In my opinion, lack of funding is the main reason many startup businesses fail or do not even start trading. I have seen many potentially successful businesses in financial difficulty because the entrepreneur did not calculate how much money was needed to set up the business and keep the business trading, especially in the first year. I always advise my clients to prepare the following documents before they start up: a simple start up table, a profit/loss forecast and a cash flow statement forecast to calculate the total business investment needed and the total working capital. I am not going to explain in detail how to prepare the financial statements now as I would like to concentrate on calculating the total figure the entrepreneur should have in mind before committing himself to open the doors of his business without risking a financial disaster. Let’s start with the startup table.
New entrepreneurs always ask me how long it will take them to start up their businesses. I usually ask them as many questions as I can in order to give a more accurate answer. During our first consultation, I often realise that entrepreneurs have not done enough research or initial study in the market to understand where their businesses will be heading to. The most important lesson you should know about starting up your own business is: Do your research and ask yourself as many questions as you can before you invest a penny.
Most of the entrepreneurs I know are very good salespeople. The vast majority of business owners I have been in contact with tell me that they attach more importance to selling to a potential client than finding the ideal client for their business. But in my opinion, attracting, finding and reaching out for the right client is more important than selling to them.
Imagine you’ve had a business idea recently. You’ve prepared your business plan and you know how much money you will need to invest in your business to launch it. But you’ve realised that you don’t have enough money to start. You think about how other entrepreneurs have overcome the same financial challenge when they started their businesses. Should you invest all your savings? Should you invite one of your friends or someone from your family to become your business partner? Should you talk to your personal bank manager? Perhaps an investor?
We know of many successful entrepreneurs who started their business from home. Steve Jobs from Apple is perhaps the most famous example. I have given advice to many people in the UK looking to start their business from home.
The first thing you need to be aware of is that you can’t start just any business from home in the UK. Most types of businesses in the UK need to have a special licence to operate, or at least a local registration in the Borough Council. You may also need permission from your mortgage provider or landlord to run your business from home.