Barclays explains what you need to think about before becoming your own boss
With UK unemployment currently sitting at 2.67 million, it’s not surprising that many people are deciding that the time is right to start a business from the comfort of their own homes.
While starting a business from scratch is a great way to get working again after redundancy, it’s also a good way to change your lifestyle. Your commute could become a thing of the past and you could finally strike that elusive work-life balance by becoming your own boss.
So what do you need to think about before getting started?
First and foremost, you must be 100 per cent convinced that there is a buyer for your product or service. You may think that you’ve come up with a great idea, but if nobody is prepared to pay you for it, your enterprise will never take off - no matter how much money you spend on it. Doing thorough market research is vital.
You also need to suss out the competition. Is anyone else already doing what you’re going to do? If so, ask yourself what would make your version better? Can you compete on price? Is there enough business for both of you?
But most importantly, you must work out what your set-up costs will be. It doesn’t matter what you’re selling - whether you’re baking cakes or selling your bookkeeping skills - every business encounters similar basic costs.
It’s sensible to write yourself a list of all outgoings that you’re likely to encounter - such as electricity bills and equipment costs - before you receive payment from your first customer and do this well before you decide to bite the bullet and set up on your own. And try to identify areas where savings can be made.
If you are going to be working from home, you must be prepared for the distractions—noisy children, spinning washing machines and the lure of a comfy sofa and a nearby TV can be hard to ignore.
You’ll need self-discipline and determination. And there are some simple, practical steps you can take to get off to a good start. For instance, set aside a space for your office and be strict with yourself about working hours. Late starts, long lunches and early finishes don’t often result in profit.
Don’t forget to make sure that your home insurance is adequate. If a burst pipe flooded your basement, would the cost of replacing your ruined stock be covered?
Next, you need to get your day-to-day finances in order. Put a neat and tidy filing system in place. Work out what expenses you can claim against tax and keep all of your receipts and invoices in one place. Enter all the information into a spreadsheet and keep paper copies of your records - and it will be much easier to put your accounts together.
It is strongly recommended to set up a separate business bank account so you can easily keep track of your incomings and outgoings. And as your business grows, if you need more money to pay for premises, equipment or stock, you might also want to consider the benefits of a commercial mortgage as a way to fund your company’s growth. Having your accounts readily available and up to date will make the application process easier.
i http://www.bbc.co.uk/news/business-17039513
ii http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1083765949&type=RESOURCES
iii http://speckyboy.com/2011/06/16/home-office-tips-eliminating-distractions-when-working-from-home/
Issued by Barclays
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
Barclays is a major global financial services provider engaged in retail banking (bank accounts bank accounts and instant access savings accounts), credit cards, corporate banking, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 140,000 people. Barclays moves, invests and protects money and provides ISAs, home insurance, life insurance, a mortgage calculator, guides on how to buy shares and other services for over 49 million customers and clients worldwide. For further information about Barclays, please visit our website www.barclays.co.uk.
For further information about Barclays visit www.barclays.co.uk.