Starting a company is the dream of every young and aspring Entrepreneur. Being your own boss and having the control to choose the future of your business is what many people aim to achieve. But the reality is, starting a company is increadibly hard. You will have to work far harder than you would in a normal job, and you won’t be able to escape the stress of your company, your business cash flow and your responsibility to your staff, suppliers and customers.
However starting your own company does not have to be such a big risk if you approach it in the right way. Here is my definitive guide to starting your own company whilst minimising the amount of risk you take.
Get a full time job in your industry
The very first step you should take on your quest to starting your own company, is take a job in your industry. This is the first step, not only because it’s the first logical thing you should do, but also because it’s one of the most important. If you are leaving University soon, or you have dreams of quitting your dead-end job to start your own company, the best first step you can take is to get experience working for a company in your field.
Being an employee has a lot of advantages at this early stage. For one, you will be getting a regular pay check and you don’t need to worry about getting new clients or managing your cash flow. You are likely to be less stressed and so you can concentrate on honing your skills and picking up the knowledge you will need to launch your own company.
Even if you believe you are an expert in your field and you know everything you need to know in order to start, you should still take a job to make sure that when you do start up you aren’t confronted with any hidden suprises that you didn’t account for.
Start building a professional network
You need to start building up your professional network. Through your work you will begin meeting clients, suppliers and friends of your collegues and your boss. Take the time to get to know these people on a personal level and strive to help them in any way you can, without looking for anything in return. Having a professional network will be critical for your future success as your first clients or referrals will likely be sourced from it. Put every effort into prooving you are increadible at your job today, and you will feel the benefit of your hardwork tomorrow.
Don’t just start adding everyone you can on LinkedIn, take every opportunity you can to develop meaningful relationships with a handful of key people.
Setting up your company
When you set up a company, there are many administrative things you need to take care of before you start trading. Without setting these things up first, you will be forced to waste time later on when you should be spending your time dealing with your clients.
Here is what you need to set up;
Choosing your company structure
The first thing you need to decide is your company structure. In the UK you can either be a Limited company, a partnership or a sole trader. Each structure has a different legal status and each has a number of benefits and drawbacks for choosing each one. Look out for a future post where I’ll break down each in more detail.
Register your company name
Next you need to register with Companies House. You will need to decide on a company name and fill in the required forms to set up your company.
Set up a business bank account
Next you will need to set up a business bank account in order to manage your money. Shop around the various hight street banks to see what business account suits your needs the best. Each bank will probably have different terms and conditions so you should chose the account that will best suit your needs, don’t just go with the same one as your current account.
Website and business cards
Having a website will probably be the best investment for your “marketing budget”. From around £10 a month you can set up a professional site that people can access who want to find out more about what you can offer them. If you have no experience with setting up a website, take a look at a service like SquareSpace and register yourcompany.com with a domain registrar. Now that you have your own domain name you can also set up a company email address like email@example.com. There is nothing as unprofessional as using a free email provider to conduct business communication.
You will also need your first set of business cards to hand out to people who are interested in your services or who you meet at business networking events. Business cards are really very important as you will need something to hand out to people with your contact details on. Go to Moo.com to design and order your first set of cards.
Next you need to be able to handle your accounts. I would recommend using a service like FreeAgent. FreeAgent is a completely web based accountancy package that can handle all your incomings and outgoings and automatically give data back about the tax you owe and how your business is doing financially. At only £30 a month for a Limited company, you can’t go wrong and it will prevent a lot of headaches down the road.
Get into the habit of working…a lot!
Now that you’ve got a full time job you will need to dedicate a good chunk of your time outside of work to developing your company in tandum. If this seems like something you don’t really want to get into, congratualations quit now, you’ll save yourself a lot of time and money in the long run. For the rest of you, getting into the habit of dedicating nearly all of your time to productive work will set you up for launching a successful company. Realistically you need to be spending atleast a couple of nights a week and a good chunk of the weekend working on your company in order to get everything set up and begin taking clients long before you quit your safe day job.
If you get home from work each night and you don’t want to work on your company for the next 5 or 6 hours, then perhaps you should re-think starting a business. You are going to have to dedicate the next couple of years to getting this company off the ground, so if you can’t find the motivation now, you never will.
As I mentioned, meeting people is one of the key aspects of running a succesful business. Business networking is the best way to meet like minded business owners, clients, suppliers and friends. However, don’t go to a business networking event just to pick up clients, you should go with the attitude and aim of helping other attendees. Go with the mindset of “How can I help this person?” and don’t expect anything in return. People always have their own agenda, and so if you can help someone with either advice or your service, they will be far more likely to call on you or refer you to a paying client.
There are many different types of business you could start. From suppling a product to offering service, your business idea will more than likely be based upon an assumption that you have spotted an opportunity to build a company and make money. However this is an untested assumption that could be completely wrong. Many of the best companies started with one vision, but transitioned to another once they started to get feedback from their clients. Don’t assume that your idea is perfect, because it most likely isn’t. Test your idea with potenial clients and see what their reaction is. Are they fighting to give you their money? Or do they not seem interested when you describe your idea? Talk to as many potential clients as you can and refine your idea until you have something that you know will work. Don’t worry about seeming unprofessional infront of a potential client, by introducing yourself early, finding a solution to their problem, and developing a strong relationship with them, they are far more likely to turn into a paying customer once you are ready to serve them.
Start profitable from day one
I believe being profitable is the most important thing you can do in business, and by ensuring you are profitable from day one is the best first step you can take. Being profitable early on can be achieved with a number of small steps.
Firstly, now that you have a full time wage coming in, save that money and use it to set up your company, buy your business cards, attent networking events and buy any equipment you need to start. It might seem tempting to put these expenses through your business account, but actually you should be doing the investing straight out of your own pocket.
Secondly, do as much as you can for free and don’t tie yourself to contracts. Don’t hire office space just yet and don’t waste money on frills. However, if you need to employee a freelancer to make you a website or do design work, then don’t try and do these things yourself. A professional identity is worth every penny.