Business Ideas

Different approaches and business ideas to start your own business

Every year, thousands of people get business ideas and set up their own business.

This guide looks at why you might choose to run your own business and different ways of making the move.

It considers the positive and negative aspects of each approach and tells you where you can find out more.

Good business ideas

Good business ideas could be an invention, a new product or service, or an original idea or solution to an everyday problem. It might also be:

a gap in the market that you can fill
a business related to the work you do already
an interest or hobby that you can turn into a business
Whatever your idea is, you need to be sure that it fits with your needs as an individual, as well as being a viable business proposition.

Questions to ask yourself

What is it that you will personally bring to the business in terms of relevant experience and expertise?
Is there a market - a need for the idea, and customers who will pay for it?
How big is the market, and how will you reach it?
Who will be your main competitors?
What is special about your idea, making it different from similar products or services already out there?
How will you fund your idea?
What might go wrong?
For information on turning your answers to these questions into key documents for your business.

Other sources of help

Discuss your ideas with friends and colleagues, particularly those who know about the business.

Help for people under 30
Help with setting up your own business is available from the Shell LiveWIRE scheme.
If you have a good idea for a business but can't get funding, the Prince's Trust scheme could help you by offering a low interest loan, a grant or a mentor.

A tried and tested business model

Some self-starters choose a well-trodden path - such as buying an existing business or rights to a franchise - which can carry fewer risks than going it alone.

Advantages

It is usually easier to get finance.
A market for the product or service will have already been demonstrated.
A business plan and marketing method will be in place.
You should have valuable experience to draw on.
Many of the problems will already have been discovered and solved.
A franchise comes with financial support too.

Disadvantages

Some businesses that are up for sale may be experiencing difficulties. Make sure you fully understand the reasons for selling, as you may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
The rights to a franchise or to sell particular products or services may be expensive.
With a franchise, there may be a particular way to run the business that you have to stick with.

A specific business opportunity

Sometimes the possibility of owning your own business can come as a complete surprise. Perhaps you are offered the opportunity to buy out your employer, or take on a family business.

Opportunities like these are like any other business start-ups. You still need lots of personal commitment and you may need to put your own money on the line. You also need to carefully assess the business to make sure it is viable.

Advantages

Development, planning and market testing should already be in place.
There may be established customers, a reliable income, a reputation to capitalise and build on, and a network of useful contacts.
You probably already have expertise in the product or service and a good understanding of the business you're taking on.
Disadvantages
You may be taking on someone else's problems when you take on the business. Ask yourself if there are problems with the business, and if so, can you solve them?
If you are buying out your employer, you may lose support services that you take for granted now. You won't just be responsible for your core role, but for everything else as well, such as accounting, staff management and payroll.

More help

Talk to people already in the business about your plans and ideas. What can they pass on from their own experiences?

A business with social aims

You may want to start a business that isn't just for profit but also has a social purpose. For example, you might want to provide a service for a disadvantaged group in your local community, or help improve the local environment.

Although any business can have social objectives, you might want to consider setting up a specific type of business known as a social enterprise. Although a social enterprise is run as a business, and often operates under the same financial and profit-driven pressures, it also aims to provide a clear social benefit. The profits are mostly reinvested, or used to support its social aims, rather than being paid to the owners of the business.

Advantages

You earn a living doing something you feel is worthwhile.
As your business grows and matures, your community or beneficiary will also benefit.
Customers may be more willing to buy from a business that supports a good cause.
It may be easier to attract and motivate employees (or even volunteers) to work in a social enterprise.
You may qualify for a grant, or be able to raise finance from people or organisations sharing your social aims.
Disadvantages
Making profits and achieving your social aims can sometimes conflict with each other. You may have to make difficult choices.
Although you can earn a reasonable income working for a social enterprise, you will not make your fortune - most of the surplus profits are put back into the business or go to support its aims.

A change in circumstances

A major life change can often enable you - or push you - to set up your own business. Maybe a dramatic personal event kick-starts you into action, or your job situation means that now is the time to take the plunge. Such changes might include:

unemployment
redundancy
a change of family circumstances
coming into money

Advantages

A change in your circumstances might be an opportunity to start again or do something you've always wanted to do.
Redundancy payments or receiving a lump sum of money can provide an opportunity to invest in a business.
At its best, being your own boss can give you the flexibility to work around family commitments.

Disadvantages

Major life-changing events can be very stressful. It may be unwise to make further big decisions at times of personal upheaval.
Starting your own business is unlikely to provide a speedy return on your investment and you should be prepared for a long haul.
In the early stages especially, running your own business can mean putting in long hours and making sacrifices elsewhere in your personal life.

Starting a business when you're unemployed

If you're on jobseeker's allowance and want to get back into employment by starting your own business, find out how the New Deal can help you by calling the New Deal Helpline on Tel 0845 606 2626.

To check what would happen to any benefits you may be receiving if you start a business, contact your local Jobcentre Plus or Social Security Office.

There are many schemes designed to help people on benefits start up their own business. You can find out about local programmes through your nearest Jobcentre Plus.

You may also be entitled to Working Tax Credits. These are payments to top up the earnings of working people on low incomes, including the self-employed.

Taking control and changing your lifestyle

For many people, the biggest attraction of setting up a business is the independence provided by being your own boss and the chance to have the lifestyle you want.

Advantages

Starting a business can offer a career with built-in independence and flexibility.
Being your own boss can give you the choice to work more convenient hours - such as working around your children's school hours and holidays.
You will be able to choose to do some professional development or training.
You will be the one in the driving seat, making the decisions that enable you to lead your chosen lifestyle.
If your business takes off, the payoff in financial and lifestyle terms can be huge.
Disadvantages
You may find that you have to work longer hours.
You may find it difficult to separate work and home life, especially if you run the business from home, and this can put extra demands on your family.
Some business owners suffer stress when things are not going so well.
You should be prepared for the loss of perks such as pension schemes, holiday pay and sick leave.
It's quite common to have financial difficulties, especially when you're starting up.

Going into business full time

The kind of business you've chosen - or your individual circumstances - may mean that you want to take the plunge and jump straight in full time.

Advantages

You can devote all your time and enthusiasm to your business.
You can react to new developments as they arise.
If your business depends on a gap in the market or a new idea, time will be of the essence.

Disadvantages

You will have to manage without an income while your business gets off the ground.
If you decide to go into business full time you have a few options to help you over the early days:
Live off your spouse or partner's income - however, it can be hard to live off one salary if you've been running the household on two.
Use your savings - if you've been putting money aside for a rainy day, this could be it. Ask yourself if you have enough to cover your living expenses and fund your business? For how long? Will you have anything to fall back on if your business fails?
Get a loan - banks will often help new businesses with a loan. However, they can be inflexible. You may have to pay back the loan immediately if your business fails, and there will be expensive penalties if you don't make agreed repayments.
Use your home as capital - if you have capital in your house, you could use it as security. However this is risky, your house may drop in value and if you cannot keep up repayments, you risk losing it.
Borrow money from family or friends - you can save a lot of money if your friends and family don't charge you interest. But if your business doesn't work out, it could put a big strain on your relationship with them.

Going into business part time

If your business allows, you could decide to work on it part time, fitting it in with your current job or other responsibilities. Then, when the business is robust enough or circumstances change, you can move over to it entirely.

Advantages

You can still earn an income while you're getting your new business off the ground.
Technology such as answerphones, the Internet and email make it possible to communicate out of hours when you're not available in person because you're doing your other job.
It can make it easier for you to juggle your other commitments - such as childcare - by allowing you to choose when you work.

Disadvantages

It can be difficult to manage the extra hours you need to put in.
Putting in very long hours can be stressful and tiring. There won't be time for much else.
It could take much longer for your new business to take off.
You'll have to pay tax on both incomes if you continue with your other job.
Many people who set up their own business decide to work on a part-time basis to enable them to balance their home and working obligations.

Some people decide that the safest option is to continue with their current job whilst setting up their business. Legally you don't have to tell your employer that you are setting up a business, although there may be a clause in your contract preventing you from doing other work.

You might want to ask your employer for more flexible working arrangements. These could involve reducing or re-arranging your existing working hours.

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