RUNNING your own business is both a physically and mentally challenging experience.
Those involved often work double the hours of the average PAYE worker and in many cases earn little to nothing from the business in the first 18 months, according to Siobhán Finn, coordinator of Cork Innovates, an initiative of the Cork Entrepreneurship Steering Group partner organisations, funded by Cork City and County Councils and hosted by Cork Chamber.
Its long-term objective is to increase the rate of job creation in the region while developing Cork as a hub for entrepreneurship and proactively promoting and supporting the cultivation of the entrepreneurial eco-system and identifying key support services for entrepreneurs.
“Despite this reality, more and more people are opting to become self-employed. Whatever the reason, the decision to embrace the unknown will be underwritten by a cache of entrepreneurial characteristics, including self-confidence, innovative skills and a willingness to take risks,” she says.
Research by Barclays Bank found that only 30% of entrepreneurs carry out any market research to test the demand for their product or services, and over 75% of all entrepreneurs fail to carry out market testing of their product or service.
“The lesson is not that the risk of failure is high; rather that generating your idea is only the first step in a process which requires time and commitment to reach solid business planning stage. Market research will form the very core of your business plan,” she says.
Tax is an important aspect of running any business and increasingly requires the skills of a qualified professional adviser.
Caroline O’Driscoll, a tax partner with KPMG in Cork, adds: “Some of the areas you may want to seek advice on include planning your remuneration package, enabling founders and key talent to participate in the equity of the company, claiming the R&D tax credit relief.
“Also critically important are VAT considerations, maximising your ability to capitalise on Ireland’s 12.5% corporate tax rate, minimising your exposure to withholding tax and setting up a suitable investment structure from the outset in anticipation of a future exit.”
“KPMG offers advice across all aspects of starting a business, from preparing a business plan and raising finance, to finding and keeping talent, maintaining accounts, as well as doing business overseas.”
Many entrepreneurs rite their business plan only when faced with the need to present their case to a bank or investor around the solidity of their business idea and the viability of their business in the long-term.
Siobhán Finn says “The value of the business plan is seen in documenting your thought process and approach to starting your business. It includes key elements such as growth strategy and financial projections.
“The business plan must communicate very effectively the potential of the product or service being developed along with your own ability to make the business a success.”
* Decoding the DNA of the Entrepreneur, Ernst & Young 2011