Starting Up A Business

Different approaches to starting up your own business

Every year, thousands of people decide to set up their own business.
This module looks at why you might opt to run your own business and
different ways of making the move.
It considers the positive and negative aspects of each approach, and tells
you where you can find out more.

A good business idea

A good business idea could be an invention, a new product or service, or an
original idea or solution to an everyday problem. It might also be:

A gap in the market that you can fill

A business related to the work you do already

An interest or hobby that you can turn into a business

Whatever your idea is, you need to be sure that it fits with your needs as
an individual, as well as being a viable business proposition.

Questions to ask yourself

What is it that you will personally bring to the business in

terms of relevant experience and expertise?

Is there a market - a need for the idea, and customers

who will pay for it?

How big is the market, and how will you reach it?

Who will be your main competitors?

What is special about your idea, making it different from

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similar products or services already out there?

How will you fund your idea?

What might go wrong?

For information on turning your answers to these questions into key

documents for your business, see the modules on how to prepare a
business plan and write a marketing plan.

Other sources of help

You can get free professional help from your local

enterprise agency - find your local enterprise agency on the

National Federation of Enterprise Agencies website
Discuss your ideas with friends and colleagues,

particularly those who know about the business

Help for people under 30

Help with setting up your own business is available from

the Shell LiveWIRE scheme.

Find out about the Shell LiveWIRE scheme on the Shell LiveWIRE
website

If you have a good idea for a business but cant get the funding,
the Princes Trust scheme could help you by offering a low interest
loan, a grant or a mentor.
Find out about the Princes Trust scheme on the Princes Trust
website

A tried and tested business model

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Some self-starters choose a well-trodden path - such as buying an

existing business or rights to a franchise - which can carry fewer risks
than going it alone.
Advantages

It is usually easier to get finance.

A market for the product or service will have already been
demonstrated.

A business plan and marketing method will be in place.

You should have valuable experience to draw on.

Many of the problems will already have been discovered

and solved.

A franchise comes with financial support too.

Disadvantages

Some businesses that are up for sale may be experiencing

difficulties.
Make sure you fully understand the reasons for selling, as you may
need to invest quite a bit more on top of the purchase price to give
it the best chance of success.

The rights to a franchise or to sell particular products or

services may be expensive.

With a franchise, there may be a particular way to run

the business that you have to stick with.

For more details of acquiring a going concern, see the module on how
to buy an existing business.
For more on franchises, see the module on how to buy a franchise.

A specific business opportunity

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Sometimes the possibility of owning your own business can come as a

complete surprise.
Perhaps you are offered the opportunity to buy out your employer, or
take on a family business.
Opportunities like these are like any other business start-up.
You still need lots of personal commitment, you may need to put your own
money on the line, and you'll need to do some careful assessment to make
sure that the business really is viable.
Advantages

Development, planning and market testing should already

be in place.

There may be established customers, a reliable income, a

reputation to capitalise and build on, and a network of
useful contacts.

You probably already have expertise in the product or

service and a good understanding of the business you're taking on.

Disadvantages

You may be taking on someone else's problems when you

take on the business.
Ask yourself if there are problems with the business, and if so, can
you solve them?

If you are buying out your employer, you may lose support
services that you take for granted now.
You won't just be responsible for your core role, but for
everything else as well, such as accounting, staff management and
payroll.

More help
You can get free professional help from your local enterprise agency.

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Find your local enterprise agency on the National Federation of

Enterprise Agencies website.
You can find your local Business Link through our Contacts Directory.
Talk to people already in the business about your plans and ideas.
What can they pass on from their own experiences?

A business with social aims

You may want to start a business that isn't just for profit but also has a
social purpose.
For example, you might want to provide a service for a disadvantaged
group in your local community, or help improve the local environment.
Although any business can have social objectives, you might want to
consider setting up a specific type of business known as a social
enterprise.
Although a social enterprise is run as a business, and often operates
under the same financial and profit-driven pressures, it also aims to
provide a clear social benefit.
The profits are mostly reinvested, or used to support its social aims,
rather than being paid to the owners of the business.
Advantages

You earn a living doing something you feel is worthwhile.

As your business grows and matures, your community or

beneficiary will also benefit.

Customers may be more willing to buy from a business

that supports a good cause.

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It may be easier to attract and motivate employees (or

even volunteers) to work in a social enterprise.

You may qualify for a grant, or be able to raise finance

from people or organisations that share your social aims.

Disadvantages

Making profits and achieving your social aims can

sometimes conflict with each other. You may have to
make difficult choices.

Although you can earn a reasonable income working for a

social enterprise, you will not make your fortune - most of the
surplus profits are put back into the business or go to support its
aims.

See the module on how to set up a social enterprise.

A change in circumstances
A major life change can often enable you - or push you - to set up your
own business.
Maybe a dramatic personal event kick-starts you into action, or your job
situation means that now is the time to take the plunge.
Such changes might include:

Unemployment

Redundancy

A change of family circumstances

Coming into money

Advantages

A change in your circumstances might be an opportunity

to start again or do something you've always wanted to do.
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Redundancy payments or receiving a lump sum of money

can provide an opportunity to invest in the business.

At its best, being your own boss can give you the
flexibility to work around family commitments.

Disadvantages

Major life-changing events can be very stressful.

It maybe unwise to make further big decisions at times of personal
upheaval.

Starting your own business is unlikely to provide a speedy

return on your investment and you should be prepared for a long
haul.

In the early stages especially, running your own business

can mean putting in long hours and making sacrifices elsewhere in
your personal life.

Starting a business when you're unemployed

If you're on jobseeker's allowance and want to get back into employment
by starting your own business, find out how the New Deal can help you by
calling the New Deal helpline on Tel 0845 606 2626.
To check what would happen to any benefits you may be receiving if you
start a business, you can find out where you stand at your local Jobcentre
Plus or Social Security Office.
Try not to be put off - there are many schemes designed to help people
on benefits start up their own business.
You can find out about local programmes through your nearest Jobcentre
Plus.
Find your nearest Jobcentre Plus office by entering your postcode at the
Jobcentre Plus website.
You may also be entitled to Working Tax Credits.

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These are payments to top up the earnings of working people on low

incomes, including the self-employed.
You can find out about the Working Tax Credit at the HM Revenue &
Customs (HMRC) website.

Taking control and changing your lifestyle

For many people, the biggest attraction of setting up a business is the
independence provided by being your own boss and the chance to have the
lifestyle you want.
Advantages

Starting a business can offer a career with built-in

independence and flexibility.

Being your own boss can give you the choice to work more
convenient hours - such as working around your children's school
hours and holidays.

You will be able to choose to do some professional

development or training.

You will be the one in the driving seat, making the

decisions that enable you to lead your chosen lifestyle.

If your business takes off, the payoff in financial and

lifestyle terms can be huge.

Disadvantages

You may find that you have to work longer hours.

You may find it difficult to separate work and home life,

especially if you run the business from home and this can put extra
demands on your family.

Some business owners suffer stress when things are not

going so well.

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You should be prepared for the loss of perks such as

pension schemes, holiday pay and sick leave.

It's quite common to have financial difficulties, especially

when you're starting up.

Going into business full time

The kind of business you've chosen - or your individual circumstances may mean that you want to take the plunge and jump straight in full time.
Advantages

You can devote all your time and enthusiasm to your

business.

You can react to new developments as they arise.

If your business depends on a gap in the market or a new

idea, time will be of the essence.

Disadvantages

You will have to manage without an income while your

business gets off the ground.

If you decide to go into business full time you have a few options to help
you over the early days:

Live off your spouse or partner's income - however, it can

be hard to live off one salary if you've been running the household
on two.

Use your savings - if you've been putting money aside for

a rainy day, this could be it. Ask yourself: if you have enough to
cover your living expenses and fund your business? For how long?
Will you have anything to fall back on if your business fails?

Get a loan - banks will often help new businesses with a

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loan. However, they can be inflexible. You may have to pay back the
loan immediately if your business fails, and there will be expensive
penalties if you don't make agreed repayments.

Use your home as capital - if you have capital in your

house, you could use it as security. However this is risky, your
house may drop in value and if you cannot keep up repayments, you
risk losing it.

Borrow money from family or friends - you can save a

lot of money if your friends and family don't charge you
interest. But if your business doesn't work out, it could put a big
strain on your relationship with them. For practical tips, see our
guide on loans from friends and family.

Going into business part time

If your business allows, you could decide to work on it part time, fitting it
in with your current job or other responsibilities.
Then, when the business is robust enough or circumstances change, you
can move over to it entirely.
Advantages

You can still earn an income while you're getting your new
business off the ground.

Technology such as answerphones, the Internet and email

make it possible to communicate out of hours when you're not
available in person because you're doing your other job.

It can make it easier for you to juggle your other

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committments - such as childcare - by allowing you to choose when

you work.
Disadvantages

It can be difficult to manage the extra hours you need to

put in.

Putting in very long hours can be stressful and tiring.

There won't be time for much else.

It could take much longer for your new business to take

off.

You'll have to pay tax on both incomes if you continue

with your other job.

Many people who set up their own business decide to work on a part-time
basis to enable them to balance their home and working obligations.
Some people decide that the safest option is to continue with their current
job setting up their business.
Legally you don't have to tell your employer that you are setting up a
business, although there may be a clause in your contract preventing you
from doing other work.
You might want to ask your employer for more flexible working
arrangements.
These could involve reducing or re-arranging your existing working hours.
Related web sites you might find useful
Find your local enterprise agency on the National Federation of
Enterprise Agencies website
http://www.nfea.com/
Download the guide to defining the purpose of your business from the
smallbusinessjourney website (PDF)

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http://www.smallbusinessjourney.com/files/pdf/411_002_002_DefinePur
pose_April.pdf
Find out about the Prince's Trust scheme on the Prince's Trust website
http://www.princes-trust.org.uk/Main%20Site%20v2/14-30%20and
%20need%20help/start%20up%20in%20business.asp
Find out about the Shell LiveWIRE scheme on the Shell LiveWIRE
website
http://www.shell-livewire.org/
Read guidelines on choosing a franchise on the British Franchise
Association website
http://www.british-franchise.org/choosing.asp
Search for businesses for sale on the Daltons Business website
http://www.daltonsbusiness.com/AdvancedSearch.asp
Read about social enterprises on the Social Enterprise Coalition website
http://www.socialenterprise.org.uk/
Find information about social enterprises on the Small Business Service
website
http://www.sbs.gov.uk/socialenterprise
Search for grants for social enterprises on the governmentfunding.org.uk
website
http://www.governmentfunding.org.uk/
Find your nearest Jobcentre Plus on the Jobcentre Plus website
http://www.jobcentreplus.gov.uk/cms.asp?
Page=/Home/AboutUs/OurOffices
Find out about the Working Tax Credit at the HM Revenue & Customs
(HMRC) website

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https://www.taxcredits.inlandrevenue.gov.uk/Qualify/WhatAreTaxCredit
s.aspx
Find out about business support for women in your area on the Prowess
website
http://www.prowess.org.uk/
Part time
Full time
Usaha dari awal, kita jadi bos
Starting a business when you're unemployed
A change in circumstances (pake pegawai pensiunan)
A tried and tested business model
A business with social aims
A specific business opportunity

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