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Friday, 31 August, 2001, 06:57 GMT 07:57 UK
Advice before you go it alone
Working for yourself?
Setting up a small business requires more than determination
This is the fourth part of BBC News Online's "kick-start your career" guide

By BBC News Online's personal finance reporter Sarah Toyne

Small businesses account for 99% of the 3.7 million businesses in the UK.

But recent figures suggest that fears of a recession may be putting people off.

According to a recent survey by Abbey National, only one in 50 people in the UK has taken the plunge into self-employment over the past year.

This reluctance by people to set up on their own is hardly surprising.

HAVE YOUR SAY Hundreds of thousands of rural business owners are having a torrid time due to foot-and-mouth disease, and the manufacturing sector has been crippled by the strength of the pound.

But there are contradictory reports.

Geraldine Boardman is chief executive of Trafford Business Venture, a local enterprise agency in Manchester, which helps people start businesses.

Ms Boardman says that the prospect of a recession is not deterring people from going it alone.

She says: "We are seeing a lot of people coming out of employment to start businesses - and not as a last resort."

In fact, setting up a business during a downturn or recession may even work in your favour.

Bucking the trend

Personal finance public relations firm Lansons was founded in 1989 at the height of the last recession, but now employs 65 people and has an annual fee income of 5m.

Tony Langham, co-founder, says that there can be advantages of setting up a company in a recession.

Mr Langham says: "People are looking around for cheaper options for the work they do - you might be able to find cheaper office space next year."

More than a good idea?

"My main tip is to do something you are passionate about... it all starts from believing in something you do," says Mr Langham.

But giving up a good job and taking the plunge into self-employment can be risky, though.

Experts advise anyone to think carefully and seek advice before they take drastic action.

And setting up on your own is not just about determination, perseverance, a thick skin and a willingness to be your own boss.

Tony Langham, chief executive of Lansons
Tony Langham set up PR firm Lansons during the last recession

Ms Boardman says that although these qualities are essential, you also need a clear business plan, knowledge of your market and willingness to take advice.

"You must carry out detailed market research, including the level of demand, and how your idea differs from competition," she says.

But it is a business plan that is the most important factor.

She says: "If someone's plan is not right, with the best will in the world, they will not get support - it is the key."

Plan ahead

Less than two thirds of businesses prepare plans prior to starting up, but it is not only important when you set up.

According to research by Shell LiveWire, companies with a regular business plan had an average profit margin of 54%, compared with only 35% for those that did not.

Mike Rogers, managing director of small business and start-ups at Barclays says: "It is vital to assess the situation and make a positive decision. There is nothing wrong with changing the original plan but not acknowledging the change of direction is a mistake."

Need good advice

Experts advise anyone to get proper advice before they quit their job and set up on their own.

The government launched a Small Business Service (SBS) in April 2000 to help small firms.

Through its Business Links network, you can obtain information, advice and access to experts on all issues relating to running your own business, planning, finance, regulation management and other queries.

The Federation of Small Business represents self-employed people, and has a "Be Your Own Boss" pack.

Most High Street banks are falling over themselves for small business custom and as a consequence have set up an array of business advisory services.

For example, Barclays offers advice and fact sheets on writing business plans, while NatWest offers a BOSS (Business One Stop Shop) adviser on running a business.

Mike Warburton
Mike Warburton, senior partner at accountants Grant Thornton

You may also be able to get help through your Regional Development Agency, the Learning and Skills Council as well as through your local chamber of commerce.

There are about 60 different local chambers of commerce in 100 locations around the UK and it costs 80-plus a year to be a member.

Malik Thahid of the British Chambers of Commerce says that a local chamber of commerce can be invaluable to a new start up.

He says: "The classic service a local chamber of commerce can offer is vital networking for a small business start-up when they are a new company and are trying to build sales leads.

"They run events and get the whole community involved - people swap business cards and build partnerships."

Other considerations

Mike Warburton, a senior partner at Grant Thornton, an accountant, usually advises people to "moonlight" before setting up on their own, as long as the type of work they do does not conflict with their day job.

Mr Warburton says: "This way you are not going into a 'blank' situation - you have some business lined up. It can take a couple of years to build up a customer base."

He also warns people to remember that a major part of running a business is being prepared to take control of financial affairs, such as keeping proper records.

Further sources:

The Consumers' Association publishes a Which? guide to starting your own business: "Starting your own business. How to make a success of going it alone."

Tell us about your experiences at work - have you started your own business? Have you kick-started your career and successfully changed direction? Do you have any tips for job seekers?

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Tony Langham, chief executive of PR firm Lansons
The main tip is to do something you are passionate about
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