13th August 2014
A total of 526,446 companies started in 2013* compared with 484,224 in 2012, which is great news for the economy, however business success is not guaranteed and the impact of launching a start up, on your personal life and your finances, can be huge. If you are one of the thousands setting up a new business then here are some points to consider:
1. Mind the Financial Gap
In any start up situation there is usually a period of time where the founders have little or no income. The founder may therefore need to reduce personal spending, e.g by stopping personal pension payments and cutting out non essentials such as holidays, gym membership, take-aways and new clothes. Are you and any dependants ready for this?
2. Be objective with your figures
Try to be objective with business projections. Don’t be over optimistic and assume all leads convert, but don’t assume nothing will come in. Apply this principle to your personal cash flow too. Work out how much you need to earn to provide for yourself and any dependants and check it is realistic for the business to generate that amount.
3. Keep the Family on Side
Relationships can come under strain when running a start up. Make sure your partner and you are aligned in terms of the goals for the next six months or year and manage everyone’s expectations, sharing both good and bad news as it comes in.
4. Look after Yourself
It can be impossible to stop thinking about the business, even when at home, or out with friends and most people work more hours in their own business than they did when they were employed. Remember that nothing is worth killing yourself over, so take time to de-stress and to keep fit in body and mind.
5. Consider the Implications of a Business Loan
There may be situations where the founder of a start up has to provide a personal guarantee for a business loan. Before going ahead, think about what this might mean to your personal life if the business fails and the loan is recalled for immediate repayment, or if legal proceedings start. Have a ‘worst case scenario’ plan.
For support and advice on starting a business please contact: Erin.Walls@wardwilliams.co.uk