Factors to Consider When Thinking About Starting a Business

Starting up you own business is often seen as a way of achieving a very comfortable working environment and making a lot more money than if you stay working for someone else. All of this is very often true, and a lot of people do make a lot of money from their own businesses.

There are also a number of advantages, from being your own boss and setting your own working hours to longer holidays, picking the jobs and contracts or type of work that you want to do, (rather than being told), building relationships with your customers and your staff and the satisfaction of building something that contributes to your community and provides for your family. These are all great advantages and all possible for anyone who does start their own business. However, a lot of people start out with rose tinted glasses and don’t weigh up the other side of the coin – how risky it can be going out on your own and what a massive decision it is to leave a career and work for yourself. Being your own boss also means the buck stops with you and there is no safety net.

Entering startup
Image by dierken / Flickr

If you are thinking about making the leap, here are some of the questions you should ask yourself first:

1. Can You Afford the Risk You Will Be Taking?

Starting your own business is a lot easier when you are younger and don’t have so many dependents. If you’ve got kids and a mortgage, outstanding debts and not much leeway financially, then you should think long and hard about starting your own business. You must weigh up what would happen if the business was to fail and how such a failure would affect you financially. Then work out how it would affect your family if it failed. Additionally it is necessary to weigh up how long your family could cope with a smaller income (or none at all) that would inevitably come with the first few months of starting your business.

2. Have You Got A Financial Safety Net?

If you have a family and people that depend on you for your income then the only way to start a business safely is with a financial safety net in place just in case things don’t work out as well as you hope they will. A financial safety net could be anything from a large amount of untouchable savings to stocks and shares to a family home that is fully paid off. Make certain that your family home and savings are fully protected from any potential failure of your business (talk to an accountant about this) and that you have something set aside should everything go wrong.

3. Have You Budgeted Enough Money for Your New Start Up?

However much you have budgeted for your new venture, it probably wont be enough. There are always costs that people forget about or underestimate so it is essential to have a good business plan and then get a financial expert to look over that business plan and critique it. Think about the startup costs of everything from leasing an office to buying furniture and stationery, computer equipment and setting up utilities. Then there will be website hosting, website design, SEO, copywriting as well as the cost of creating business brochures and cards and other forms of advertising. Once you’ve thought about all that you need to consider how much to pay yourself (and other staff) as well as the cost of business rates and other expenses. Lastly, there will be the costs of your lawyer and your accountant, both necessary when starting a business.

4. Can You Commit the Time to a Business Start-Up?

Again, if you have a family or a busy social life, are you willing to make the necessary sacrifices to make your business work? Almost certainly in the first year or two you will have less time available to spend with your family or to socialize with friends. If you don’t feel you will be able to commit nearly all of your time to the business and will be able to drop everything when an emergency, or big client, comes along, then starting your own business might not be for you. Similarly, make sure your family is ok with your decision too, as this will affect them as much as it does you.

About the Author: Esther is a business blogger and writer. She blogs every week about business and finance issues covering everything from business loans to credit cards and from small business marketing to SEO. She also blogs about consumer finance and short term loans for a payday loans uk blog.

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