By John Sheridan
The day you decide to take the plunge and work for yourselfwill be one of the most life-changing choices you ever make,whether starting a company large or small or as a freelance;from the very first moment of being self-employed, you and youalone will stand or fall by your decisions and actions. You willbe responsible for steering your business through all its upsand downs, good times and bad times with no guarantee thateverything will turn out right in the end.
When you are in charge the buck stops at one place. There is nomanagement line to help with complications; no colleagues toshare the blame for mistakes, there is only you to deal with anyproblems that crop up, only you to decide how those problems aredealt with, and only you to face the consequences of yourdecisions whether they turn out to be right or wrong. Whilstthere are many pitfalls and worries in running your ownbusiness, there are by contrast also times of extremesatisfaction, personal achievements, financial rewards andperiods when everything runs to perfection – it’s not all doomand gloom but it is most certainly very hard work.
There are important issues to be considered by anyone thinkingof becoming self-employed and all of them should be given veryserious thought. Assuming at this point that you know yourchosen field of expertise enough to go it alone, sufficient timeto plan the setting up of your business is vital. This part ofthe process may be a tedious and drawn-out exercise but it isnecessary to try and ensure the smoothest possible start to yourventure.
The most immediate priority is of course money. When you startworking for yourself it is recommended that you have enoughfunds to support you (and your family if applicable) for atleast three months, by which time you should hopefully begenerating an income from your business. However, saving thisamount of money would not be an easy task and so a great deal offorward planning and patience is an absolute must if you want tomake it a viable alternative to a bank loan, especially if youhave already borrowed money to start the business.
It is worth bearing in mind that a vast number of companies havea ‘cheque run’ on a designated day of every month to pay theirsuppliers. If you miss this day because you did not send yourinvoice soon enough you will not get paid until the next chequerun. Experience has taught me that they will rarely if everdeviate from this rule. It is in your best interests to sendinvoices as soon as possible; too late and you may have to getby for a month with little or no income.
A must-have for any business is a good accountant. How youchoose one is usually a matter of pot luck or a referral fromsomeone you know, the latter usually being the best way to findone. Whilst accountants are not exactly inexpensive, they willsave you money in the long term. It would be a huge mistake tothink that you could do their job better or cheaper than theycould – unless of course you are an accountant yourself.
Many a person has tried to do without one to save money and havefound themselves having all sorts of problems with the InlandRevenue because they have not filled in their return formscorrectly or made glaring errors in their accounts. It is worthnoting however that there are also the odd few small businesseswhose financial arrangements are so straightforward that theycan get by without an accountant although this is generally notthe norm.
Opening a business bank account can be a helpful factor inrunning your new enterprise. It would be a wise precaution tokeep personal finances separate from your business ones and abusiness bank account will enable you to do that. There are nosinister motives here; it simply makes sense to track andmaintain company transactions from a dedicated account ratherthan having to identify and separate them from a statement thatcontains your personal banking details as well.
A useful point to bear in mind is that a good workingrelationship with your bank manager is an asset to any businesslarge or small. A new business will find help and advice fromtheir bank manager invaluable. There must be give and takethough; you do have to be honest with the bank. If you areexperiencing financial difficulties in business, don’t try tohide it – inform the bank as soon as possible, they can thendecide how best to go about solving the problem quickly.
With your chosen accountant acquired and your business bankaccount open, two key components of your enterprise are now inplace. Other things to think about are premises, equipment,supplies or maybe staff. As the principal character in your newcompany only you will know what other requirements are needed tocomplete your set-up in order to commence trading, and no doubthave been giving a serious amount of thought to these particularmatters.
Apart from the points already mentioned there are a myriad ofother considerations involved in setting-up your business. Allof them must be addressed at some point but obviously in orderof importance. At times all this may seem like an insurmountabletask, but the very fact that you made the decision to work foryourself means that you possess the determination and driveneeded to see it through.
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