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. If you want to form a business it's never been easier with Smarta Formations, as we handle all of the hard work for you.

Fast-growth business

  • If you're looking for a relatively swift and 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 companies 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 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 and 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 employers 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 do not. Your current employer may also become a future client, partner or at least very useful contact.

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 e-commerce, 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

Smarta Formations 

You can set your own business with Smarta - we offer a company registration service powered by the National Business Register.  You can search for available names then register a business name, or set up a company and/or register a trademark with us. You will receive a professional binder with all your official documents via post within 3-days.

Smarta Formations is the quickest and easiest way for you to register your limited company. All the hard work is handled for you. 

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