Running your own business

[stevie1556]

I'll hopefully be launching my business next month, providing I don't have any more costly or time consuming set backs, and it got me thinking. As there is quite a diverse range of members on here, I was wondering how many of you run your own business, or have done, and wouldn't mind sharing some tips.

First time I've ever done something like this, and although it's scary (due to costs and time commitments), I'm genuinely very excited about it! I've had a few small extra money makers over the years, but nothing like this.

 

[Duncs]

Sorry, I've no experience of running my own business but always wanted to. Just wanted to say good luck with it :

 

[bunkerbrewer]

I was self employed (actually a partnership) for 7 years. I've had a "proper" job since 2006, but sometimes I miss the flexibility. What sort of industry are you going into, if you don't mind the question?

The only immediate advice I can give is - cashflow is king! :) A lot of people start to struggle when they don't manage their cashflow. If you're in a very small business or a one-man band, you may find that when you're delivering work for customers, you aren't selling, and when you're selling you aren't delivering, so can end up with cycles of up and down income which have to be managed.

And the very best of luck :thumb: :

 

[alanywiseman.]

I have grand plans to run my own business but must learn to walk before I run! Good Luck with it though.

 

[Megaross]

I've been self employed briefly and I've got a degree in business administration (which to be honest doesn't really prepare you for running a business truth be told).
Get some accounting software like sage - thats a bloody lifesaver, ensure you're insured and paying the proper taxes and rates and don't be over optimistic when planning.

And don't get greedy, be happy to make a steady living, greed kills so many businesses. Do things by the book, obey the rules, if something needs doing just do it. It's all about best practise, if you do right by your customers and by your community and your staff, you may spend a little more in the short term but long term your reputation will be impeccable - and that is something you can't fix down the line and is invaluable to any business.

From a highly generalised standpoint anyway, it depends what sort of thing you're doing.

And good luck!

 

[oz11]

I've been self-employed and run a limited company but, quite frankly, the time spent on paperwork put me off in the end.

My personal targets achieved I returned to part-time PAYE a couple of years ago and it's a blessed relief not to have any more tax forms, VAT or company returns to complete!!

 

[graysalchemy]

I have successfully run my limited company for 9 years now. I have had ups and I have had downs and last year was my worst down, but I have survived.

I have lots of advice were to start :wha: :wha:

Firstly get yourself a good accountant, i have known to many people who were self employed and ended up with big tax bills because they hadn't taken advice from an accountant.

Your accountant may advise to become a limited company I personally would for various reasons limited liability of yourself if you go bump (not that you will be planning to I am sure), You may well be better off tax wise paying marginally less tax and no national insurance, this is set to get better when the new corporation tax rates come in next year i think. Also if you are working in a Business to business enviroment you will get more respect even if you are a one man band.

Treat people and companies how you would wish to be treated yourself, bend over backwards for your customers treat suppliers with a little respect pay them on time and build good relationships with reps and they will look after you.

As has already been said cash is king, keep up with your cash flow, get customers to pay on time or if you can insist on payment up front. I have had about £10000 worth of bad debt over the years which isn't a huge amount but then it is a huge amount as that comes directly out of your pocket. Most of my mistakes have come if I am honest being to friendly with customers and too frightened of loosing them, as I result I have lost out.

Also don't be greedy. I pay my self a set amount each month enough to keep us comfortable at home. I keep the rest of the profits in the company for cash flow expansion and for bad years. If I didn't have funds in the business last year I would have gone bust. Yes in time you will be able to take a dividend out but build up funds in the business, it is also better for the balance sheet and credit ratings.

I built my business organically little by little. I have never had a loan (apart from some money I put in to begin with) but I have grown my business. I haven't gone down the route of having staff and probably won't if can help it. I invested in machinery which helped me increase output. Machines don't take holidays or go on the sick though they can break down. Don't over stretch yourself both financially, physically or emotionally otherwise you will end up with an unwieldy business which is so big that it consumes all your energy for little more gain than what you were making when it was just a one man band. One of my suppliers grew quickly and they had a turnover of £10m in less than five years, they employed 40 staff and had big shiney premises, but the two directors made less than £25K a year each.

Finally as you establish yourself and get successful i with regular customers , don't get complacent, always look for new customers see how you can look after you existing ones better, listen to what they want, look at the market and innovate. Be a chameleon evolve and change with the ever changing market place don't be a dinosaur. Keep your business lean and manoeuvrable it will bode well in hard times, so many companies went to the wall early on in this recession because they couldn't adapt or change.

Finally enjoy yourself when it becomes a chore then it gets shortening. I find when i am doing monotonous jobs that I just think of the ££ I tot up how much profit the job is making me, and that usually puts a smile back on my face. Also get the balance between home and work right. I spent most of teh first 4 years of my kids lives working weekends and bank holidays, which I regret. I don't do that now.

There is probably loads more I could tell you but I hope that helps even if it is a bit jumbled up. :thumb: :thumb:

 

[Tim_Crowhurst]

Finally as you establish yourself and get successful i with regular customers , don't get complacent, always look for new customers see how you can look after you existing ones better, listen to what they want, look at the market and innovate. Be a chameleon evolve and change with the ever changing market place don't be a dinosaur. Keep your business lean and manoeuvrable it will bode well in hard times, so many companies went to the wall early on in this recession because they couldn't adapt or change.

"Look at the market" is crucial. Don't just look at where it is now, bear in mind where it's likely to go in the future. A good example of why it's important is what's happening at the National College for Teaching & Leadership:

The NCTL is a quango charged with researching and improving how well state-funded schools, colleges, etc. are run. It survived the bonfire of the quangos a few years ago, but its funding was greatly reduced. Much of its research work was done on a contract basis, and it had a well-established network of sole-trader researchers and consultants with a variety of specialisms. My aunt's specialism is/was vulnerable children, special educational needs and inclusion, and of the group she worked with most frequently she was the only one who hadn't yet reached retirement age. For many of the people she worked with it was a way of keeping active in retirement, continuing their involvement in the education system, &/or topping up their pensions.

A little before the bonfire of the quangos, two new requirements were brought in: all contractors had to be limited companies (increasing costs for the contractors) and they had to tender for all but the smallest jobs (increasing their workload). In both cases there was no corresponding increase in pay, and the relatively small amount of work done by most of the contractors meant that it was no longer financially viable - most were already earning less than minimum wage, because the amount of hours they were doing was much higher than they were being paid for. Most of them dropped their involvement at the time, although my aunt didn't roll up her company until the end of the last financial year, when the costs of running as a limited company became equal to the company's earnings.

I don't know whether or not the NCTL was responsible for the limited company and tendering process decisions (in fact I suspect they weren't) however I do know that it was a classic example of not looking at the market, in this case the contractors. The NCTL has lost dozens of consultants with decades of experience who were often being paid much less than you might expect, primarily because they were doing it for love of education, not just for the money. In effect there was previously a glut of supply which kept costs low, however this is no longer the case. If the NCTL's funding is ever increased it will find itself with a much more limited supply of consultants who are mostly working to earn a living rather than as a hobby or a pension top-up. That is a very different and potentially much more expensive market to be operating in.

 

[stevie1556]

Thanks for all your replies guys!

I'll try and address you all individually:

Dunks, cheers! At the moment I feel like I need as much luck as I can! :

Bunkerbrewer, thanks for the advise. I understand that cashflow is king, which initially will be extremely tight for me. However, I'm thinking that if I plough the profits back into stock and R&D, then I should hopefully be fine. The business is guitar effects pedals, but rather then the mass produced ****, they will be hand built. I know there are a few companies already doing it, but they are (very) pricey, and I want mine to be affordable to people with less deep pockets, but still want the quality and benefits of them. I'm also hoping to be doing hand built valve amplifiers, along with hand built speaker cabs, hopefully by the end of the year, and then sometime in the future open a full custom guitar building shop. I have been building my own effect pedals for about a year now, so in a way it's just expanding on what I already know. However, I did find that I used to just build them and hope for the best, but now I'm relearning electronics (did GSCE and City & Guilds at school and college), which has taken up a lot of my time but has been extremely enjoyable!

Alanywiseman, life is too short, find a niche, hopefully it's something you enjoy, and then go for it!

Megaross, a lady a work with used to be an accountant, and she said either find an extremely good accountant or get good software, and she said it would be an absolute lifesaver! Same wise words as yourself! My understanding of business is limited, but I know that without happy customers, or even good customer service, it's over before it's begun. By nature I'm not a greedy person, Don't get me wrong, I would like a comfortable lifestyle, but not so comfy that money becomes a novelty. I've already got plans in my head of maybe doing charity runs, by that I mean making a limited number of pedals (say 10 pedals), different colour, maybe a charity logo, and all proceeds from the sales goto that charity.

Oz11, I'm glad to where you got to where you want to be, and on the bright side, I'm assuming you now don't have the stress of it all when you are working! :thumb:

Graysalchemy, amazing advise, thank you! I do plan on seeing an accountant in the next few months, if only for a consultation for want of a better word. I'm lucky that in my job I work 6 days, then have 3 days off, but in my working days I also have home standbys which I can work on. If all goes well, Winter next year i could go 50% part time (3 days working 6 days off) which would be ideal, as I would have a constant income should it all go wrong. I've tried cutting out the stress, as trying to plan a wedding next year, plus the other half trying to set me completely unrealistic goals, and a few various other things was just getting far too much, so I've stepped back from the wedding and letting SWMBO having more or less free reign over it (which is a good thing as it's the only thing we have ever really argued about). As regard to the finances, I'm never planning for the business to be in debt, by which I mean that the profits will pay for more stock, and no stock will be done on credit. I'm also trying to order as much stock from companies in the UK, and preferably small businesses. Not as cost effective as ordering from bigger companies, but I do feel it's more morally right in that businesses should help each other grow. For the last year, I've really enjoyed building pedals, so for me it feels more like a hobby and not a job/chore. Also, I'm trying to do as much as possible in house, to keep costs down and to also add to the hand built effect. I've got the equipment and learnt how to powder coat (more durable then spray paint and better for the environment), building the circuit boards and wiring all the controls and switches up. In fact, the only thing I don't do, is making the circuit boards. I used to, but it's extremely time consuming, but it's also the cost factor. I can have 50 boards professionally made and delivered from china for cheaper then what I can make them for! Absolutely crazy eh!

Tim_Crowhurst, I think that is the thing that scares me the most, not keeping up to date and the market being ever changing. But the effect pedal market hasn't really changed too much over the years, which can't be said for the amplifier market. The traditional valve amplifiers still have more or less the same designs as the ones from yesteryear, but digital amplifiers have changed a lot. They have effects built in, different modes, etc, but lack the true tone of the valves. I do have a valve amp design, which is nearly ready, which, I think, features something not available on commercial amps.

:

 

[Good Ed]

as above, if you need an accountant I can recommend a mate I went to college with, good accountants for small businesses are notoriously difficult to find so let me know if you need his contact.

don't worry too much about what you are doing, it's a move for the better :

 

[Tim_Crowhurst]

Tim_Crowhurst, I think that is the thing that scares me the most, not keeping up to date and the market being ever changing. But the effect pedal market hasn't really changed too much over the years, which can't be said for the amplifier market. The traditional valve amplifiers still have more or less the same designs as the ones from yesteryear, but digital amplifiers have changed a lot. They have effects built in, different modes, etc, but lack the true tone of the valves. I do have a valve amp design, which is nearly ready, which, I think, features something not available on commercial amps.

:

If it scares you, it terrifies me. It can take years to get a book out, while tastes can change virtually overnight. You can easily write something that fits really well with what's popular at the time it's written, but by the release date there's no longer any demand.

 

[Megaross]

Effects market changes often but in small amounts, I've seen on various forums over the years, and in my own playing. Sometimes it's back to basics - less people buying effects, theres been a big revival and valve based pedals are on the up, popularity of different musical styles will dictate how pedals sell.

It's all little things but worth keeping an eye on, tracking how well what is selling and trying to assign value to the fluctuations will no doubt prove invaluable in gaining an understanding of how to get the most out of the market and deliver the best to your customers.

Although I think a lot of it is like craft beer, as long as you're making a good product, you give it a fun name and you have the channels to get your product out there. It's a pretty safe bet. One of the best things you can do is give your brand it's own personality based on who is going to be buying it.

I like the idea of the charity thing, it's good publicity and good for the cause. I mean recently Ashdown did a couple for the BC bass relay and I was interested in them a lot more I must say, having not seen much of their pedals before.

 

[EskiBrew]

I've run my limited company since 2005 and have really enjoyed the flexibility it gives me (for example, I can choose to spend some time during the day with the kids and then I'll make it up in the evening when they are in bed). I spent most of the week in the run up to the spring thing doing stuff for that and have been catching up with work since - try doing that if you work for someone else :grin:

I can't really improve on the great advice GA has given :thumb:

I use quickbooks for day to day accounting and also employ an accountant on a monthly retainer fee which entitles me to phone/email him for advice whenever I like (very infrequently now). Although there are numerous free accounting packages and also spreadsheets, IMO it's worth paying something for a recognised package because it makes things much simpler when it comes to passing info to your accountant or submitting VAT returns etc.

 

[graysalchemy]

Well said Martin.

I use Sage because I always have (and more importantly thats what SWMBO is fluent in ) but there are other cheaper packages available.

 

[spike418]

Hi Stevie,

Good luck with your new enterprise :

I went self-employed in January, coincidently as an accountant :mrgreen:

I specialise in small business accounts and tax matters (of all kinds), I have 30 + years experience on both sides on the fence (12 years with HMRC and latterly with an accountancy practice). I also provide technical tax support to a few local accountant and solicitor firms, as a member of the Chartered Institute of Taxation.

As mentioned previously cashflow is king but please don't make the mistake of confusing capital expenditure with revenue expenditure. I have come across several clients who don't understand why they have a tax profit when there is nothing in the bank!!!! The best I saw was an profit of £80K and client was ranting about it couldn't be right as no money in the bank, so couldn't pay the tax bill. I politely explained that the land he bought for £110K was not deductible from the profits......

So if you have questions please shoot them in my direction via pm, I am happy to provide occasional free advice on small points when it doesn't take that long.
I would be equally happy to act (remotely if neccessary) on your behalf. :hat:

 

[Maceio]

Hi Stevie,

You planning on making a replica of the TS9 tube screamer (al la SRV)? Now that's a vintage pedal?

Good luck with the venture.

Maceio

 

[stevie1556]

Sorry for the slow reply, with trying to get everything up and off the ground, and working full time, I completely forgot about this thread!

Maceio - Not sure about the TS-9, maybe in the future but not yet. However, I shall be launching with the TS-808 replica. Just trying to find the right shade of green.

Spike418 - Thanks for the offer. If it's still ok, I'll shoot you a PM in the next day or 2 with a couple of quickie questions.

Graysalchemy - I shall check out Sage. Is it easy to use? Want something that's ideally cheap, and near idiot proof to use.

Eskibrew - One of the reasons I'm setting up my own business is that I want the flexibility. At the moment, I'm working shifts, 6 days on 3 days off, but I do get home stand bys during my working days so they are basically a day off if I'm not called out, and I can start at 5am on some early shifts, and finish at midnight for my late shifts. Would love to get up and start work without an alarm clock, and finish work at a decent time in the evening.

Megaross - The hardest thing with it is trying to decide on the names for the pedals! I'm trying to make them stand out, but it's a lot easier said then done. There is one guy who does a booster for valve amps, called the Super Hard On. I'm sure the name has helped contribute to the success of that pedal, but I don't want to go down the route of the risqué names! With the changes in the market, after a bit more research, I know what you mean about the small changes. The main effect I don't really like is the fuzz pedals, just too much for my liking. However, there is money there, so I will be doing a couple (already got a Tonebender MKii clone on the go. Also got a nice valve driver on the go, not quite ready just yet, will probably be about another 2 months or something, but it's going to be a good one.

Tim_Crowhurst - I really don't know how you do it! I would be absolutely petrified come release time!

Good Ed - I may take you up on that offer. Especially when it comes to accounts, tax, tax exempt things, etc.

 

[Vossy1]

I to ran a business for 3 years and G's advice

Firstly get yourself a good accountant, i have known to many people who were self employed and ended up with big tax bills because they hadn't taken advice from an accountant.

is probobaly the best single thing I can think of...a good one can save you 1000's...a bad one the reverse.

Good luck in your new venture :thumb:

 

[stevie1556]

These ones were done with water slide decals for the labels, then a clear power coat on top. I'm getting the proper boxes screen printed. They will look slightly better and be a lot more durable. They are going to be slightly redesigned for the screen printing as well.

The yellow one is missing the knobs as it was still in the testing stage when the photo was taken.

 

[kev]

Your accountant may advise to become a limited company I personally would for various reasons

I assume you're talking about this instead of becoming a sole trader?

K