Turn redundancy into an opportunity
Whether you have been made redundant or just fancy a career change, a second start in the shape of your own business offers the opportunity to try something different.
Take Geraldine Brooks, 43, from Hastings, a former managing director within the Virgin group, working directly for Sir Richard Branson. Despite the glamour, Geraldine was tired of the networking circuit.
"I found the countless work events I went to very stuffy, so I wondered if I could create something women would want to come along to."
The business she eventually set up, Sugargroup, organises networking events for women, where members can meet up to share ideas and contacts, as well as have fun. It began in Hastings, Rye and Eastbourne, and has now expanded to Brighton, Tunbridge Wells and London.
How to sell your idea
Second-starter Geraldine's experience proves that if you've got an innovative idea, there's no reason why you can't turn it into a business.
But a good idea in itself isn't enough to create a profitable business, warns Ian Robertson, chief executive of the National Council for Graduate Entrepreneurship (NCGE).
"Lots of people have good ideas, but you need to be able to showcase your skills and how you'll make a success of things."
Friends Laura Kidd, 34, and Kelly Andrews, 24, didn't change careers, but they did decide to go it alone after the collapse of the estate agent that Kelly managed and Laura, an independent mortgage adviser, worked with.
The two friends spotted an opportunity to offer something a bit different from the typical agency, and together they set up Love Property.
"Customer service is lacking in our industry, so we wanted to run an estate agent that tries to give as much help and support to its customers as possible," says Laura.
As the only estate agent in Catterick, Love Property is in a healthy position competition-wise – but as mum-of-two Laura observes, it's not an easy life. "It's a lot harder to take a holiday now, and neither Kelly nor I took a wage for eight months," she says.
Their dedication to the business, taking calls 24/7, certainly dispels any idea that working for yourself allows you to work fewer hours.
However, Tim Campbell, winner of the first Apprentice TV series and founder of the Bright Ideas Trust, thinks that the 155,000 people (according to the Office of National Statistics labour force survey) who have lost their jobs in the second quarter of this year should view their redundancy as an opportunity.
"Sometimes you need to be shaken out of your stupor," he says. "Small businesses are often created by recession."
So can anyone do it? "When someone tells me they want to start a business, there are two things I look for: do they really know what running a business means, and do they have the motivation and ability to deal with being self-employed?" says Ganesh Selvarajah, an adviser with the government's small business support service Business Link.
The business plan
Drawing up a business plan is a great way of graduating from fluffy idea to hard-nosed business. "It clarifies what you're doing, and helps potential investors understand what they're buying into," says Selvarajah.
If the purpose of the plan is to try and get funding, include a cash-flow forecast indicating how much you need and why.
Business Link suggests estimating how much finance you'll need for the first two to three years, or until you make a profit. Contingency funds for rough patches should take up 10% to 20% of the total required funding.
In addition, include financial forecasts for a three-to-five-year period, and state how the loan will be repaid and when investors can expect to get their money back.
Alongside the financial information, your plan should also include market research detailing your competitors, probable customers and how your product or service fits into the market. Then demonstrate how you propose to attract your customers through a marketing plan.
It can seem daunting, but there are plenty of templates and guidelines available on businesslink.gov.uk, bplans.com and other websites.
However, Doug Richards, founder of the School for Startups, which offers training to prospective business owners, is wary of business plans. He prefers to use a series of 20 questions to get would-be entrepreneurs into the correct frame of mind.
"I think business plans can become ceremonial. Business planning is an activity, but a business plan can become just a pile of paper," he warns.
If you're applying for funding, though, you'll need something concrete to show the bank manager or investor.
Unfortunately, the recession has made it harder to get financial help from the banks, says Andrew Cave, policy adviser for the Federation of Small Businesses. "Most people can't go to a bank and get a decent bridging loan, even with a contract in hand."
It's hard to come by statistics showing banks are less willing to loan to small businesses, but there is a lot of anecdotal evidence.
For instance, according to T-Mobile research on small businesses, 81% of UK small business leaders feel banks encourage UK business to grow in times of prosperity but withhold bank credit and retract support in tough times.
Second-starter and former occupational therapist Donna Fraher, 40, struggled to find a bank willing to loan her money towards her startup FAB Cars, a car accessory business.
"I didn't find the banks very receptive, but I've had more luck with private investors. One person has just given me a straightforward loan; another equity funding; the third is a bit more hands-on, like a business angel."
Angel on your shoulder
An 'angel investor' or 'business angel' provides capital to startup businesses in exchange for either some degree of ownership or a repayment, effectively bridging the gap between friends and family and venture capitalists.
The TV programme Dragons' Den has brought them more into the public eye, but in general angels tend to keep a lower profile.
The British Business Angels Association (bbaa.org.uk) is the only national trade association dedicated to angels; otherwise, it's pretty much a case of whom you know. Given the lack of bank loans to small businesses, Campbell thinks there is room for angels to do more.
"I like angels in principle, but the problem is that it's only if you know about them that you can get help – and after Dragons' Den some angels are getting greedier too," he says.
Donna found her angel through the Yorkshire Post. Friends and family have also chipped in financially and in more practical ways.
"It's been so important to have that extra help as it can be so stressful. You find yourself working all the time – and you can't do it alone," she says.
Compared with the US, where the majority of startups receive funding from people the owner already knows, the UK lags behind.
However, Richards believes that tax incentives would encourage more friends and family to lend money to people they know.
"A couple of years ago, France created a similar credit system, using money from its wealth tax to fund it. Literally hundreds of millions of euros went into private businesses as a result," he says.
Robertson thinks that sales and marketing is an area where new business owners often let themselves down, but given the online tools now at their disposal, there is no need to neglect this.
Donna, for example, used Google AdWords to create adverts cheaply. She's also in the process of developing a new website, fabcar.co.uk.
As well as taking advantage of technology, look for other opportunities: for example, Donna's car has her company details on it.
Finally, you should know when it's time to quit. It's extra hard if you're personally attached to the business or are really wedded to the concept, but as a true businessperson you should be able to accept that the venture is failing and it's time to turn to a new idea.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
People who have bought a property before they’re able sell their existing property often have to take out a bridging loan, a temporary short-term loan to “bridge” a gap in finances. Because bridging loans are made available very quickly, and because they are short-term loans, borrowers are charged higher rates of interest by the lenders.