Are you brilliant at what you do for a living? Still in full-time employment? Do you dream of ditching the 9–5 and launching your own service-based business?
Many new entrepreneurs tell me they decided to flip the switch and start their own business when they realised they were using their talent to line someone else’s pockets. Perhaps you’re at that stage now, or maybe you’re frustrated at some of the systems or processes in your workplace and can see a better way, but your wisdom falls on deaf ears.
Being an aspiring entrepreneur is exciting, but the Office of National Statistics tells us that 29.7% of new businesses fail within the first five years. Without the right planning, yours is likely to be one of them!
New businesses typically flounder because of a lack of planning; burning passion is not enough, but that doesn’t mean you have to curb your enthusiasm and stick to the grind!
Invest time in thinking ahead. Here are seven ways to help your service-based business get off to the best possible start (you’ll find more great tactics in this blog):
1. Be realistic about your potential client base
Your popularity within your place of work doesn’t necessarily translate to a full diary as a solo entrepreneur. Check to see if you have a non-compete clause in your contract, and don’t expect all of your raving fans to follow you. They might sound enthusiastic when you surreptitiously hint at starting your own business, but don’t bank on taking them with you. Consider it a bonus if they follow you.
2. Get clear on your costs
When you are self-employed, the days of guaranteeing exactly how much money will appear in your bank account each month are over. This is exciting when it’s a lucrative month, and leads to sleepless nights on a lean month (be prepared for the “what on earth have I done?” thoughts, but don’t focus on them).
Even if someone else in your household is the main breadwinner, get clear on what it will cost you to run your business. List all your annual outgoings (including the less visible ones) such as insurance, cost of running a car, tax, national insurance, pension contributions, public liability insurance, phone charges and so on.
3. Work out what you want to earn
Financial freedom, along with making a big difference in the world, is often at the heart of a decision to become an entrepreneur, and it’s unlikely you want to be on the poverty line to make it happen. It’s not particularly motivating to see every penny you have earned go straight back out the door each month, so work out how much you want to earn in order to maintain (or preferably, better) your current lifestyle. It’s tempting to want to undercut the fees your current employer charges, but first you need to gauge how that level of income will impact you.
4. Establish what your desired income looks like in terms of service delivery
If you know that you need (or want) to earn £3k per month, break that down into the number of transactions required. For example, if you charge £50 for what you do and you want to earn £3k per month, you need to provide 60 paid sessions in a month (which would average at three per weekday). Perhaps that sounds easy if you’re currently delivering 150 for your current employer, but there are other considerations!
5. Account for time spent on non-money-making activities
Working for three hours per day (to reach your £3k per month) sounds like a lot of freedom, but you’ll need to invest time (or money) in other work-related activities, including marketing, maintaining a smooth customer journey, and responding to new enquiries. It takes time to build an engaged audience in any niche. Your initial hourly rate will go down significantly when you build these factors in; and even if you increase the number of hours when you are client facing, you’ll still need to find time to create valuable content and engage with your following.
6. Fail to plan, plan to fail
When you carefully consider #1–5, you increase your chances of creating a robust business (and saving yourself many sleepless nights or squabbles with your significant other). What can you do to minimise risk? You might choose to start your business as a side hustle; test your marketing; build a bank of marketing content to get you going. Plan how best you could use your time in the week in order to streamline your business.
7. Build a strong foundation
Setting up a designated bank account solely for the purpose of your business income and outgoings will save you a major headache in the long run, and give you easy access to the info that you’ll need to complete a tax return (register as a sole trader initially; there are no tax benefits to being a limited company when your business is in its infancy).
Starting a new business can feel daunting. I’ve been on the brink of bankruptcy before and I don’t want that for anyone else. If you’re considering taking a leap of faith and starting your own service-based business, you might like to check out my new book Think Simple Win Big: How to Build the Business of Your Dreams With a Few Simple Goals, or feel free to drop me a line at firstname.lastname@example.org.
If you’re considering taking a leap of faith and starting your own service-based business, you might like to check out my new book Think Simple Win Big: How to Build the Business of Your Dreams With a Few Simple Goals,
or feel free to drop me a line at email@example.com.