fantastic, bringing me

immediately up to speed with importantmatters like rules, regulations and tax.

“Now I’ve opened my own shop ‘JuliesTiaras’ in Plymouth, and I’m displayingmy products in another jewellery shop inPlymouth and a lingerie shop in Tavistock.My website, which my son and I builttogether, is live and taking orders forbespoke creations as well as items frommy existing and fast-growing collection.”



Name: Paul KruzyckiCompany: Ales By Mail

While developing the idea for his ownventure, Ales by Mail, Paul Kruzyckicontinued working full-time as a buildingsurveyor.

What I did“I spent a lot of time talking to people inthe industry and finding information onwebsites. My research showed that Alesby Mail couldn’t pay me a salary at firstso I decided I needed to save at least sixmonths’ living expenses.

“I now work as a property consultant twodays a week and spend two days on Ales

by Mail. On the fifth and sixth days I workon whatever needs doing most urgently.I’m building the business on a tight budgetand am going for slow growth.”

How did you respond?

Less than 20

You’re well-equipped for a life inbusiness. You can work on your own,you’re willing to work hard and canbounce back from setbacks. Just makesure you don’t try to take it all on yourself,so think about enlisting support whereyou need it.

20 to 35

You’re going to love some aspects ofbusiness, and hate others. Where canyou get help to deal with the bits youlike less?

More than 35

This doesn’t mean you shouldn’t go intobusiness. You may have a great idea fora product or service and people could bequeuing up to buy it.

But there may be some aspects ofrunning a business that you should

think carefully about. Maybe it would besensible to give some in-depth t houghtto what you want out of life. If you’re stillkeen, why not consider setting up witha business partner, or someone who’lltake care of the aspects that you’re lesscomfortable with. Put any actions inyour action plan.

Circle the number that applies to you:

1. Do you like taking risks?

Love it 1 2 3 4 5 Hate it

2. Do you like taking responsibility?


3. Do you like working on your own?


4. Do you like taking the initiative?


5. Are you happy rising to a challenge?


6. Do you like working hard?


7. Do you like getting rewarded for your efforts?


8. Do you like having to find things out?


9. Do you like paperwork?


10. Do you like meeting deadlines?


Worksheet: Will business suit you?

Wi l l b u s i n e s s s ui t y o u?

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2 .4

Take this quiz to help you decide whether starting a business will suit you or not.

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Here’s how I decided I wasready to start up my business



Very few people starting out in businesscan claim to be strong in all of the areasrequired.

The key is to make the most of what youdo have. This may be skills that you’ve

built up not only through work but alsofrom volunteering, bringing up a family,team sports, community activities andso on.

Don’t worry, you can build up the skillsyou need for your business over time butyou need to think about which ones arethe most important. As well as learningnew skills by yourself you can draw onoutside help by buying in the skills youneed or employing someone.

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Wh at s k i l l s d o y o un e e d t or un y o

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2.5 What skills do you need to runyour business?

Worksheet: Business skillsBelow is a list of some of the important skill s needed to run a successful business.Tick those that you already possess (be honest here) and feel free to add any otherskills that you have that are relevant.

Selling techniqueCold callingNetworkingMarketing and promotionsTime managementBeing organisedPeople managementRecord keepingBalancing the budget and managing cashflowNegotiatingCommunicating well in writing and in personUsing a computerDealing with customers

What previous experience do you have that’s relevant to your new business idea?

What are the 3 most important skills you’ll need to improve or get help withto make your business a success?

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Find out moreTraining Directory:businesslink.gov.uk/starttraining

What are your strengths? How can you make the most of them?

What actions can you take to learn these skills through training and researchor using external services? Add these to your action plan.



Worksheet: Personal survival budget

£ £

Estimated personal expenditure

Mortgage and/or rent

Council taxUtilities (gas, electricity, water etc)

Personal and property insurance

General housekeeping expenses (food etc)

Phone and Internet

Car tax and insurance

Car running expenses

HP repayments

Hire charges

Subscriptions to journals, professional bodies etc

Savings plans

Contingencies

Tax

National Insurance

Other (specify)

+

Total personal expenditure =

Estimated personal income

Income from family, partner

Other income (specify the source) +

Total personal income = -

Total survival income required from the business =

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I s y o ur f i n an c i al p o s i t i on s t r on g en o u gh ?

2.6 Is your financial position strong enough?

Find out moreHow do I survive until my business isoff the ground?businesslink.gov.uk/startsurvive

You can find out more about raisingfinance in Module 5: Managing money

2 . 6

Something else that you need to considerat this stage is finances. There’s noguarantee that your business will makemoney for you straight away, so you shouldaim to have sufficient reserves to lastwithout an income until the business can

pay you one.

Being realistic at this stage is likely tosave a lot of pain. People who launch theirbusiness without enough funding find itextremely difficult to keep it afloat.

To get over this, you should investigatealternative sources of finance.

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If your estimated personal income is more than your estimated personalexpenditure, this means you may have additional funds to invest in the business.



Based on all the information you’vegathered so far about your personalqualities, knowledge, skills and businessidea, you have a number of options.

Go for it: If you’re convinced that your

business idea is viable, that you havewhat it takes and that it really is what youwant to do – congratulations. You’re ina strong position.

Reduce your risk: You could reduce yourrisk by developing your business part-time, starting more slowly or reducingthe need for finance.

Change your business idea: Closerexamination may have revealed someflaws in your thinking. Don’t look at this asa problem – it’s a challenge. A few tweakshere and there might make your ideamuch more viable.

Accept that it’s not for you: You may havecome to the conclusion that running yourown business at this time doesn’t suit yourcurrent circumstances. There’s nothing

wrong with this. However disappointing,it’s better to come to this decision nowthan deal with the consequences ofstarting a business that may not work.

2.8 What next?

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Worksheet: Does your business idea have potential?Checking the key points in this worksheet will help you decide whether you’reat least thinking along the right lines.

What is your business idea?

What will make your business different?

Describe who will buy your product or service. What types of peopleor businesses are they?

Think about your responses above. Is there anything you can do now to strengthenyour business idea?

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Find out moreFurther develop your business bycompleting modules 3, 4, 5 or 6

Add anything you need to do to your action plan

It’s not enough to have the right qualitiesand skills. You also need a businessidea that has a good c hance of success.Business ideas that answer a consumeror business need will have a greaterlikelihood of turning into a successfuland profitable business.

2.7 Does your business idea have potential?

Find out moreYou can find out about how todo market research to test yourbusiness idea inModule 3: Planning your business.



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Find out moreWorking your way through thismodule may have made you realisethat before you can make your mindup you need to do more researchand/or talk to someone who can give

you advice.

Module 3: Planning your business will take you further into researchingyour market and working out your costs Considering starting up?businesslink.gov.uk/startconsider

Attend our Workshop:Getting the basics right workshopcould be a useful next step for you

Talking to a local Business Linkadviser can help you decide howto proceed.Call 0845 600 9 006

The Business Link website also hasadditional information on setting upa business for people in particularcircumstances.

Starting a business when economicconditions are toughbusinesslink.gov.uk/startrecovery

Starting a business as a womanbusinesslink.gov.uk/startwoman

Starting a business whenyou are 50 plusbusinesslink.gov.uk/start50plus

Starting a business as a disabledpersonbusinesslink.gov.uk/startdisabledplus

Starting a business as a minorityethnic personbusinesslink.gov.uk/startminorityethnic

Starting a business on a low incomebusinesslink.gov.uk/startlowincome

Starting a business whenyou are youngbusinesslink.gov.uk/startyoung

Starting a business as a graduatebusinesslink.gov.uk/startgraduate

2.9 Action plan

What needs to be done By whom Date

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By working through this module you’ve taken an important step in deciding whetherstarting a business is right for you.

Take a few minutes now to write down any additional actions you want to take to moveyour business idea forward.



Module 4: Finding and keepingcustomerscovers researching the market,getting your business offerright and successful selling tocustomers

Module 5: Managing moneyexplains the key skills needed toorganise your business financesand how to apply for funding

Module 6: Your business planenables you to develop abusiness plan to use yourself orto help raise finance

Starting a Business – The No Nonsense Guide is divided into six easy-to-follow modules.

Work through it at your own pace or dip in and out, depending upon your areas of interest.Step-by-step, this invaluable resource will guide you towards your goal and help yousucceed in business.

Module 1: Overviewsummarises the basic stepsyou’ll need to take in orderto set up your own business

Module 2: Is starting a businessright for you?contains information andexercises to help you decidewhether running your ownbusiness will suit you

Module 3: Planning yourbusinesswill help you to plan the practicaland legal aspects of yourbusiness

Published May 2010© Crown Copyright

Printed in the UKon recycled paper

URN: BL/004

Workshops to helpyou decide whether

starting a businessis right for you andexplain what you needto know to make yourbusiness a success

Practical guidesand online tools

on our website. Visitbusinesslink.gov.uk

Help and adviceover the telephone.

Call 0845 600 9 006 to talk to a localBusiness Link adviser

Business Link0845 600 9 006businesslink.gov.uk

As well as this guide, Business Link offers the following support:

Documents

Starting Up Module 2