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Published On: Tue, Apr 25th, 2017

Is Setting Up Your Own Business a Gamble?

There are not many people who would turn down the opportunity to be their own boss, except probably the people who have done it and regretted it. Setting up your own business can be seen as a huge gamble, especially if you are currently in full-time employment and enjoy the benefits such as guaranteed salary, holiday pay, sick pay, pensions, etc.

Deciding whether to make the leap is a big decision, regardless of the circumstances. Okay, maybe if you’re already financially very comfortable you can afford to take the gamble, but for the majority of people, the uncertainty of financial income can prevent people from taking the chance.

Even if you have a sum of capital to invest, if your business doesn’t take off, that money could quickly disappear. Unfortunately, a large number of startup businesses end up failing (90% in fact) and the reasons behind this are varied. If you are thinking about taking the plunge and going it alone, you should spend an appropriate amount of time analyzing whether your business will succeed.

Here are a few ways to increase your chances of success:

Develop a strong business plan

You can get help and advice from the government to develop a business plan that will give you a better idea of how marketable and profitable your business will be. If you have the opportunity, this should be done before you leave a permanent job, just in case your findings are disappointing. Part of developing a strong business plan involves analyzing the current demand for the product or service that you are planning to offer and working out a competitive, yet profitable pricing structure. You should also produce a financial forecast, and if you do go into business, you should be tracking your progress against your forecast on a regular basis.

photo/ Gerd Altmann via pixabay

Use available support

As well as providing help with business plans, you may be able to get financial support or benefits from the government when you are setting up. Explore all of the opportunities that are available to you. If you aren’t able to get funding, then you can look at other options. Once you have been established for some time, you may be entitled to further support or preferential rates. For example, after a year you may be able to apply for a Merchant Cash Advance that could be the difference between staying afloat and sinking. Remember, over a number of years even a small difference in loan rate can make a huge difference, so shop around and always get the best deal available on the market.

Know when to quit

Within your business plan, you should have identified a clear strategy on hitting financial targets and how much you can afford to go into debt, if at all. One of the hardest parts of owning a failing business is knowing when to quit. Sometimes you think, ‘if I just get that one big sale everything will be different’. The reality of most situations is that it will only lead to further debt, so always stay realistic and stay true to the figures you defined for yourself at the start.

Author: Carol Trehearn

photo/ Gerd Altmann via pixabay

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