From researching your competitors to the structure of your company, our experts advise on how to make the transition to being your own boss
Thoroughly research your business idea
Whether you’ve discovered a gap in the market or are plotting to turn that passion for knitting into a business venture, those thinking of launching a business should start by thoroughly researching the sector they’re looking to enter.
Key to this is checking out the competition. Clive Lewis, a chartered accountant and head of enterprise at the Institute of Chartered Accountants in England and Wales, says you need to consider four key points: “Who are your competitors? Where are they? What do they offer customers? How will your offer compare in terms of price, content and convenience?” Armed with this information, he advises creating a marketing plan demonstrating how you will win customers, what advertising and promotion you will need to undertake, and including a sales forecast for at least the first two years.
If your product is geared towards customers, it’s important to test the waters before launch. Lewis says this approach which, for instance could be done via a market stall or pop up – “will also give you a better understanding of your target market and anticipated demand”.
How can I build customers?
There’s plenty of ways to find new customers but Jim Duffy, founder and chief executive of Entrepreneurial Spark, a free business accelerator for early stage and growing businesses, suggests building a database by adding a sign-up form for say, newsletters, on your website. However, he warns not to bombard potential customers with too many emails. “Build the relationship, be valuable to them, and then they will see you as the go-to person for your sector and might even buy your product.”
Being active on LinkedIn and finding potential clients through that network is probably one of the most effective ways of building a client list, advises Dasha Amrom, founder and managing director of Career Coaching Ventures. “Once you have identified the suitability of a particular individual as a potential client, then it makes sense to message them with a brief note to introduce yourself – a great way to start a conversation.”
Limited company or sole trader?
The decision to set up as a limited company or a sole trader is a complex debate. Andrew Chamberlain, deputy director of policy for the Association of Independent Professionals and the Self-Employed (IPSE) says: “A limited company gives you more flexibility in terms of how you retain money in the business, and it provides limited liability – in other words, if the company gets into financial trouble it can be contained. However, there are some responsibilities that go with being a company director and you’ll probably want to take on an accountant, which carries a cost.”
As for the sole trader option, Chamberlain notes that is a good choice if your clients “don’t mind working with an unincorporated business and your activities aren’t likely to put your personal assets at risk”.
Lewis points out that there are changes set to take place affecting the taxation of dividends on 6 April 2016. “This means that to trade through a limited company will only be tax-efficient if the company is making approaching £40,000 profit. Otherwise trade as a sole trader.”
Overcoming loneliness
If you’ve spent your entire working life in an office environment, the transition to working for yourself will seem like a large leap, says Chamberlain. However, in a global digital age, this is easy to overcome by joining online communities like Workingmums and LinkedIn groups, he suggests. Freelancers can also join one of the growing number of co-working spaces, which provide all opportunities to network and collaborate with fellow small businesses.
“Look out for where other people looking to start a business hang out,” says Dawn Whiteley, chief executive at the National Enterprise Network. “It can be lonely starting up on your own and that’s definitely when the lack of confidence can kick in, but if you build a network of like-minded people who are sharing the same highs and lows it can definitely help. They don’t have to be in the same sector as you, the very fact they’ll be facing some of the same issues will be enough for you to have empathy with each other.”
What about sickness pay?
One of the trade-offs of working for yourself is unfortunately that you have to be prepared for ups and downs in your income, warns Chamberlain. However, he says that the recently published review of self employment by the Department of Business could lead to greater security for the self-employed.
While Whiteley advocates taking out some sort of sickness insurance, Lewis suggests building up a cash surplus to protect against no income during sickness and gaps in the workload.
The pros and cons to running your own business
Being self-employed brings you freedom, builds your confidence, makes you feel proud of yourself and your achievements and overall is very worth it, says Amrom.
Many surveys show that freelancers tend to be much happier than their employed counterparts. Chamberlain says IPSE surveys have shown that nine in 10 freelancers are satisfied – or very satisfied – with what they do and have no intention of returning to working to someone else. “We’ve found that the vast majority do it so they can have more control over the hours they work and the clients they work with – and get a better work-life balance,” he adds.
However, he flags up several downsides to being self-employed. “You’re entitled to less maternity pay than an employee, you don’t get automatically enrolled into a pension, and it can be harder to get a mortgage (particularly as a new freelancer).”
[Source:- Gurdian]
