Last Updated on Mar 12, 2020 by James W
It seems that nowadays, an increasing number of people are choosing to start their own businesses. This is in part due to the global economic recession and a lack of stable employment. In fact, there are lots of people who are on zero-hour contracts, and have no way of knowing what their income will be from one month to the next.
So, it is hardly surprising that so many people are choosing instead to take their chances with self-employment instead. There’s the appeal of being your own boss and not having to answer to anyone else but yourself. But more importantly than that, it’s a way of creating opportunities for yourself, in an economic climate where such opportunities are few. So, if you’re a go-getter who’s planning to start their own business, well, we know just how challenging this can be. So, we’re going to help bolster your chances of business success, by showing you how to avoid a financial disaster.
Be Prepared & Do Your Sums
It doesn’t matter what kind of business you plan on going into – you must always start by making a detailed business plan. This will help you work out exactly how much you’re likely to need to borrow. Remember, it’s always prudent to overestimate how much you’ll need. In fact, we’d recommend doubling or even tripling your estimated start-up costs.
So, for example, you may plan on going into real estate and have found a 4 bedroom house to rent in Moseley. Well, aside from the cost of the property itself, you also need to factor in extras, such as repair work, the cost of the surveyor, plus solicitor and realtor fees. It’s essential that you don’t borrow more than you’re able to repay. But you also want to make sure that you have enough to cover all of your basic costs. Remember, more businesses fail in their first year than succeed. So don’t ruin your chances of success by underestimating start-up costs.
Put Something Aside for A Rainy Day
Unless you’re lucky enough be secretly sitting on a small fortune, chances are that you’re going to need to put some money aside for a rainy day. Now this could be money that you have already set aside for such a purpose, or you could deduct it from any loans you choose to take out. The most important thing is that you have a financial back-up plan should you ever have a cash-flow problem.
Only Spend Where you Absolutely Have to
The mistake that many people make in their first year is by overspending on things that aren’t really essential to the day-to-day running of the business. It can be tempting to get a little over-enthusiastic and spend a fortune on branded office supplies. Such items may even help to present a more professional appearance to your consumer base. But at this stage, your time and money would be far better spent on ensuring you have enough customers to actually appeal to in the first place.
All that’s left to say is that we wish you every luck in your new business endeavor!