Starting A Business After Being Made Redundant
If you are feeling ambitious and fancy starting your own business, being made redundant may be the push you needed in the entrepreneurial direction!
If you have a passion for something and truly believe that you could find success with your ideas, what is stopping you? All you need to do is design a well thought-out business plan and research finance options to get your business up and running. Statistics show that more than one in six new business start-ups are established following redundancy.
There are many resources on the Internet to help you; a lot of them are free. You can find free templates to help with structuring your business plan. The Prince’s Trust website offers a lot of useful information.
Financing Your Business
There are many ways of sourcing funds to start a business; personal investment, family or friends, business angels, loans and grants are just a few.
If you are in the fortunate position to have your own money to invest into the business, this will help with minimizing debt. This may be possible if you have had a large payout following on from redundancy. You may have friends or family that you can borrow money from; this is a healthier way to loan money as it is unlikely that they will charge you high interest rates.
If you are not in the position to fund your business entirely yourself, you could consider a loan. You can apply for loans through banks or loan companies, however you will need to do some research on who offers the best type with regards to interest rates and pay-back periods.
You may be eligible for a grant to help fund your business. The Government website has a long list of grants available, take a look to see if you could get some finance that you do not have to pay back!
You could apply for a Business Credit Card. Business credit cards are useful because a lot of the time, they have small minimum payments. This is beneficial for small start-ups who have not got much cash inflow to begin with and have small expenses. The risks can be high, however, as debt can build quickly with costs and interest rates on the card.
You could also consider Business Angel’s. Business Angel’s will invest a certain amount of their money into your business for a share of it; think Dragon’s Den. You will have to negotiate a deal; the more money they invest, the higher share they are likely to want. Using business angel’s to help finance your business comes with positives and negatives, as does any route of finance. You will no longer have full ownership of your business, however the investors may bring more knowledge and experience, promising higher success.
Similar to Business Angel’s is Crowdfunding. Crowdfunding is where you can receive small investments from a number of investors, rather than relying on just one. There are websites whereby you can advertise for Crowdfunding such as www.crowdfunder.co.uk.
Other Things To Remember
It is important to remember that you will have other responsibilities after you have actually started your business: tax, insurance, legal aspects and potentially employing people.
Deciding on a legal structure that your business will take (e.g. limited company, sole trader, business partnership) will then allow you to register your tax responsibilities. The UK Government website gives more detailed information on the different structures of business.
You may need some advise from a legal point of view when setting up your business, and advise from an accountant once you have started trading. Be sure to do some research into finding the best advisors from professional bodies.
If you decide you need to employ some extra people to help you out, you will need to look into the legalities such as wages and insurance for the employees. If you do not employ anyone, you will need to make sure you have business insurance.