I think we have all been tempted at some point in our careers haven’t we, on the days when we come home from work grumpy, complaining to our better halves about how we could run the Company so much better than the boss. Or we are budding entrepreneurs with the “next big thing that no one has yet to think of” idea we spend our paid working days day dreaming about. Regardless what we do and what we want to do, many of us dream about the freedom of making our own decisions and running our own company.
Some of us take the plunge and make the enormous decision to quit our full-time jobs and set up our own businesses. A recent survey in Bostine says that 70% of Millennials want to start their own business, a huge number, however, I don’t believe business set ups are limited to the millennial generation - ask any of the business set up Companies here in the UAE and they will tell you that age is no limitation to going it alone – in fact, older generations are more likely to be financially secure enough to take the plunge.
So, what do we need to expect when embarking on running our own business? This 2-part blog will give you some insight to the challenges and lessons learnt you should take into consideration before handing in your resignation. They are taken from clients we work with and of course, personal experience as well:
1. Money: The best place to start as many business set ups fail almost immediately as they quickly run out of cash. I am often surprised how some Company owners go into setting up their own business without having the financial back up to do it. Unfortunately, it’s not often that we leave our paid job at the end of one week, open the doors to our own business on the following week and win a year’s worth of salary in the first contract secured on our first day! We need to get real, points 2 and 3 below are immediate financial drains and you haven’t even gotten started yet.
When asked we always advise to have at least 2 years money in the bank before you set your own business up. You need to know, to the penny, what your monthly expenses are and how much you need to live on to get by to come up with the 2 year figure. Time to rein in the expenses and forgo the weekly brunch or mani-pedi! What you earnt in your full time job is unlikely to be what you earn in your own business in the first few years of set up.
You need to be clear on the pricing of your services. What is it your Company is offering? How much will your target market be willing and able to pay for it? Who are your competitors and what do they charge? Over time you can adjust pricing, but by knowing your monthly outgoings and the pricing of your services, you can quickly see how much you need to sell to maintain your monthly living costs, then use this data along with pipeline conversation rates to understand when you are potentially out of cash, allowing you to make key decisions as you move towards this date. Some may call this a negative way of working, but its reality and best to be at the forefront of your mind always.
2. Trade licence: There is a lot of pre-work required before you have a Company trade licence. This takes time and many hours of back and forth signing and stamping as well as handing over cash. Make sure you choose the right business set up Company for you (there are many) and the right trade licence for the services that your Company is offering to the market. Consider if you can work on a free zone visa or you need a main land visa – to know the answer to this, you need to know where your target market is based. A main land visa means you need a physical office, an additional expense.
Thinking this through in advance saves money and means you get it right first time. Investigate the costs and make sure you know everything from A to Z before you start doing anything. If you can, do this before you leave your day job. Also look to do this prior to spending time and money on a website, the name of your Company must be registered and your first choice of Company name may not be available.
3. Website: Often clients spend a great deal of their finances on website set up, and then 6 months down the line their Companies purpose and services completely change, leaving you with a website that now needs a complete rewrite. Get yourself a simple holding page with the basics in place and once things have settled go back and spend time and money updating the website.
4. Know it’s not easy! It’s probably the hardest thing you will ever do, and so it should be – if it was easy, everyone would be doing it!!!! You need to put in the hard work and recognise that things rarely happen overnight. However, the rewards are immense and the time and effort you put in are paid back two-fold.
See next week’s blog for further insights and experiences.