Starting a business can be an amazing time. The excitement of new opportunities and that fabulous feeling when you land a big new contract are unrivalled. However, it’s a sad fact that most businesses fail in their first year or two - so by getting through this challenging period you can dramatically increase your chances of success. So how do you do it?
Try to minimise the ‘feast and famine’ cycle
Many one-person businesses suffer from this phenomenon, caused simply by a lack of capacity for business development. You win a contract; work flat out on it for three months; get paid and then… Nothing. And you’ve been so busy doing the work that you haven’t had any time to line up new customers or source some new leads. Given it can be weeks or even months before a new lead can provide you with any work, you’re now faced with the prospect of a difficult fallow period and possibly a rapidly dwindling bank balance.
The best way to avoid these problems is to set aside a dedicated time every week for business development. This could be anything from emailing prospects to attending networking events - anything to keep your pipeline full of potential work opportunities.
Don’t fall into the ‘I’m a business now’ trap
When you start your own business the only thing that’s really changed is your business cards. Do you need to rent a desk or office or can you work from home until the business is more established? Do you really need that plaque to go on your wall or could that money be used better elsewhere?
Being your own business cannot be improved by unnecessary physical ‘accouterments’, so think carefully about any purchases you think you need to make because you’re now ‘a business’.
Don’t leave the ‘legal stuff’ to chance
Some businesses fall over simply because their founder was so busy ‘being the business’ they forgot the legal fundamentals. Get set up as a limited company straight away - this can be done online quickly and cheaply. This will provide legal separation between you as an individual and your business, so should you go under with a long line of creditors you only stand to lose what you invested in the first place - not your house or your car, for instance.
Secondly, get contracts in place for all your work. These will vary depending on the kind of work you do, but standard pro formas can be found online easily. These can protect things like intellectual property and usage rights to your work.
Lastly, get insurance. In many cases this is legally required and many business owners simply don’t realise until it’s too late!
Blog supplied by Darren Fell of small-business tax specialists Crunch Accounting.