Starting up your own business is both exciting and rewarding, but for many people it can be a daunting experience. It can also involve a number of risks, so it is important to understand the issues and challenges involved before taking the plunge and launching your venture.
It is not enough just to have a good business idea. You need to be sure there is a viable market for it, and you also need to have the right skills and temperament to make a success of the opportunity.
Assess your abilities and resources
To get your new venture off the ground, there will be a mountain of tasks to complete, research to carry out, things to do and people to contact. You need a thorough understanding of the information you need to find and the contacts you need to make in order to pull your start-up plan together.
Whatever your personal starting point, there are some fundamental issues you need to address relating to your business idea, your personal aims and your own business ability.
You can start by asking yourself some vital questions:
- Do you have the necessary capital and financial resources to start your business, to finance the purchase of any stock and equipment, and to pay your general living expenses while you go through the start-up phase?
- Can you afford, and do you really want, to risk these resources? For example, you might have to take out a secured loan based on the value of your home. Have you considered the consequences of your business failing and possibly being forced to sell your house?
- Do you have the commitment and self-discipline to get through potential hard times? There may be times when customer demands are particularly heavy and it will be up to you to make sure these demands are met. How will you cope with this, and are you prepared to put in the necessary hours to meet the demands of your business?
- Are you confident that you will be able to negotiate with suppliers to get the best deals, be available and helpful to customers at all times, think clearly under pressure and take criticism without getting upset?
- Are you confident enough about the level of demand your product or service will generate, and will you be able to assess how this might change over time so you can adapt your business operation to deal with fluctuating demand?
- Do you have the determination to carry on when demand and sales are low?
While you may not have specific answers to these questions, it is very important for you to consider whether you can cope with the uncertainty involved with running your own business.
There is no single 'type' of person who becomes an entrepreneur, but there are some typical characteristics that people who run a successful business tend to have in common:
- Logical, perceptive and responsible (good at getting things done).
- Extrovert and confident (good with customers).
- Able to communicate and get their point across (to staff, suppliers, financiers).
- Sociable, with the ability to show leadership.
- Single-minded, but able to take advice.
- Flexible and adaptable.
- Quick to take opportunities (and ready to take calculated risks).
- Hard-working, committed and determined ('get up and go' type).
- Thick-skinned (able to handle failure).
- Individualistic (not afraid to stand out from the crowd).
- Creative and imaginative (always coming up with new ideas for the business).
This list is not necessarily exhaustive, and you do not need to have all these characteristics to be a success at running your own business. The key is to develop and adapt your own skills and characteristics as you gain more experience.
Understand the pressures
The pressures of being the owner-manager of a small business are inescapable. You will be staking practically everything on your own ability. If it goes wrong, there will be no one responsible but you; you may have to work long hours and there will be times when things get on top of you; you may get into debt in order to finance the enterprise and may have to manage without a regular income if the business cannot fund your salary or drawings, especially in the early days;
you will need to maintain your faith in the business, often in the face of others' doubts.
If you employ people, you will need to be positive and show leadership all of the time, even when you don't feel like it; there will be times when you need to be tough and prepared to discipline employees or make difficult demands on your suppliers. There will be times when you feel lonely and isolated. You need to be polite and helpful even when an awkward customer is being difficult or demanding.
This may seem more like a nightmare scenario than a business dream, but you need to be the sort of person who can face up to and deal positively with such challenges. Above all, you need plenty of confidence in yourself, with the energy and mental toughness to get through the more difficult times that you will inevitably face.
Skills and qualifications
Apart from your business and personal skills, customers and business funders will be more comfortable if you have the right qualifications. In certain regulated sectors these may also be mandatory. Therefore, if you are considering starting a business it is important to check whether you need specialist qualifications before you commence trading. Knowing the basics may not be enough to obtain the licences you require or to receive accreditation with trade bodies and professional associations. For example, to trade as a chiropractor in the UK it is mandatory to undertake formal General Chiropractic Council (GCC)-approved training.
You can find out if formal standards or qualifications are required from the trade association or professional body that relates to your industry or sector in the UK.
It is essential to acquire new business skills if you do not already have them. It is important to understand the principles of running and managing a business, including marketing, planning, finance, people management and so on. Ideally, you should aim to get some basic training in business administration, finance and marketing before you start.
If you have no current business experience, it can be worth taking a business start-up course, which may be free of charge or available at minimal cost. Contact your local enterprise agency, Chamber of Commerce or further education college for details of courses available in your local area.
If you intend your enterprise to remain small, (as many people do), you can continue to concentrate on the daily 'nuts and bolts' without worrying about taking on staff. However, if you expect the business to grow, you will inevitably have to employ people and your leadership and people management skills will be vital.
Many promising enterprises fail to grow because their owners do not have these skills when they take on staff. Consider whether you would benefit from further training or support in this aspect of business.
Every business requires an element of selling. Initially, it is important to educate and persuade people about why they should buy from you, and in some cases it will be crucial to be able to negotiate to win new business. It is possible to learn basic selling and negotiation techniques, but being outgoing and articulate, reliable and approachable are equally important for success.
In order to trade effectively, small business owners must be well organised and administratively efficient. It is important to organise yourself and others, plan ahead, manage your time and have the discipline to meet deadlines and statutory commitments.
Many people who make a success of starting their own business have the backing of their family - even if this is only in the form of moral support. You may frequently be under pressure, often working long hours. Your family must be prepared for the impact this can have on family life. Also ensure that your family are aware of and can deal with the risks and pressures that small-business ownership can bring, especially in terms of lower income in the initial stages and maybe even the implications of the business failing.
Hints and tips
- Carry out an honest assessment of your skills and abilities.
- Get advice about your business idea, and your own capabilities, from an experienced business adviser.
- Talk to your family and consider whether you can face the pressures involved in running a business.
- Attend a business start-up training course.