Zyra's front page //// business //// advice //// site index
How to Set Up and Run Your Own Business
I think it's important in life to be a success, and yet it is surprising how unambitious the career options proposed by most schools (and some universities) are. They assume that you want to get a job and be paid a regular wage, have a mortgage, retire at a particular age, etc, but without making all this sound too much like the song "Choose Life", it has to be said that you really can choose your future and you really don't have to do the normal expected thing.
What would be nice would be to make a fortune and become immensely rich. Looking at this aim in a practical sense, it soon becomes obvious that even if you get a well-paid job and work until you're 65 years old, you'll not really become truly rich. You don't get rich by working for someone else. A better plan is required. There are various ways of becoming rich: Winning the Lottery, but this requires luck. Being a STAR, but this requires star-quality and luck as well (more about this later). And then there's running your own business, which anyone with enough sense and determination can do. You don't need to be brilliantly clever, lucky, have star-quality, have an ancestry of entrepreneurs on both sides of the family, or be quite well-off to start with, although all these things help a bit. What really helps is getting a few things right, and now I'll go on to describe these things, in the general helpful hints and tips by Zyra style...
* The first myth to explode about running your own business, is the notion that to start any business requires a lot of money. This idea is believed by almost everyone, strange as it may seem. Whilst it is true that some types of business require an enormous initial outlay, most only require a very modest initial investment, and some require virtually no money at all to start them off! It is quite practical to start a business with no more money than you spend on a Saturday night and end up eventually becoming a multi-millionaire.
* Don't get me wrong about this - becoming rich by setting up your own company is not a get rich quick system. Running your own business is harder work and requires longer hours than having a 9-5 job. It's not an "easy option". The point is that you CAN become immensely rich, not that it's easy. However, if you hate being poor, the extra work required to become rich may be worthwhile.
* The essence of running your own business with success is a matter of good planning. It is a strategic planning philosophy which works best, as seen in the Direct Drive idea. You plan what you're going to do, work out what kinds of things might go wrong, and test the ideas out to see what's practical. If you play chess, apply that chess-playing logic to life and money, and you are likely to be a success.
* Determination is important. It's best to have an attitude of being persistent in working on your business. You have to keep on at it even though it's hard work and doesn't have any immediate reward.
* Accounting. It's not boring. There are two types: Tax accounting and Admin accounting. Tax accounting is done as follows: Collect all important-looking financial paperwork and put it all into a large bag. Look after this carefully and give it to your accountant. (There are two types of accountants: Those that work for YOU and those that work for the Tax Office. Make sure you select the right type). Admin accounting is something you do yourself, where you work out on the back of an envelope how much money you are getting in and how much money you are spending. Every part of your business has to make sense financially. So, if you're manufacturing something, it has to sell for more than the cost of all the parts (sounds silly, but I have seen businesses where this was not so!).
* This idea of "Admin accounting" is important and extends into having a knowledge of the way money works. If you have a cash register/till with £1000 in it, a person with no capitalist sense may tell you that you have made £1000. You've got to know this is not true. Your takings might be £1000, but if your stock cost you £800, then you've only "made" £200. Minus your overheads.
* Overheads are the cost of running a business, such things as electricity, property maintenance, insurance, fuel, the type of things that still cost money regardless of how much business is going on. Watch out for overheads very carefully. Keep them to a minimum if possible. I've seen companies that take in huge amounts of money and yet still go broke because their overheads are too big. But this is no secret threat that can creep up and bite you. You can quantify overheads and work out exactly how much money your company needs to make to cover them.
* Open a bank account but try to avoid paying "business rates" for it. Most banks have some kind of special offer on free banking with a current account. You don't need to pay for the privilege of paying cheques in, or any kind of monthly fee generally. If you can't find a bank account that's free, run your business from a building society account!
* Avoid PARTNERSHIPS. Especially with your friends! If you decide you must have a business relationship with someone, make sure it's all written down and everyone knows exactly what they are supposed to do.
* Limited liability. Whilst it's tempting to be a LTD company, this is often overrated and misunderstood. The advantages and disadvantages of being Limited are mainly not to do with the snazziness of the company but are to do with investor insurance and formal management. It's often easier and less expensive to be a sole trader. In most capitalist countries, a person can declare themselves to be a company (not limited) just by stating the fact, and there is no official registration required. This is very good for business, as companies can be created ad-lib by would-be entrepreneurs and can succeed or fail on their own merits.
* There are many types of business you can set up. I have run many businesses (with greater or lesser success) since I left university in 1982. My current business makes more money than if I had a well-paid normal job, and it is THIS WEBSITE www.zyra.org.uk , and I can go on and tell you about affiliate marketing if you like, but you'll probably have some entirely different brilliant idea for a business!
* Your own website. Whether you're an Internet business or not, it's good to have your own website! This does not have to be expensive. See How to Get a Website. All web design companies and affiliate marketing companies have their own websites, but most fishmongers and windowcleaners don't usually have. However, having a website is good for business. Customers are often impressed to see "www." on the company's "premises". Also see how to choose a domain. (Don't be caught out by cybersquatters or fooled by rogues phoning in and claiming to be able to sell you your domain! Buy it yourself, first!)
* When you have your own website, you can also set up e-commerce and have customers buying stuff from you on the Internet. This is great because the amount of passing trade on the superhighway is somewhat bigger than even on a busy highstreet shopping location. You can even have affiliate websites like this helping to promote your business. See what an affiliate program can do for your business
And now here are some things to watch out for, potential threats to a company which can be seen in advance if you know about them:
* Beware of CREDIT. Obviously beware of borrowing too much money from the bank and paying loads of interest. But also beware of extending credit to your customers. If you do, some of them will not pay up, and the rest will have to subsidise them! It's better to be cash only and in advance. This will allow you to sleep better, will be cheaper for your customers, and will not let bad payers damage your business! Remember: Bad payers come in many disguises. They may look reputable, look rich, and seem honest, but can bounce cheques on you and make lame excuses. Don't let them get away with it! - If your business is in trouble, try to avoid going broke. The folk at Regency Holdings may be able to help you to save it.
Payments online can be done with payments into bank accounts (offshore banks are good for that). Also, some places offer the ability to accept debit card payments. Avoid PayPal as they can keep your money and pull the rug out from under you.
* When signing anything, always read all of it. If there's too much smallprint it's better to refuse to sign it than to sign it without reading it. Take a look at things I won't sign up to
* Don't have "all your eggs in one basket". If you're a supplier, don't let your business become DEPENDENT on one customer. A well-balanced company should be able to survive the loss of any one or two customers and still survive. The problem is especially bad where a small company is a supplier to a big supermarket and sells 80% of their produce to the supermarket. It has been known for the customer to eat the company whole by withdrawing the deal, making the company go broke, and then buying the company up for next-to-nothing at the liquidation sale. To avoid this, always have enough lifeboats, such that even if the worst happened, you will not be lost without trace. In 2010, Silvertap saved themselves from this type of problem when Tesco pulled out, as Silvertap had been designed to be compartmentalised, and the company survived even though Tesco pulled out in a shock "suddenly no rug" situation.
* Also, if you have a small shop, be on good terms with other small shops as much as possible but beware of the habits of some of the larger rivals. Some of the more disreputable places have been known to nobble the suppliers, making dodgy exclusivist deals to try to cut out the small shops. For that reason it's best to suss out the enemy before they suss you out. Wherever possible it's best to have many different suppliers who are all in healthy competition with each other, and to be in-the-know with the friendlies, who all know who the worst offender is. Some small towns live under economic oppression and poverty because of the unreasonable business behaviour of a few vested interests who "own the town".
* Another threat to a business which has to be watched out for is to do with commercial rent. If you rent a building, be very careful and be on your guard for this. Some landlords have a habit of waiting for a business to be a success and then doubling the rent. To avoid this, make sure the smallprint is not too bad, and also have options open to move to different premises if the problem occurs.
* Don't work too hard, have no fun, and catch the dreaded diabetes. Also, if you run a small business, make sure that even if you were to suffer from a sudden attack of bad health, your business will not be bankrupted. Self-employed people have no statutory sick pay or other compassionate safety nets. Therefore it's best to make provision to have some kind of understudy and living will!
To sum it up:
If you have a desire to run your own business, then you should do it! However, plan what you're doing well and have good strategy worked out in advance. if you've got a good idea, give it a try. Don't risk more money than you can afford to lose, and don't be put off by problems that occur. Listen to different people's good advice and then make your own mind up about whether they are right or not. In principle anyone who can think logically and has some determination about them can run their own business, and some of them will make money. I wish you well with it!
If you set up your own business, how about recommending this helpful website and putting a link in to this site? It is Zyra.org.uk - This helps other new businesses starting up and is generally good.
This page is by Zyra, who has run various businesses over the years.
Other helpful links: The Clearly Business start-up kit by Barclays Bank!
Free business cards are an option at Vistaprint
See various helpful business connections at this site.
BusinessLink UK - UK government sponsored "Set Up Your Own Business" site!
Plus, UKcorporator which in their own words "provides excellent, extensive, & free guidance on setting up a UK limited company"
In addition, The Alliance and Leicester Commercial Bank who in their own words provide "the ultimate Free Business Current Account to save you money and make banking more convenient ".
The world's local bank is HSBC and there's helpful comment on getting a business bank account there.
And, Income Tax Relief to help save you paying too much tax.
Don't go bust! If you're having trouble saving your business from bankruptcy, you could see if Regency Holdings can help.
Although I advise caution with borrowing money, I know there are some business plans where you might consider a secured loan (secured against your property or some other significant tangible asset). If you feel this is for you, there are loans companies at this site, and the matter of secured loans is explained at the page Absolute Solutions