Phil MeekinView Profile
Is 2012 a good time to start your business? The reality is that there are businesses out there now which are not only surviving but thriving.
Self-employment can be hugely rewarding, not just in financial terms but the having independence and the satisfaction of being your own boss. With as many as 1 in 3 new businesses failing within the first three years it is certainly not for the feint-hearted. But that also means that 2 out of 3 survive.
Is 2012 a good time to start your business? The reality is that there are businesses out there now which are not only surviving but thriving. It is also true that many fail when the economy is booming. But there is no doubt in such economic conditions, this is much tougher.
Nobody goes into business expecting it to fail but if you are looking to start a business and want to survive it’s worth knowing common factors which often occur in failed businesses.
• Lack of professional advice. You need an accountant and a solicitor before you start trading to advise you on issues such as VAT and your legal responsibilities. You also need to decide whether to be a sole trader or form a partnership or to trade as a limited company. There are many reasons to incorporate, not least of which is to protect personal assets, such as your home, should things go wrong.
• Poor cash flow. Each business which ceases to trade will have its own reasons, but whatever the underlying cause, the crunch comes when it grinds to a halt because of a lack of cash. You need sufficient cash to continue trading until the business becomes established. Don’t assume that it will be easy to raise finance – it would be almost impossible for a new business in the current climate.
• Concentrations. Being heavily dependent on one or a small number of customers, suppliers, products, staff, etc., makes your business vulnerable.
• Lack of planning and monitoring. Well managed businesses invariably plan well and are constantly monitoring their results. It enables a business owner to identify and address problems at an early stage and even foresee some and take evasive action.