Have you been considering starting your own company?
Going solo for a lifestyle business? Or perhaps getting together with a few trusted business partners to begin your quest for global domination with a product that fills a gap? Maybe you’ve started already but you’re wondering whether you’ve made the right decision.
Many people ask me, “What is it like being your own boss?” so I am writing this blog post to give you my insights after 6 years of running 2 companies of my own after years of scaling previous companies that benefited other owners/shareholders. The first only lasted a year and my 2nd company is still running today – it’s called DADD.tv, an innovation and digital marketing company. (DADD is an acronym for Delivering Ambitious Diverse Developments.)
First, the positives of starting your own company
When you start your own (services) company, you are:
- free to do what you like (a double edged sword) because you are answerable only to yourself. This does require you to be disciplined with will power. I have a stack of potential distractions around me, like a music studio, projection facilities and a fridge full of refreshments, but I have no problem ignoring them all. I sometimes use them as a reward for completing a goal. Of course, if you’re selling and delivering on what you’ve sold, you need to balance business development, project time, admin and learning time.
- in control of your schedule. I can’t tell you how amazing this is. I can spend more time with my children, stay fit easier and cook from scratch more. Some days I hike in the sunshine with friends and customers. There’s no rule that says you have to meet a customer in your office or coffee shop. Mix it with exercise and the great outdoors and the endorphins will stimulate your problem solving skills. Yes of course, some days I work 20 hours straight if customer deadlines demand it. I meet customers when they want to meet and attend conferences that are at a fixed time. In the evenings, my wife is often out rehearsing for a play so I work then, when the kids are in bed.
- able to commute the short distance from your bed to wherever you’ve set your office to be. In my case, I hand built a garden office to accommodate all my business needs a year ago (every Friday for a few months). Before that, I worked primarily at customer sites or from a spare room. As a stark contrast, I used to spend 3.5 hours a day on a train, which wasted 32 days a year.
- you are far more efficient. Since my company is only paid if my customers are happy, everything my company delivers is focussed around that simple goal. I don’t spend hours in meetings about meetings, or turn up for meetings that half the room are late arriving to or only paying half attention.
- pay less tax. Depending on how you set up your company and what your income and expenses look like, it is quite possible you’ll reduce your tax burden and be able to buy some of the things you would have paid for out of net income (like a laptop) as a business expense. This together with paying a mix between salary and dividends gives you control of when you take money out of your business. Without a doubt, unless you love admin and accounts, I’d say spending £1200 per year with a good accountant like mine, Steve Francis (www.srfrancis.co.uk) is well worth the stress relief – you simply maintain a bookeeping spreadsheet of your bank ins and outs with your sales order book, mileage and expenses. Let the accountant handle your VAT, PAYE, personal tax, end of year accounts etc
- life is cheaper all round. Since you typically commute less, you aren’t buying a coffee enroute, hanging around after work for more drinks, or spending spontaneously for lunch (£10 in Pret a Manger is easily done).
End result? These positives generally result in less stress, a ‘job’ you enjoy (because you chose it) and therefore a happy, healthy life.
OK, it all sounds fantastic doesn’t it…
Where’s the catch, what are the negatives of starting your own company?
There are many pitfalls and many (most) companies still fold within a year. With so many people beginning their potential dream adventure using a pot of money from redundancy payouts, or shares sales, or scrimping, you may be surprised so many fail. Here’s why:
- cash buffer. Many people don’t give themselves enough months buffer of cash to cover all their household expenses, mortgage payments etc. I’d recommend you have 6 months money put aside. Minimum. You need to consider that not only do you have to find and win work from customers, you typically have to allow at least 30 days for them to pay. One of my clients took 5 months to pay and they were a massive blue chip company, where money was not the issue for them…they were changing their accounts system. We ended up having to collect the payment in person, by VISA card using iZettle. My first business almost lost us our house. We were within 2 months of not being able to pay our mortgage. Luckily, I am a risk hedger, so I had another fledgling business with committed consultancy and paid conference circuit work which turned things around. So cut your costs to a minimum until your cashflow covers your base monthly costs. Where possible, ask customers to pay a deposit or 50% of a project quote up front. This protects you and tests your customers can pay.
- you can’t find enough customers. Sometimes, you’re lucky enough at the start to have a couple of friendly clients ready for your service, before you leave your old job. However, you have to know the market demand is there and you can be competitive at the price you’re willing to work for. For my company, I use a mix of networking events, digital marketing and affiliate referrals to generate enough sales pipeline. DADD charges different rates for different types of work that fit with customer expectations. If you’re not the natural salesperson, you may need a suitable business partner who is.
- over committing and under delivering. Your quest in your own valuable business, is to delight your customers so they come back for more. In corporates and government companies, you may have become used to slipped deadlines and mediocre service. You have to think like Amazon. Offer a great customer service by delivering just before your committed deadline and your customers will say nice things about you as well as give you more business.
- product development. When you’re in an established company, you typically have access to a team, an allocated budget for capital expenditure on product development and the ability to raise finance against the business assets. In your own venture, you have to find time to improve your product/service line with minimal over engineering. Build it, test it with customers then tweak and repeat!
- focus! When you are in control of your own destiny you have to really stay focus and keeping things as simple as possible so you don’t struggle to juggle.
- regulation and liabilities. It’s very easy to miss new legislation that’s around the corner and might kill your business. For instance, there’s a new General Data Protection Regulation that is going live in May 2018. It comes with heavy financial penalties for abuse. One of my customers AssureData.eu is offering training to help you avoid such cost risks. You can also take out liability insurance and key man insurance to protect you from customers suing you or illness preventing you from working.
Conclusion. Should I stay or should I go, go, GO!
I’d say without hesitation that running your own business is an exciting journey to go on. One everyone should try. Whether or not it’s for you depends how much of a risk taker you are and whether your business idea is well thought out. As you’ve read, there are lots of pros and cons. What’s the worst that can happen? You could try and fail. Failure teaches us everything in life. We learn to walk by falling over as toddlers. We have relationships that failed. But you still try again, don’t you?
Bottom line. Life is for living not complaining. So I say, go, go, GO! Be BRAVE, be BOLD and start your BUSINESS.