Your attitude and know-how plays a crucial role in the growth of your business. This means being honest about a range of issues - this means your personal qualities, knowledge and your financial status that you can introduce in your new business. Dedication and time is required in setting up your own enterprise. Here is a list of the challenges you may need to think about. Another essential way to discovering about the day-to-day realities of running a business is to engage with the people who are in business already.Support of family and friends, the commitment and drive as well as the perseverance will highly benefit you when transforming your idea into reality and will be vital during your initial days.

Do you have what it takes to set up a new business? This guide will help you decide if you do. In addition, it provides an insight at the day-to-day reality of setting up a business and highlights the know-how and qualities your required:

• Personal dedication - the physical and emotional sacrifice of starting up in business should not be underestimated. Setting up a business is a life-changing event that requires you to put in long hours of hard work, especially during the initial stages.
• Financial risk - there could be a number of times where your business may face financial uncertainty that could have a knock-on effect for both you and your family. You may have had personal savings invested or used as security your family home and in the worst case scenario you risk having your investment or even your house lost.
• Company perks - starting up your own business enterprise means that you can no longer take advantage of the usual benefits supplied with a permanent job e.g. loss of “safety net” benefits such as sick pay, paid holidays, pension rights and other.
• Pressure on close family and friends - their support plays an important role and they should be aware the effect of setting up a business will have on your life and that they support you all the way.
• Isolation - it can be a satisfying experience being your own boss but shouldering all the responsibility for the development of the enterprise can become lonely.

Research has proven that there are certain personal and business qualities commonly found amongst business people.

A typical businessman will posses the following key qualities:

• Self-confidence -passion and self-belief about your commodity or service - your ideas should be won over by your enthusiasm.
• Self-determination- rather than based upon external factors or other people’s action, you should have the belief that the outcome of events are down to your own actions.
• Being a self-starter - the strength and ability to develop your ideas, take the initiative and work independently.
• Judgement - as well as bearing in mind your own objectives for the business, you should also be open-minded when listening and initiating in other people’s advice.
• Commitment -willingness to dedicate yourself through long hours and loss of recreation and leisure time.
• Perseverance- despite setbacks, you should still be able to continue even during financial risk and exposure to risk.
• Initiative - the power to be resourceful and productive, rather than adopting a passive “wait and see” approach.

As a business owner you need a core know-how to execute your ideas to make certain that your new business survives in the long term. You should begin by assessing your own know-how and understanding. This will help you decide on whether you need to learn new know-how or draw on outside help by recruiting, delegating or outsourcing. The key business skill areas:

• Financial management- which includes having a good grasp of credit-management, cash flow planning and maintaining good relationships with accountant and bank.
• Commodity development - The ability to identify the people, materials and processes required to achieve and make long-term plans for commodity development. Before making such plans, you will need to be familiar with your competition and your customers’ needs.
• People management - This includes managing recruitment, resolving disputes, motivating staff and managing training. Good people management will help employees to work together as a well-functioning team.
• Business planning - The ability to assess the strengths and weaknesses of your business and plan accordingly.
• Marketing know-how - A sound marketing approach will help you set up and oversee sales and marketing operations, analyse markets, identify selling points for your commodity and following these through to market.
• Customer/supplier relationship management - The ability to identify suppliers and positively manage your relationship with them.
• Sales know-how - Without sales your business cannot survive and grow. You need to be able to identify potential customers and their individual needs, explain your goods and services effectively to them and convert these potential customers into clients.

Comment:

1. The bottom line: Securing the right financing for your new business is crucial, as there is no guarantee that your business will make money for you straight away. You should aim to have sufficient reserves to last you for several months without an income from your business. You need to be honest about your start-up capital reserves. If there is not enough money to see you through until your business begins to make money, then you are not ready to start up. Being realistic at this stage is likely to save you a lot of pain. If you decide to launch your new business without enough funding behind it, keeping it afloat will prove extremely difficult. There are many different sources of potential start-up funding, including bank loans, overdrafts and private loans.

Tags: entrepreneurship

Your required to research your target market and your competitors carefully.

A common misconception is that businessmen who fail simply because they lacked sufficient funding or did not put together the right team. In many cases, new businesses fail because they have not spent enough time on researching their business idea and its financial viability in the market.

There are particular criteria you can use to establish this:

• Does your product or service satisfy or create a market need?
• Can you identify the potential customers?
• Will your product or service outlive any passing trends or capitalise on the trend before it dies away?
• Is your product or service distinct, unique or superior to those offered by competitors?
• What competition will your product or service face - locally, nationally and globally?
• Is the product safe?
• Does your product or service comply with relevant laws and regulations?
• Can you sell the product or service at a price that will give you the sufficient profit?

Market research can play a vital role in answering many of these questions and increasing your chances of growth.

How much research you go through will depend on the time and funds you have available. You could:

• informally canvass the opinion of friends and family
• talk to the industry contacts and colleagues
• survey the public about whether they would use your product or service
• ask the customers of the competing product and what improvements they would like to see
• set up focus groups to test out your product or service
• examine what your competitors are doing
• monitor what has and hasn’t worked in your industry or market niche
• study wider economic and demographic data

The more information you have, the better it will be for you and your business idea growth.

Tags: marketing

Every year, thousands of people choose to set up their own enterprise. This guide looks at why you might decide to run your own enterprise and the different ways of making the move. It considers the positive and negative aspects of each approach.

A good business idea

A good business idea could be an innovation and an invitation, a new product or service, or an original idea or solution to a day-to-day problem. It might also be:

• a gap in the market that you can fill up
• a business related to the work your doing already
• an hobby or an interest that you can turn into a business

Whatever your idea is, you need to be aware that it fits with your needs as an individual, as well as being a viable business proposition. Questions to ask yourself are:

• What is it that you will bring to the business in terms of relevant experience and expertise?
• Is there a market – the need for an idea and the reliable customers willing to buy?
• How big is the market, and how will you reach it?
• Who are your main competitors?
• What is special about your idea and what makes it different from similar products or services already out there?
• How will you fund your business or the idea?
• What might go wrong?

Tested business model

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.

Benefits:

• It is usually simpler 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 experienced before may have already been discovered and resolved.
• A franchise comes with financial support too.

Disadvantages:

• Some of the 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 growth.
• 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.

A surprise business opportunity

Sometimes the possibility of owning your own enterprise 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-ups. You still need lots of personal commitment and you may need to put your own money on the line. You also need to carefully assess the business to make sure it is viable.

Benefits:

• 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 commodity 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.

A business with social objectives

You may want to set up a business that isn’t only made 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 perhaps improve the local environment.

Although any business can include social objectives, you may want to consider setting up a specific type of business known as a social enterprise. Even though a social enterprise is run as a business, and often operates under the same financial and profit-driven pressures, it also aims to offer 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.

Benefits:

• You earn a living by doing something you believe is worthwhile.
• As your business develops and matures, your community or beneficiary will also benefit.
• Customers may be more willing to buy from a business that supports a good cause.
• It may be easier to motivate and attract 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 who share the same social aims.

Disadvantages:

• Making profits and attaining 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.

A dramatic personal event

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

• redundancy
• unemployment
• a change of family circumstances
• coming into money

Benefits:

• A change in your circumstances might be a chance for you to start over or do something you’ve always wanted to do.
• Redundancy payments or receiving a lump sum of money can offer you the opportunity to invest in a business.
• At its best, being your own boss can give you the flexibility to work around any family commitments.

Disadvantages:

• Major life-changing events can be very stressful and it may be unwise to make any further big decisions at times of personal upheaval.
• Starting your own business is unlikely to offer you a speedy return on your investment and you should be prepared for a long haul.
• In the initial stages especially, running your own business can mean putting in long hours and making sacrifices elsewhere in your personal life.

Taking control of your life

For many individuals, the biggest attraction of starting up a business is the independence provided by being your own boss and the opportunity to create the lifestyle you look for.

Benefits:

• Setting-up an enterprise can offer a career with built-in independence and flexibility.
• Being your own superior 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 decide on doing some professional development or training.
• You will be the one behind the wheel, making the choices that will enable you to lead your chosen lifestyle.
• If your enterprise takes off, the payoff in financial and lifestyle terms can be huge.

Disadvantages:

• You may find yourself working longer hours.
• You may find it difficult to separate home life from your work life, especially if you run the business from home, and this can put extra demands on your family and friends.
• Some business owners suffer stress when things are not going so well.
• 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 to set up your business.

Tags: startups

Taking on a franchise is an option worth considering for anyone who wants to run a business but doesn’t have a specific business idea or prefers the security provided by an established concept. The right franchise can give you a head start. Instead of setting up a business from scratch, you use a proven business idea. Typically, you trade under the brand name of the business offering you the franchise, and they also give you help and support.

Franchises have a much lower failure rate than completely new businesses. But it isn’t all plain sailing. Some franchises are better than others. And some people find that running a franchise just isn’t for them.

What is franchising?

The term franchising can describe some very different business arrangements. It is important to understand exactly what you’re being offered:

• Business format franchise: This is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea - often in a specific geographical area. The franchisee sells the franchisor’s commodity or services, trades under the franchisor’s trade mark or trade name and benefits from the franchisor’s help and support. In return, the franchisee usually pays an initial fee to the franchisor and then a percentage royalty on sales. The franchisee owns the outlet they run. But the franchisor keeps control over how commodities are marketed and sold and how their business idea is used.
• Distributorship and dealership - you sell the commodity but don’t usually trade under the franchise name. You have more freedom over how you run the business.
• Agency - you sell goods or services on behalf of the supplier.
• Licensee - you have a licence giving you the right to make and sell the licensor’s commodity. There are usually no extra restrictions on how you run your business.
• Multi-level marketing: Some businesses offer franchises that are really multi-level marketing. Self-employed distributors sell goods on a manufacturer’s behalf. You get commission on any sales you make, and also on sales made by other distributors you recruit. Be aware that some multi-level marketing schemes may be dishonest or illegal.

Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own enterprise without starting from scratch. But there are also a number of drawbacks.

Benefits:

• Your business is based on a proven idea. You can check how growthful other franchises are before committing yourself.
• You can use a recognised brand name and trade marks. You profit from any advertising or promotion by the owner of the franchise - the “franchisor”.
• The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
• You usually have exclusive rights in your territory. The franchisor won’t sell any other franchises in the same region.
• Financing the business may be easier. Banks are at times more likely to lend money to buy a franchise with a good reputation.
• Risk is reduced and is shared by the franchisor.
• If you have an existing customer base you will not have to invest time looking to set one up.
• Relationships with suppliers have already been established. 

Disadvantages:

• Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing royalties and you may have to agree to buy commodities from the franchisor.
• The franchise agreement usually includes restrictions on how you run the business. You might not be able to make changes to suit your local market.
• The franchisor might go out of business, or change the way they do things.
• Other franchisees could give the brand a bad reputation.
• You may find it tricky to sell your franchise - you can only sell it to someone approved by the franchisor.
• Reduced risk means you might not generate large profits.

You decide

As with any new business venture, you need to think about carefully whether you have got the right know-how and attitude to run a growthful franchise. Analysing your own temperament can also help you decide which type of franchise would be right for you.

Assess yourself:

• You must be prepared to sell. A franchise gives you a business blueprint - but it won’t automatically give you customers.
• Do you have the necessary stamina?
• Running your own enterprise can be stressful. Think how you react to pressure.
• You may be setting up a business because you want to be your own boss. If that is the case, would you be happy with the restrictions imposed by a franchise arrangement?
• On the other hand, you may decide to limit your risk. You might be more at ease with a franchise than starting a new business from scratch.

The right franchise for you:

• Do you like office work? Or would you favor a business that involves physical labour or using a particular skill?
• Are you content working on your own? Or would you be good at recruiting, training and managing employees?
• Do you prefer dealing with members of the public? Or would you like a franchise where you sell to business customers?
• Are you weak in particular business know-how such as finance? Can you locate a franchise that offers the support you need in those areas?

Find out about possible franchises

You can find out about possible franchise opportunities from a range of sources. A helpful starting point is the British Franchise Association (BFA). As well as offering guidance and seminars on franchising, it also provides details of members who may be offering new franchises and existing franchises for resale.

Franchises are advertised and written about in a variety of national newspapers and in trade publications such as Dalton’s Weekly and Franchise World.

Websites can be a useful source of information on franchises. You can find other listings using a search engine and employing search terms such as franchise opportunity or franchise directory.

Attending a franchise exhibition can also be a good way of finding out what’s on offer.

But tread carefully. Advertised franchise opportunities - particularly multi-level marketing schemes - can be untried, dishonest or even illegal. Assess the franchise opportunity carefully and check if the business offering the franchise is a member of the BFA.

Assess a franchise opportunity

To assess if a franchise represents a sound business opportunity, you’ll need to consider:

• what the business is and how it operates
• the location of the franchise
• the growth of the franchise concept - the number of franchises in the UK and how financially growthful they are
• the strength of competition from other businesses in the same market sector
• how long the franchisor - the business offering the franchise - has been in business and how financially secure it is
• levels of initial and ongoing costs
• how much training and support you’ll get in setting up and running the business
• conditions and restrictions in the franchise agreement, including how long it will run and whether you’ll have the option to renew

The franchisor will probably give you an information pack but you shouldn’t just rely on this. Ask questions and look for evidence of their claims.

Visit other franchisees and talk to them. Ask the franchisor for a full list of past and present franchisees, not just the two most growthful ones.

Take advantage of other sources of information and advice. Ask your bank - many have franchising specialists. And make the most of other advisers such as Business Link, your solicitor or your accountant.

The costs of a franchise

When calculating the likely cost of a franchise, you need to take both initial and ongoing fees into account.

Initial costs:

The franchisor - the business that sells you the franchise - usually charges an up-front fee, which should be relatively low, and covers the costs of administration. Good franchisors make the most of their profits from continuing royalties.

Your largest initial costs are usually your investment in:

• premises
• equipment
• initial stock

You will need to establish a business entity. Although a franchisee holds a contractual agreement with the franchisor, each franchisee is an independent business, and it is this business entity that will enter into the franchise agreement. Your chosen business structure could be a limited company, partnership or sole trader - each of which will involve different costs - or your franchisor might have specific requirements.

Continuing costs:

You usually pay a royalty - a percentage of sales - to the franchisor. Alternatively you may pay a management fee of some kind.

Under the terms of the franchise agreement, you may have to purchase stock from the franchisor. Check what they charge. They may mark up the prices - or they may be able to offer them to you at a discount because of their purchasing power.

You also have to pay the usual business costs - for example, rent for premises, utilities or the costs of any employees you take on. Again, check if the things that you pay for through the franchisor have a realistic cost.

Check too if the agreement includes additional charges. For example, you may be required to pay for training, or to contribute to the cost of national advertising campaigns.

How to purchase a franchise

There are a number of key things you need to consider when planning to purchase a franchise. It might be worth thinking about the following:

• Assess yourself to see what kind of franchise, if any, will suit you.
• Find out what franchises are available and draw up a shortlist.
• Assess franchise opportunities carefully, ask questions and talk to other franchisees.
• When you find a business, investigate its financial prospects. Base this on a thorough research of performance figures. Include an analysis of three years’ accounts - if they have been trading for that period - and management figures.
• If you’ll need to raise bank finance, ask your bank if it will consider a loan for the type of franchise you’re considering.
• Do your own market research into business and competitors in your area.
• Draw up a business plan.
• Check the franchise agreement and get professional advice.

However, it is advisable to make sure you don’t:

• take up the first opportunity before investigating alternatives
• allow yourself to be hurried into making a decision
• pay any non-refundable deposit
• commit yourself before you’re completely satisfied
• assume a business will work in your area just because it works elsewhere
• rely on the forecasts provided by the business selling you the franchise
• sign any agreement without legal advice

Franchise agreements

The franchise agreement is crucial. Don’t sign any agreement, or pay any fees or deposit, until you have taken legal advice from a solicitor. Get a specimen contract for them to review.

Areas covered by a typical agreement:

• Term - how long does the franchise last? Will you have the option to renew it, and on what terms?
• Territory - what area does your franchise cover? Do you have exclusive rights to sell within it?
• Fees - what initial fee will you pay? What royalties will you pay on sales? Will you pay a regular management fee - and if so, what does it cover? Will you have to pay other costs? How are the costs worked out?
• Support - how much help will you get starting the business? What continuing support will you get?
• Restrictions - what restrictions are there on what you’re allowed to do and how you must run the business?
• Exit - what happens if you can’t continue in business for some reason - perhaps due to ill health? What happens if you want to sell your franchise?

Tags: franchise

Launching a small business can be risky and growth is not always guaranteed. Businesses are most vulnerable to failure during the initial years of trading, with 20 per cent of new businesses folding within their first year and 50 per cent within their first three years.

These figures should not scare you off, but should prepare you for some of the challenges businessmen face when starting a business. With hard work and an awareness of the issues, a new business can be a great growth.

This guide looks at the a large amount of common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea succeeding.

Poor market research

Research and planning are vital to ensure that your business idea is viable.

Lack of proper market research is one of the key problems for new businesses. It’s easy to get carried away with a business idea and set up a business without testing its financial viability.

Failing to share your business ideas with people you trust means that you will miss out on objective feedback. Brainstorm with other colleagues to give you a valuable perspective. Note down any good ideas you get from brainstorming and apply them when developing your business. If you want to keep your ideas confidential, think about using a non-disclosure agreement, also known as a confidentiality agreement. This will let you share your ideas with colleagues without the risk of them divulging the information.

If you do not complete adequate research, you are in danger of selling to the wrong people or of not understanding your marketplace. To avoid this:

• use information, such as free government data or your own network of contacts
• do field research to explore customers’ profiles and discover buying trends
• swap ideas with people in the similar sector

Weak financial planning

Financial planning is extremely important for most new businesses. Not enough capital, lack of a contingency plan and reluctance to seek out professional advice can all bring major problems.

Having enough capital is necessary for the survival and prosperity of your business, and is a primary indicator of your business’ health.

It is crucial to create a high-quality business plan to draw in and secure the right type and amount of funding that you require to make your business growthful. A business plan can:

• be used as a tool to structure the financial side of your business and can be updated and changed as your business grows
• keep your expectations for what can be delivered grounded

Lack of a contingency plan. Without a contingency plan you can leave yourself exposed to the unexpected. Situations beyond your control that may impact on your business and cashflow include interest rate rises, transport strikes and political instability. While your business can live on periods where there are no sales or profits, it cannot survive without cash. Building up cash reserves will assure you that you can trade effectively and develop your business.

Failing find professional advice will make any financial troubles worse. Few new business owners can maintain expertise in all areas of their business. Using an accountant or financial adviser can help you ensure you borrow and manage money cost-effectively.

Setting sights too high

It is important to make realistic forecasts about your business’ potential. Throughout the start-up phase, it can be simple to make over-optimistic forecasts, nevertheless, there can be serious consequences for your business if your projections are not realistic.

Inaccurate forecasting of market size is a widespread mistake when starting up. Cash levels can be rapidly depleted if you recruit too many people, buy unnecessary equipment or spend too much on business premises. Effective cashflow and income forecasting can help you avoid this.

Focusing on sales volume or size not profit. A frequent mistake for new businesses is to focus too much on growing the sales volume or size rather than profit. Overtrading can take place during the rapid expansion of a new business when it takes on more orders than can be supported by its working capital or net current assets. This can have serious repercussions. 

Taking your eye off the competition

During the busy start-up phase it can be easy to overlook and set aside enough time to monitor the competition. However, it’s necessary that you are ready to respond to competitors in your market place and to new developments. 

Failing to monitor your rivals will prevent you from seeing what competition or threats to your business exist in your market place.

Competition is not just another business that might take money away from you. It can be another product or service that’s being developed which you ought to be selling or looking to license before somebody else takes it up.

You can get clues to the existence of competitors from:

• advertising
• press reports
• exhibitions and trade fairs
• questionnaires
• searching on the web for similar commodities or services
• approaches reported by your customers
• flyers and marketing literature that have been sent to you - this is quite frequent if you’re on a bought-in marketing list
• planning applications and building work in progress

Failing to use information collected about your competitors will weaken your position in the market. Feed any helpful information into your marketing plan. Your marketing plan and research will help you to set realistic targets and deadlines, and allocate appropriate resources. You can then choose to focus on building relationships with your existing clients or draw in new customers. Your marketing can then be turned into sales by deciding on your sales methods.

Poor supplier and customer controls

Failing to decide on your suppliers carefully and set up satisfactory credit arrangements are widespread mistakes for new businesses. Choose carefully as your business’ profitability and reputation could be at stake.

Finding a reliable and competitively priced supplier can be fundamental to the growth of your business. This is because you rely on your suppliers to supply you with the goods and services your business needs to function. And getting the best deals can have a significant effect on your business’ profits.

When selecting your suppliers, price is an evident concern. However, other factors such as value for money, quality, reliability and service must also be taken into consideration.

Create exactly what you are looking for in a supplier. Carry out a credit check to make certain that the supplier can deliver what you need and is not about to fold. When you have identified your chosen supplier, you can then discuss terms and conditions and draw up a formal contract.

If you are dealing with a possible new customer, it can be tempting to offer credit without carrying out checks. But this can leave your business exposed to delayed or non-payment. You may find that you cannot pay your suppliers or bank on time. In turn, they may withdraw their supplies or funds, putting your business at risk.

To avoid potential problems with customer payments, you may want to:

• carry out credit checks on new and existing customers
• check bank references, trade references and online credit-ratings, from a credit-reference agency
• ensure that your customer is aware of your credit terms (eg they must pay within 30 days) and that the payment terms for your debtors is longer than the terms offered to customers
• motivate customers to make initial payments by offering discounts
• investigate legally enforceable ways of encouraging prompt payment

Poor stock and asset management

Poor stock control and over-investment in fixed assets can mean your capital is tied up unnecessarily.

Efficient stock control (inventory) will mean you have the correct amount of stock in the right place at the right time. It ensures that capital is not tied up unnecessarily, and protects production when there are problems with the supply chain.

You need to put systems in place to keep close track of stock levels and values. Taking control will let you free up cash, while also having the right amount of stock on hand.

There are a number of ways you can come near stock control. You can:

• re-order when stock reaches a minimum level
• carry out regular reviews of stock
• use just in time (JIT) delivery to keep away from excessive stock building up

In the initial years of your new business, you have to to limit drawing on your cash reserves unnecessarily. Over-investment in fixed assets, such as office furniture or computer equipment can be a problem. Acquiring fixed assets outright provides you with ownership straightaway, but you have to pay for the full cost upfront, which drains cash.

The alternatives include:

• Leasing assets - at least while your business finds its feet. This allows you to spread payments in regular instalments over a fixed period, thus freeing up more cash. You may be able to upgrade equipment without having to buy more up-to-date models.
• Hire purchase - you own the asset at the end of the payment process. This is not the case with leasing.
• Buying second hand - for office furniture, fittings, etc.

Hiring the wrong people

A large part of your new business’ growth will be determined by the quality of the people you recruit. Taking on people will always imply some form of investment for your business and requires careful consideration. Taking this investment seriously can make it more valuable and develop your chances of growth.

Ensuring that you hire high calibre people with the right mix of know-how is not a simple process but one that will pay dividends.

How you go about employing new people will depend on your business requirements, eg whether the work is constant, how long it will last and the number of hours available.

You need to explore all the options available to you. These include:

• recruiting permanent staff on a full or part-time basis 
• fixed-term contract employee
• temporary staff
• freelancers
• consultants
• contractors

Employing relatives and friends may appear an easy solution to staffing issues, but they may not have the right mix of know-how that you need. It can also be more difficult to bring a period of employment to a close when a personal relationship exists.

Failing to delegate

Being your own boss may be a key motivator to starting up your own business. Nonetheless, delegating the right task to the accurate person is important for both you and your business. Failing to delegate could mean you take on too much and enhance your stress levels. A good way to tackle delegation is to identify a few key tasks of your own that are very important to the business and handover the rest to your team.

Tags: startups