10th August 2020
It’s one of the more positive sayings that has been used a lot lately, and one that the team at Latitude believes to be true. We see many commonalities during difficult economic times and one of the better ones that is almost guaranteed, is individuals finding their entrepreneurial spirit.
After the crash in ‘08, we saw a number of start-up companies emerge. From surveyors to beauty salons, plumbers to physios. Highly skilled individuals who had found themselves out of work through no fault of their own, deciding to control the situation and seize the chance to be their own boss.
It’s the kind of spirit that makes our economy great but it isn’t for the faint hearted and sadly the statistics don’t always favour the brave. Having taken the plunge starting our own company last year, as well as having the insight from a funding perspective, here are our thoughts on how to make sure your business has the best possible chance of survival:
Under cook your projections
However many clients have promised you work-reduce it. Work on worst case scenarios. If you’re relying on one client only, do your due diligence-are they financially stable, do they pay on time. Factor in not getting paid-what’s your back up plan/how will you chase that money?
Strip back your personal costs
You are no longer salaried. There are no guarantees so live frugally. Obvious items are TV subscriptions, swapping utility companies, reviewing insurance but there’s other things like the food you eat-planning menus and sticking to them can save a fortune. Don’t sacrifice your health but look at alternative gym memberships, there are lots of offers on and independents that run pay as you go classes. Don’t forget running and walking is still free!
Be prepared for long hours
The day job carries on but you now need to factor in time for items like accounting and marketing. This can’t eat into your cash generative hours so evenings and weekends will become the norm. If you have a significant other, make sure they’re on board with this.
The marketing and accounts you’re now doing at weekend-how do you know you’re doing it right? Teach yourself, read up on it, find free info online. You won’t become a professional but you can learn enough to get started. There’s some excellent accounting software available that can do the bulk of your monthly work.
Save your money
The first few paid invoices are exciting and a thing to celebrate but put the champagne on ice and keep that cash in the bank. We’re all going through one hell of a ‘rainy day’, cash at bank is what has saved many businesses and individuals.
Be willing to offer PG’s
You are likely to need funding and offering a guarantee is the norm. If your business is brand new, it doesn’t matter how well known and skilled you are, or how detailed your business plan is, finance companies need added security and if you’re a home owner this will come in the form of a Personal Guarantee. Don’t be offended when asked. Finance will be difficult to secure so perhaps look at hiring the equipment you need to start with.
Lean on your support network
This might be for tangible help with childcare or simply as a sounding board but it’s essential for your mental wellbeing. Knowing who you can rely on and having support can be the make or break. Not every day will be brilliant, have someone to talk through the bad bits with and the good bits too. There’s no boss to pat you on the back-find yourself a substitute!
Keep on top of your credit score
It sounds obvious but when you look for funding, until you have a few years of accounts, your personal credit will play a part. Take a look at your own report, if you score low look at ways to improve it before attempting to secure finance.
Have a goal
It’s too easy to fall into the daily churn/grind. Take time to think about what you want. Is it a lifestyle business or do you have grander plans? Can you make a positive change to how your industry currently operates, if so how, when and what will it cost you to do it? What kind of cash or investment will you need to generate to take the next step?
Every industry is different and some less saturated than others so the experience of being a new start can differ greatly, but with the right knowledge, determination and passion, you don’t need to be one of the horror stories.