That might seem like odd advice…
Everyone’s business plan is different – and different businesses will have different start-up costs. However, there are a few golden rules that I think apply to anyone:
- Don’t spend your life savings
- Don’t risk the home you own and live in.
- Avoid borrowing/debt, if you can.
Unfortunately, viewers of Dragon’s Den would be forgiven for thinking that setting up a business requires many thousands of pounds. And all the banks are all too keen to lend money. I bet there is a business banking rep in the networking group that you recently joined? Yep – people starting a business are vulnerable to tempting, but possibly unnecessary offers.
But many businesses can be started with a very low initial outlay.
My big tip is to get a job! A part-time, regular, paid job to help support yourself in the early days of running your business. Or alterntively perhaps you’re wanting to leave your regular career job – if that’s the case, then try and start and run your business part-time concurrent with the last few months in your regular job. That might be difficult but, whatever, try and create a consistent source of income to suport yourself and your family in the early days. But you MUST also create a payment model for yourself, from your business, as soon you can.
It’s hard – I was lucky, when I left the Navy I had already spent a couple of years getting my business idea primed and ready – then, when I left, I was able to work in my old job as a part-time reservist. Which meant I didn’t have to dip into the gratuity payout sat in my bank account (I invested that in property but I’ll talk about that another time).
Don’t spend or pay yourself from your savings!! Savings take a long time to accumulate – and a big lump of money is useful for a big investment (like a house) or an urgent unforeseen need etc (what if your boiler breaksdown at home? or your roof gets damaged?). Your early business costs will probably be intangible and/or be spent on items that depreciate to nil value in very little time – eg, office furniture or PC equipment etc. Don’t convert a really useful lump of money into useless office tat!
Get a job… pay for the basics and essentials… and reinvest any profits into developing and growing your business. Borrow only for what you really need.
Next article: ‘Fee Systems’