What business suits you?
To know which type of business will suit you best, you need to
clarify your ambitions and honestly assess your skill set. This
guide introduces you to different types of business and explains
what kind of person is suited to each, and suggests how someone who
is interested in that kind of business might take the next step
towards making it a reality by finding their business idea.
Fast-growth business
- If you're looking for a relatively swift a healthy exit -
building up a company and selling it within several
years - you need to always put profit first.
- This means you need to be very good with
finances, and you'll likely be the kind of person who is
always thinking of the bottom line and profit
margins.
- You also need to be able to have excellent
relationship-building skills, as you'll either need to convince
angel investors or VCs to invest in you or convince people to buy
your business at the end.
- Angels and VCs invest in fast-growth company
and can give the financial boost, guidance and experience needed to
really accelerate growth.
- Good fast-growth businesses work best first and foremost when
built around gaps in the market in markets that are
growing and will continue to grow.
- You'll need to have an in-depth understanding of the
market you want to operate in and the customers you're
going to target. Constant and highly detailed market research is
essential.
- Any experience of the industry you want to start a fast-growth
business in will help you leverage financial benefit in as many
places, and will also help convince investors to come on
board.
- You need to be prepared to be fairly aggressively ambitious, to
push yourself hard, and to stick very rigid targets and meet
them.
- Fast-growth businesses aren't really suited to people who lack
motivation and drive and don't like committing to long hours, or
who don't feel comfortable getting out there and networking
constantly.
- They're good for ambitious all-rounders who have a
natural knack for business.
Business for the long-term
- Starting up a business isn't like most jobs - it's much more
intensive. You have to be prepared to make sacrifices and put in a
lot of extra hours. For that reason, if you want to build a
business that's going to last as long as you can foresee, you need
to really love what you're doing.
- Base your business idea around a hobby, passion or belief - an
area you'll really enjoy working in. After all, why would you spend
every day working on something you didn't love?
- This will also make research loads easier, and you'll most
likely to be able to understand your target customer better too,
hopefully giving you a better idea sales and marketing for your
sector.
- If you're running a business for the long-term, you can be less
aggressive than if you were trying to make a business turn as much
profit as possible ready to sell. You can take things at
the pace you want.
- Although you'll have to have a basic grasp of bookkeeping,
accounts and finances, you won't necessarily need an
advanced understanding of business finance, as you would with a
fast-growth business.
- An accountant can also take a lot of the financial pressure off
you.
Going solo in the industry you work in already
- For a lot of people, working for someone else can lead to
permanent glass-ceiling syndrome - particularly when you can see
more efficient an effective ways to do things.
- Branching out yourself in the same industry
affords you the freedom and control you want to use your knowledge
and experience and stay in the same line of work - but with
yourself as the boss.
- Of course, with that comes the need for extra skills,
extra hours and extra responsibility, as it does with any
business you decide to start.
- But you'll have the massive advantages of already
knowing the industry, knowing your market, knowing techniques and
hopefully having a list of contacts and potential clients
you can take with you.
- Be very careful of any non-competition clauses in your
contract, which might restrict you from starting a
business that competes with your current employer's for a given
time period.
- Get a solicitor's advice if you're unsure.
- Be careful about terms on using contacts gained at your current
job too.
- Be very vigilant about IP and trade secrets clauses and make
sure you don't infringe any.
- Keep relations sweet as far as you can with
your current employer - you'll be working in the same industry and
it'll get very claustrophobic and potentially bitterly competitive
if you don't. You current employer may also become a future client,
partner or at least very useful contact.
- Read more about the things you need to consider in our guide on
how to
decide when to leave your job.
Part-time business
- A part-time business can be a great way to supplement
your income, or if you don't want to immediately commit to the long
hours and sacrifices that running a business full-time
involves.
- They're also a good way to test the market
before committing lots of money.
- Internet businesses work very well part-time,
because with ecommerce you don't need to be there to take and
monitor sales orders - the business can be 24/7 without the need
for you to even do an eight-hour day.
- Consultancy, freelance and events are other examples - but
essentially, almost all businesses can be part-time if you make
them that way. A business is all about what you make it.
- You need to make sure you construct your business in a way that
means it won't affect clients if it's closed for a day or two here
and there.
- You need to make sure you have a good system for
fielding enquiries and orders when you're not working -
whether that be an auto-email response, an explanatory voicemail or
an automates order system.
- Explaining to customers and clients through these means that
you will respond to them within one to three working days (or
however long it is until you're next working) will help prevent
them being confused and frustrated when you don't get back to them
more promptly.
- You'll need to be meticulous with your time
management - there will still be lots of admin to get
through with a part-time business, and you need to make sure you
structure the hours you do work so your business doesn't start
swallowing up time you didn't want to spend on it.
- Having a virtual assistant may help for when
you're absent.
Just-trying-it-out business
- Younger people or people who have a bit of money to
play with may want to dabble with running their own
business, but aren't too concerned about building it into a
long-term, sustainable and high-profit-wielding enterprise.
- Because of this, you can often take more risks with the
business - and so broaden your entrepreneurial experience
and a more pro-risk attitude for the future - both very important
attributes for a business owner.
- You will need a fair degree of initiative and
motivation, though, as you won't have the same financial
worry spurring you on.
- Don't invest too much of your own into whatever you try and
especially not too much(if any) of other people's money.
- This can also be a good way to test the waters with
perhaps more risky products and idea without committing
heavily - and you can then develop things further if you
get positive feedback.
- However, there will still be a fair amount of admin
involved, and you may well still need the services of an
accountant, so you still need business sense. The hassle
of all this can outweigh the fun of taking things lightly with a
trying-it-out business.
- Even if you treat the business casually, you still need
to go by the book.
- Register with Companies House to become a company or with HMRC
to become self-employed.
- Keep all receipts and documents relating to the business as
required by HMRC.
- You're still legally required to do bookkeeping and
accounting as you would with any other business.
- You will still have to pay tax on your income and/or profit and
complete a self-assessment tax return at the end of the year.
- Because of all this, don't make the decision to start a
business without thinking about all the commitments it takes first.
You may think of the business lightly, but HMRC will not.
Jargon buster
Exit: when and how you leave the business you
own.
Virtual assistant: an assistant who doesn't work
on your premises but remotely, sometimes from another country (as
this can often be much cheaper). You can use their services as and
when you need them. It's simpler and cheaper than taking on an
employee to do the same work.
HMRC: HM Revenue & Customs
Resources