Making Cents: Lot of work to do before you hand in your notice

Consumer advice with Gráinne McGuinness

If your dream is to leave life as an employee behind and strike out on your own, then you are far from alone. Whether it’s turning a sideline or hobby into a main income source or offering expertise on a consultancy basis, more and more of us are choosing to be our own boss.

It is not surprising that people are drawn to the many obvious benefits of self-employment. Who wouldn’t want to decide their own working schedule and choose to focus on a project that interests them? But there is a lot of work to be done before someone is ready to hand in their notice.

It is crucial to thoroughly research the business area you are considering moving into and ensure there is the potential to earn a full-time income. Talk to peers in the industry who have done it. Ask about their pricing structure and work out what is feasible for you to charge. Work out a business plan and have a think about how you will fund yourself. If you have savings, are you prepared to bury them all in the business? Will you need a business loan?

The good news for budding entrepreneurs is there is a wealth of advice and assistance available.

Your first port of call should be your Local Enterprise Office (LEO). There is a nationwide network of 31 LEO branches and in 2016 more than 27,600 people availed of training programmes facilitated by them, with almost 7,500 people availing of one-to-one business mentoring. You can find out about the training support available at localenterprise.ie.

In addition to advice, you may also be able to avail of financial support from them. In 2016, 1,040 business projects around Ireland were supported by LEOs to the value of €11.4m.

When it comes to money, budding entrepreneurs to be prepared for several months before their income starts. So when considering finances it is important to factor in what you will need to live on during the early days, not just what the business will need. Regardless of the area you are going into, you can expect to have to invoice for work and then allow a certain length of time for payment. Thinkbusiness.ie, which is powered by Bank of Ireland, is another site with useful information. When talking finance, it asks: “Can you make sure the bills, both personal and business, are paid each month for the first year?”

If the answer is no, you should do more work on your plan and consider additional finance.

Not every business will be eligible for grant support, you may have to look for investment and/or a business loan. The Halo Business Angel Network is a nationwide group that works to put angel investors, those willing to take a chance on innovative startups, in contact with entrepreneurs in need of support. They have articles and videos giving advice to potential business owners at www.hban.org.

There is also a Government initiative that may help — Microfinance Ireland offers loan funding of up to €25,000 to both new and existing small businesses. Your LEO can help you prepare an application. If you are applying for a business loan with your bank, www.thinkbusiness.ie offers advice on how to get your plan and financial forecast ready.

When planning to go into business it is as important to be aware of your weaknesses as your strengths. In addition to whatever area you choose to work in, running your own business means you also have to be aware of tax law, health and safety rules and potentially employment law. If you are going to have employees you will have to operate PAYE for them. The LEO’s Start Your Own Business courses cover some of these areas but you may also have to consider getting specialist advice in certain areas. An accountant can also help you with the decision of whether to operate as a sole trader or set up a limited company.

A final point to consider is that when you walk away from paid employment you are saying goodbye to more than your salary. Annual leave, sick pay, pension, health cover — you are leaving vital benefits behind and should consider replacing them as a priority.

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