Over the next several weeks we will be publishing extracts from:
Take The Plunge – 101 things you need to know before starting your own business
by Michael Carter
This week: Set up using existing skills
If you have existing skills maybe as an accountant, a dog walker, a plumber or a web designer then setting up for yourself (or perhaps with a pal or two) is a very good way of going into business. Again it is a good idea to read your employment contract with your current (and about to cease employer) as you might have previously not agreed to compete. However, regardless of what you signed, a court may well decide across town is far enough away for a junior employee to set up in competition, but that for a multi-national senior executive not competing even in the same country for two years after leaving employment, is a minimum.
If you do set up in a business you understand, chances are you might know where your supplies are going to come from. You might have a good idea about who the potential customers might be and what you can offer over and above the competition (e.g. your old employer) to attract them. Often this is not about price. Often it is far more about the customer service experience. Remember too, that a customer will feel a lot more connected to a small supplier with only a handful of customers, against being a small fish in a large pond if working with one of the big names in the industry. On the other hand, inertia and sometimes loyalty leads a customer to stick with his existing supplier, long after a change should have happened. If you run into one of those, you can always suggest they dual source (from their existing supplier and now you too) and therefore give you a platform to excel on.
Whether or not you’re starting up in a business you already know plenty about, if there is any element of ‘selling your time’ make sure you charge enough. It is very easy and wrong to decide on how much money you want to make and then divide it by 52 weeks and 5 days a week to get a daily rate. You must remember that out of the 260 days, you are going to want holiday, you will have sick days, you will have to allow for days of just doing admin and you will need days to find new business. Maybe something like 200 is actually the target number instead?
Similarly the wage you look for should be increased to cover any overheads eg accountant, bank charges, tools and supplies, national insurance charged to you as employer etc.
Top tip: Find out what your competitors charge and think what additional service(s) you can offer at the same price level
Useful website: www.staples.co.uk (you’ll need to buy yourself a calculator for some of this)