My lessons from a year running my own business

Today is the first year anniversary of the establishment of my company, Viability Solutions Ltd. Unlike other first birthdays this is less about caterpillar cakes and Peppa Pig themed gifts, and more about adhering to HMRC requirements and renewing annual costs such as this website. Running my own business was something that I had always aspired to do, but continually put off due to it not being the “right time”. So, on this anniversary I wanted to put down on paper (or in this case at least 364 more days of funded web space) some of my lessons around starting a business, and why I believe more people should consider it.

Firstly it is worth starting with the reasons that I didn’t, and millions of others like me don’t, take the step from being employed to being self-employed;

Security – what happens if I don’t have enough customers? What happens if I get ill? What happens if there is another financial crash? These are all legitimate questions and I certainly wouldn’t want to underplay any of them. However, particularly given the experiences of many during the pandemic, when you peel back the façade of security that most have in employment the reality doesn’t always appear as secure as one may assume. Lack of sick pay in particular catches many people out at their most vulnerable.

Self-doubt – it is very easy to believe that there will be aspects of running a business that may be very challenging. But isn’t this the case for pretty much everything worth pursuing in life such as buying a home or becoming a parent? Spoiler – it’s probably harder than the first but definitely easier than the second, particularly when you throw home schooling in. And as we all tend to find out sooner or later, if you don’t believe in yourself then who else will?

Not having an idea – for every company based on a moment of genius there are a thousand based on doing basic valuable functions well. As I’ll touch on later it is important to understand the value proposition of your business, but you don’t need to have come up with the next Uber to start a business.

Funds – depending on the business model setting up and running most small businesses isn’t expensive, living is expensive. Assuming that you aren’t looking to make a significant capital investment or purchase a franchising opportunity the question that needs to be answered is how much do you need to “take home” each month to support yourself and your family?

Now that we’ve established the reasons that one may not set up a business, let’s explore the benefits of doing so;

Autonomy – the beauty of running your own business is that there is no-one telling you what to do (the horror of running your own business at times is also that there is no-one telling you what to do but that is a different issue). You are in charge of all of the things which you previously may have questioned; strategy, culture, marketing, dress down Fridays. It is hugely liberating.

Work / Life balance – many small business owners will be aghast that I have suggested that setting up one’s own business involves anything approaching work / life balance… but that is the point. You can choose to have a business where you work night and day, or you can choose to have a business that fits around the life that you aspire to have. Neither of these is right or wrong and both will not go to plan all of the time, but you are in control.

Rewards – the vast majority of us work to live and not the other way around so it is important that we can see some form of financial return for our endeavours. I think if you asked the majority of small business owners, particularly in their early years of setting up, they would say that their personal earnings are below the level that they were, or could be, in an employed role. However the main reason for this is that they are sacrificing in the short-term to try and build something of value in the long-term. Earnings through PAYE will be heavily punished by HMRC once they reach a certain level, it is far more tax efficient and flexible to use a combination of PAYE and dividends with your own business, and as well as this you are building something of value which you may one day choose to sell.

I hope that this has helped to explore why you might or might not want to establish your own business. I’m now going to move on to some advice that may come in handy if you do choose to establish a company yourself.

Access the right advice

This section splits both formally and informally. On the formal side I would strongly recommend finding an experienced and competent accountant. Whether you struggle with numbers or (like me) consider spreadsheets close personal friends, there are a number of areas which would either pose a significant risk of falling foul of rules and requirements, or missing out on potential tax efficiencies. The rules are extraordinarily complicated and rather trying to understand them all yourself it is best to pay for an expert to worry about those things for you. IR35 is a good example of an area that can be highly confusing. Out of the 1,018,250 inquiries between November 2019 and May 2021 on the HMRC’s online checking tool, 210,000 came back as “unable to determine” whether a contractor was IR35 compliant or not. As well as formal advice I would recommend finding one or two mentors who have been through this process before and can help to guide you. Running your own business can be a lonely endeavour and so being able to lean on someone experienced in wearing the t-shirt can be of great value.

Understand your value

This is as fundamental to Amazon as it is to a sole proprietorship, who are your customers? Why should they choose you? What other options do they have? The answers to these questions should fundamentally shape your strategy, marketing and pricing. If you are confident in your strategy then you will feel under less pressure to drop your pricing when pushed. Linkedin is a great place to examine how companies communicate their value, and how many fall into the potential pitfall of just making noise rather than having a clear value proposition.

Know where your first invoice is coming from

I know that this sounds idealistic but it is a fantastic way of validating whether the business is workable in reality. Converse informally with potential clients prior to making a decision to proceed, and attempt to gain a verbal indication that they will become a paying customer at launch. If you are considering moving from being employed to being self-employed then this work can happen prior to resigning, and depending on the terms of your contract (worth a check in any circumstances), you can start running the company prior to making the decision to resign from your job.

Be stubborn about your goals but flexible about your methods

This quote from William A. Donohue I think is perfect advice for any small business owner. I find it interesting because it stresses both the need to understand your goals as well as making it clear that flexibility will likely be needed to get there. Your goals may be a feeling of self-control, they may be building a valuable company, or they may be spending more time with your family. Whatever they are it is important to understand them and keep them front of mind. Being flexible involves being open minded to change, being happy to pivot towards opportunities as they arise, and not allowing one’s pride to get in the way. There is no shame in taking an employed role to pay the bills if things don’t go to plan.

Be yourself

At the pinnacle of Maslow’s Hierarchy of Needs sits self-actualisation, this is defined as “the complete realisation of one’s potential, and the full development of one’s abilities and appreciation of life.” For me this is the point where one can be truly authentic and at peace with yourself. Whether that makes you Don Draper or David Brent doesn’t matter, if you can’t try for this running your own business then when can you?

As I finish this blog (that’s right, nearly there) I want to stress that some of my most rewarding moments have come whilst working in an employed capacity, and they may again. I certainly wouldn’t want to give the impression that this is somehow of lesser value. We are all just trying to make the most of the time that we have and it’s not for anyone else to say what decisions others should make.

The trends of the workplace were changing long before COVID-19; the emergence of the gig economy, more home working, less job security. The pandemic has impacted us all differently and whatever your personal priorities are as we restart normal life with those precious anti-bodies coursing through our veins, I hope that should you be considering starting your own business then reading this may have helped. As I enter my second year I am just scratching the surface of my learnings, but if I can be of any assistance then please give me a call.