A wise man once said, if you can make a living doing what you love you’ll never work a day in your life. On the advice of this nameless, faceless oracle, you’ve quit your relatively safe industry job and decided to go it alone and set up your own small business.
There can be no greater sense of trepidation than making the jump off into the world of self-employment, particularly in an economic climate recovering from what the IMF has called the deepest recession post–World War II.
It’s difficult to ignore the gloomy spectre of failure that lurks in your peripheral vision, but there is help at hand to assuage those early day anxieties. ‘A statistic that I often tell people is that of the businesses that close down 70% are actually profitable,’ said Ronnie Harrison, Director of Optimum, the Dublin-based training and advice company that has made helping SMEs their business for over 25 years. ‘They close because of cash flow.’
Cash flow problems are often cited as key reasons for stunted growth in enterprise; cash is the key enabling factor in making investments, expansion and employing staff. The only antidotes to fear and failure, according to Ronnie, are extensive market research, solid strategising and acquisition of business know-how.
‘It goes back to knowing your market and where you’re going to position yourself in that market. Who can afford what I’m trying to sell? You must know them inside out’, said Ronnie. ‘Are you producing high quantities with relatively low costs or are you going to go high end, to the luxury market? All these decisions have to be made at the start’.
Every new business has grappled with solvency issues and profit margins, but those who strategise well from the beginning, see results sooner than those who struggle to hit the ground running. ‘Pricing is extraordinarily important. If you don’t get that right at the start you’re in trouble’, explained Ronnie. ‘If you do get if right you have a far better chance of being successful’.
The formative years of business ownership can be difficult and overwhelming; while being your own boss has its advantages, many entrepreneurs don’t account for the inevitable bumps in the road. While planning and forethought can help mitigate the risks new business owners should have realistic expectations and an understanding that they’re playing a long game. ‘Don’t put yourself under pressure to make money from day 1’, said Ronnie. ‘Slow profitable growth is the way to go’.
Ronnie also suggests taking some time to decide whether you want to rule the world or simply be comfortable and achieve a better balance between life and work. ‘You might want to make €20k per year or you might want to make €1million’, he said.
‘A lot of start ups obviously have the interest or ability in whatever their business is,’ he continued, adding that often, despite passion and ability, business owners lack the right mix of experience and planning. ‘Most people have a fear of finances but if you’re running your own business you have to know about it’.
Many entrepreneurs find themselves sacrificing their personal security to make a go of things, putting other interests on hold to give the business their undivided attention. Given what’s at stake, it’s worthwhile spending some time up-skilling in the ways of good business practice.
Ronnie suggests talking with your Local Enterprise Office about attending a small business course, and joining an organisation such as the Irish Small and Medium Enterprises Association when beginning your foray into the world of self-employment; networking with other SMEs can be very comforting, particularly during difficult times or downturns.
According to Ronnie, with extensive market research, a heavy injection of know-how and good old-fashioned patience, the death knell needn’t toll for quite so many Irish SMEs: ‘It’s your house on the line, it’s your children’s education and it’s your dreams. You have to know the dream and it must be allied with knowledge of your business’.
If you've overcome those early challenges and you are ready to take your business to the next level, talk to Linked Finance. We provide business loans for Irish SMEs who have been trading for more than 2 years with a turnover in excess of €100,000.