Starting your own business

Many of us dream about being our own boss and starting our own business but don't know how to practically go about it. In this episode of Moneywise TV we tell you how.

The coalition government's spending review warned that job losses were inevitable – making the threat of redundancy all the more real for many of us. If you find yourself in this situation, it's possible to make something good come out of it though by starting your own business. But how do you get started?

All successful businesses start with a great idea but that alone isn't enough. It's hard work at first and you'll need to be prepared to work long and anti-social hours and maybe even delay giving yourself a salary. Jim Blakemore and Dave Miller started Bikeworks together in 2007.

Writing up a business plan is essential if you are looking for funding. Estimate how much money you will need for the next two–three years to cover you until you are in a position to make a profit. Also allow extra funding for rough patches. Business Link recommends setting aside 10-20% of you money towards this.

Include financial forecasts showing where you expect the business to be in the next three to five years. Outline how you would pay back a loan and if investors can expect to receive anything else in return.

The more research you've done into your competitors and probable customers, the better. It shows potential investors and the bank that you are well–prepared and setting up a business based on solid reasons rather than a flimsy, untested idea.

If you're not sure how to write up a plan business links' website and bplans.com offer further guidelines. If you're unsuccessful at the bank, there are other ways to get funding.

Loans from friends or family needn't be a disaster provided you are clear from the start on how much you've borrowed and detail how you will pay the money back. Putting this in writing is one way of avoiding disagreements down the line.

Depending on your field it's worth seeing if you can apply for funding from a related organization or authority.

Alternatively you could look to a business angel. Dragon's Den has made this more popular but you aren't fortunate enough to bag yourself a slot on the tv show, place adds in local papers and through websites like gumtree and twitter.

If your efforts fail you, go to the British Business Angels association.

Taking on staff is a financial commitment but you can be more flexible in your approach:
Case study comment: How do you employ staff? What's the benefit of having large team of semi-regulars?

Be versatile with your resources too: you don't need a fancy office or to spend loads on websites and marketing.  A bit of creative and opportunistic thinking can keep overheads down. Use social media websites like facebook and twitter to publicise your business for free, or if you've got a car consider advertising your business details on it.