10 tips to starting your own business

You are at a dinner party with good friends, it's getting late, you have all had a few drinks and the subject turns to - what are we doing with our lives.

You find yourself saying "Wouldn't it be great to break out of the commuting rat-race and start a business. What business - your friends ask? You start talking about "inter-galactic virtual holidays". Your astounded friends, say, but you have never been further than the South of France on holiday. Whilst, that is true, last week you were chatting to this inventor who was enthusing about his project for using hyper-inverted vision to link holiday resorts around the UK with locations in different galaxies and allowing holidaymakers to experience life in different worlds. (Ok it's late and it seemed like a good idea.) It is then that you realise that you really do want to start a business and then all these ideas and plans start hitting you. The rest of the evening turns into a slightly drunken debate on the pro's a con's of running your own business.

Here are 10 tips to help you turn your initial idea into a business.

1. Next morning - Can you a) remember what the idea was b) remember if you discussed it with your friends last night and c) remember what their reactions were?
   
   
2. Consider what your personal goals and objectives are, and how this new business venture will fit into these plans. Will this new venture mean you needing to work long hours and give up your current job?
   
   
3. Research your ideas, talk to people whose opinions you value. Talk to potential customers about their needs and think through how you could do a better job. Talk to possible suppliers and see how responsive they are to new ideas, and how keen they are for new business.
   
   
4. Plan, plan and plan again. Plan your product line. Plan your marketing and plan your finances. Over 50% of new businesses fail because of lack of funding.
   
   
5. Don't be afraid to admit you are wrong once in a while. It could save you a lot of time and money.
   
   
6. Cost everything you intend to do, and then prepare a financial budget showing your projected income and expenditure over the next twelve months. Always be cautious in planning the amount of income or sales you expect to generate. On the cost side, make allowances for extra costs. There will always be costs that you hadn't planned for. It is also important to prepare a cash flow forecast to identify how much finance you will need and when you expect to need it.
   
   
7. Budgets are only of any value if you compare them with what has actually happened. You will then need to revise your budgets to reflect any significant changes that have taken place. Many businesses fail because the owners have lost track of the amount they have spent and have no contingency plans.
   
   
8. If you giving your customers credit then assume they will pay late. Wherever possible, time your invoices to reach your customer before the end of the month. If the customer is a good payer, he will pay you at the end of the following month. A delay in sending an invoice may result in your being paid a month later.
   
   
9. Make sure you register your business with the tax authorities. This should be done in a timely manner, as there are fines for late registration.
   
   
10. Keep on top of the paperwork. You should have daily routines to ensure that you are running your business and it is not the business that is running you.
    
    

PS. Business should be exciting and fun. If you do not relish the idea of running your own business then you should seriously question your motives for starting the venture.

As professional accountants we have experience in advising on every aspect in starting and managing a business. If you would like any help in setting up your business then please contact us.