3.1 | Time Your Start Up
Timing is vital in business. Knowing the right time to start your business is key.
That’s why I include TIMING among my 10 Golden Rules - the critical success factors an entrepreneur needs to flourish.
However, in business, TIMING is about a variety of key areas, not just about starting your business at an opportune moment. Remember though, that timing isn't an excuse to sit around or delay. You should also be action-focused
You should take the time to get your timing just right.
Timing is about:
- Anticipating the changing needs of partners, of the market, of your people and your customers.
- Entering or retreating from markets at the right time to maximise benefit.
- Focusing on core areas of business at a time when other industry players are not.
- Prioritising. Understanding your responsibilities and commitments and prioritising the things you must do effectively.
- Circumstances, sacrifices and support. The life stage at which a budding entrepreneur is in as they start their business, and their additional priorities or considerations, such as family or health. Potential sacrifices incurred by entrepreneurial commitment must also be considered when planning the right time to start up.
- Effort and dedication, the amount of time devoted to core business areas needs consideration.
Starting up a business requires huge amounts of time, commitment and energy. Consider how much time you think it would take now, and soon after start-up, you’ll realise you should have doubled or quadrupled that amount. Most people don’t realise quite how much of their time and energy starting up, running and growing a business genuinely takes. So be warned.
For that reason, if you have too many other demands fighting for your attention, your business won’t have the best chance of success. Unstable relationships, a problematic home life, poor health, too many other responsibilities, these can all prevent a promising idea from succeeding, before it has even got off the ground.
Consider the effects starting your own business will have on your family. You are going to need their support. The right family circumstances, the right support mechanism and good health are additional critical success factors that should never be ignored.
3.2 | Commit to starting up
One of my 10 Golden Rules is COMMITMENT. Great entrepreneurs have a shared quality: they commit to action. They are doers. They get things done.
COMMITMENT is the bridge between DECISION and ACTION. Once entrepreneurs have made a decision, they make a commitment to act on it; to take the action to get the results they want. It’s the IGNITION to make things happen.
Becoming a successful entrepreneur requires making a big commitment, both to yourself and to your vision of where you are going.
With commitment comes responsibility, not just to yourself, but to your staff, your customers and your suppliers. If you are not committed, why should they be?
One less positive entrepreneurial trait induced by commitment, is the inability to switch off. But, if you find something you believe passionately in and enjoy, this is less of a problem, as it doesn’t feel like work. Good organisation also helps. It reduces the amount of sacrifices you need to make as an entrepreneur.
Commitment is empowering, it’s an invaluable ally. In my experience, the simple act of just making that commitment seems to create a momentum all of its own.
Exercise:
My business will be called ...
The business will provide ... to ...
These people or organisation(s) need this product/service and will buy this product/service because: ...
The products/services my business will provide will be ... than the competition.
On my part, I bring the following skills, experience and contacts to the table: ...
Knowledge and skills missing include: ...
Key weaknesses and risks are: ...
These will be managed/overcome by ...
The business will succeed/I believe in this idea because: ...
In two years time the business will be: ...
In five years time the business will be: ...
Once you’ve committed to your business by conducting research, getting an understanding of the market, the potential customer base and what’s already out there; once you’ve committed to writing a business plan, and sourcing finance, you’ve started to take the action needed to get you to where you want to be.
But the real journey begins here. You’ve done the leg work necessary to justify why your business will succeed, but you’ve only just begun. Just as an Olympic athlete does a huge amount of preparation before getting out on the track to start a race, entrepreneurs need to prepare adequately. But, just as what an athlete does on the track determines whether they succeed or fail, the same is true in business. It's the actions you perform once the business has started that wil determine its outcome.
Preparation without performance counts for nothing.
3.3 | Register your business
There are several ways your business can trade. But before your business idea can become a reality, the relevant authorities must be informed.
There are 2.9 million sole traderships in the UK - and that number has grown over recent years.
The majority of what I call "lifestyle businesses" are sole traderships. It makes sense and is probably more tax efficient to take sole trader status if profits are likely to be lower than £50,000 per annum. Beyond this, you should consider becoming a limited company or a partnership.
At headline level, here are the main tax issues to consider:
- Sole traders, partners and employees pay income tax.
- A director of a limited company pays income tax (as an employee of the limited company).
- A limited company also pays corporation tax
Sole Trader
If you set up as a sole trader, you need to inform the Inland Revenue and register as self-employed. (The telephone helpline for the newly self-employed is 08459 154515.)
Setting up in business as a sole trader is a viable option to test the market, before incorporating as a limited company, once the idea has proved viable. Once tested, you can invest in creating a company. Record keeping is simpler with no PAYE and there’s no corporation tax to pay, so sole traders retain all profit after tax.
By registering as self-employed with HM Revenue & Customs you can claim many pre-trading costs (except training) as allowable business expenses in your first year of trading.
The personal risk, however, is higher. If the business fails, a sole trader is liable to pay for business failure from their own pocket.
Limited Company
Setting up a Limited Company from the outset, gives entrepreneurs a shareholding director position within the company. Despite increased paperwork and corporation tax liability (a director pays income tax as an employee of the company; the company pays corporation tax on its net profit), you and your business are viewed as separate entities, so the liability for business debts is reduced.
It can be easier to borrow money as a director of a Limited Company and entrepreneurs can establish improved credibility within their marketplace by operating as a company.
If setting up a Limited Company, you need to register the company with Companies House and pay a registration fee. You must also notify the Inland Revenue.
www.companieshouse.gov.uk
www.inlandrevenue.gov.uk
Partnership
A partnership can also be set up with one or two others, giving each partner a percentage of the return of the business, depending on how much time and money they’ve invested. Partners are classed as self-employed. Each partner is personally liable for debts incurred by the business. Partners share the profits, but also the burden and risks involved, so, if one partner incurs business debts, other partners are liable for them as well.
3.4 | Make some final checks
If you've lined up all the pieces needed to launch your business, it's worth making some final checks to ensure you are absolutely on track for success.
Firstly, make sure you’ve read the other Business Tools on this site, you need the right idea and the right pitch to get investment and win customers, you need the right attitude and the right people and the right marketing strategies, to take your business from start-up to success. And you need to have a strong business and action plan in place to guide you in the right direction.
Entrepreneurs also keep in mind how they intend to get out before they get in. Devise an exit strategy so you know whether you intend to sell, float or merge your business and when you intend to do so. Entrepreneurs think carefully about where they are heading, long before they get there.
Entrepreneurs also make the most of resources available to them.
Use the web, Local Enterprise Agencies, Government resources and leaflets, small business forums and networking groups. Sign up to online forums to speak with like-minded people and those in the same position as yourself. Gather as much free information as you can from the Internet, and get leverage from the free and subsidised courses, workshops and advice services that the Government and local councils provide.
3.5 | Reality check: starting up
So you think you are ready to launch your business? Here is my checklist of points you should consider:
- Do you believe in your business and yourself? Have you assessed the viability of your idea? Are you confident beyond measure in yourself and what you have to offer. You have no Achilles heel, because you have quantified and analysed the risks and have strategies to overcome them.
- Have you committed to the task at hand? Have you created a business plan and an action plan?
- Have you assessed strengths, weaknesses, opportunities and threats and how you will improve strengths, iron out weaknesses, harness opportunities and reduce threats?
- Have you assessed the timing of your business start-up? Considered the sacrifices involved? Ensured you can devote the time and effort required and anticipate changing needs of everyone involved.
- Are you on the Internet at home? For research, communication and marketing - and generally being in touch - this is a no-brainer.
- Are you fully prepared in terms of research? Do you know enough about your competition, your market and your potential customers? Has potential market share been realistically identified? Has the level of demand been ascertained?
- Have you decided on the status your business will take (Sole Trader, Partnership, Limited Company?)
- Have the relevant authorities been notified?
- Do you have the relevant health and safety requirements, operating licenses and insurance and liability cover?
- Have you completed your cash flow and profit and lossforecasts? Are you sure you know how much cash you need to bring in to cover all outgoings, including staff costs? Is this possible?
- Are you aware of VAT registration threshold limits and how to register for VAT?
- Have you made contact with potential suppliers and partners?
- Have you protected your idea by applying to register a trade mark or patent?
- Have you planned your exit strategy?
- Have you found a mentor to guide and advise you? Do you have a support network in place consisting of family, friends and business contacts?
- Are you open to learning and ready to learn from mistakes?
- Are you feeling motivated? It can be a lonely road as an entrepreneur and you don’t often get that pat on the back, motivation and encouragement. That comes from within. When things are great, being an entrepreneur is probably the best feeling in the world, but when things go wrong it can be a lonely and isolating world. Feel the power of being prepared. Feel the power of your commitment, of implementing your ideas, of achieving results.
If you are unable to answer yes to any of these questions, visit the rest of our Business Tools section.