Like many people, I fell into my first business. I had qualified as a chartered accountant, but left the firm that employed me because they wouldn’t pay me what I thought I was worth (indeed, what they also thought I was worth – the principal believed I might spend my money on foolish things, like beer, girls and cigars!).
I was at home the Monday after I left, considering what I would do, when I got a call from one of the firm’s clients. This client was under the impression I had started my own practice, and wanted to cut ties with the firm and become my client. From there, my accountancy practice flowed.
It was a low-risk, low-cost strategy. Computers weren’t available, so I didn’t have to buy one. And I could work from my kitchen table because no one would see me. However, my business quickly got to the stage where I had to rent an office and hire somebody to help me. That’s when I realised I had to earn even more to pay for those overheads.
We all have to eat; we can’t depend on anyone else to look after us (including the government). So, starting your own business may be the way to keep paying the bills. Watch my video on how you can achieve financial independence through business ownership here.
The things to consider are:
- Will the business be long term or short term? Do you intend to get another job in the future?
- How will it affect your home life if you have to operate the business from home all day? It’s different if you go out to work at customers’ premises on contracts, etc.
- Are you brave enough to charge what you believe you’re worth?
- Do you intend to build a business, i.e. something you can sell in the future, or will you operate in “practice mode” (in other words, like a medical practitioner – if you don’t work, there is no income)?
At any time, the key criteria for starting your own business are:
- Do not take any unnecessary risks, such as making financial commitments that can become a noose around your neck (e.g. office leases, equipment purchases, and so on).
- Quickly determine whether you have a product or service that people will pay sufficient money for, so you can live well and save money at the same time.
Many businesses are created out of disasters. But you will not find them on the first three pages of Google when you search for “businesses that have been created from business failures”. All you will get are business failures. When I did this search, it reminded me of the introduction to Skin in the Game by Nassim Nicholas Taleb: “How do historians confuse us by reporting on war, not peace?”
I started an accountancy practice with one client who came from my previous employer, and that quickly grew to be a significant business. A similar event occurred many years later, when I started a financial planning practice. There are numerous cases of businesses that have been created out of disasters, such as liquidations, employment terminations, and emigration.
There is another factor to consider when things look bleak. We often forget to ask ourselves: “What do you know that you don’t know you know?” We have all learnt many skills in work and life that may not relate to our current occupation, but are useable and saleable elsewhere. An example of this is a friend of mine, a fitness fanatic who used to sell electronic office equipment. After many years of experience training and competing, he went on to successfully launch a business in fitness.
Before taking the plunge, consider spending a bit of time with an experienced business coach or mentor to discuss your idea. Undertake a personality/behavioural assessment to ensure you are suited to self-employment and/or owning a business.
I would be happy to have this discussion with you. Email me at email@example.com.