A practical guide to getting a new enterprise up and running

You never know when the urge to do your own thing will strike. It’s said that ten per cent of people are planning to work for themselves in the near future and, although this percentage isn’t necessarily higher among CIMA accountants in business, they are certainly better equipped than most to go it alone and build a company from scratch. While every industry is different and there is no magic formula to ensure to start-up success, four key themes consistently arose when Financial Management spoke to three CIMA members who are now running their own companies:

• You have to understand the market that you are launching yourself into. Ask yourself how your new enterprise is going to take a slice of it.
• You need a sound financial plan. Build in scenarios of disappointing sales periods and inflate some costs to test your liquidity because, once you’ve launched, it’s a simple case of “no cash, no company”.
• Be prepared to work hard and forget the nine-to-five routine of normal employment. High stress levels and longer hours will be the norm, certainly at the beginning.
• Keep learning. Talk to friends, colleagues and anyone you admire, especially people who have worked in your industry or have successfully started their own businesses.

Clare Thommen ACMA
Company: Boudiche.
Incorporated: July 2005.


Why did you launch your own company?

When my friend Fiona McLean and I were working for financial services provider Royal London in Edinburgh, we saw a huge gap in the market for luxury underwear that women would actually want to wear, as opposed to products that were aimed at men buying for their partners. We’d both also had experiences of choosing lingerie only to find that it didn’t fit properly. And, with such gorgeous brands out there, we couldn’t understand why you couldn’t shop for them all in one place.
How’s business?

Sales are increasing steadily every month alongside a growing reputation and quality press coverage. Our growth is on track to be 60 per cent up on last year and we recently won the best newcomer category at the Scottish Retail Excellence Awards.

What advice can you give to would-be entrepreneurs?

I probably don’t need to tell CIMA members and students this, but cash is key. Take your sales estimates and see if you can remain liquid if your actual sales are half what you have estimated. Then check, double-check and triple-check your cost assumptions. Be prudent with your cash flow forecasting.

Really try to understand your market before you jump into it. Research how the big players in your industry are faring. Speak about your idea to people you admire and seek advice from entrepreneurs who have some credibility – people who have achieved something already.

With hindsight, is there anything else that you wish you’d done before incorporation?

I think we could have found out more about life in the retail industry, but of course there’s only so much information that you can take on board. We followed our gut instinct and made loads of mistakes, but we don’t regret making any of them.The fashion world is very different from the world of finance, which now seems very dull to us in comparison.

Helen Thain ACMA
Company: Thain Finance.
Incorporated: May 2006.

Why did you launch your own company?

I resigned from my job as finance director of a £20m commercial interiors firm at the start of 2006. At the back of my mind I knew I wanted to do my own thing. I was happy with my work and, having become an FD, I’d achieved one of my main goals. But I wasn’t happy that I didn’t own equity in the company. When I was told that it was unlikely that any would be available, I decided to go it alone. I established Thain Finance just over a year ago to provide services for SMEs without full-time senior financial staff. I thought that setting up as a limited company would give it a better image – one of size, more capability and structure – along with the obvious ease of coping with growth.

How’s business?

It’s doing very well. I’m working hard and I am much happier now than when I was a salaried employee. I have branched out somewhat and am now offering financial training courses to people who work outside finance departments. The stress levels can rise when there aren’t many forward bookings, but the independence is so gratifying that it’s all worth it.

What advice can you give to would-be entrepreneurs?

Before you resign from paid employment, get your business cards printed, think about your web site and take advice readily. Every industry is different, obviously, but if your intention is to move into freelance work – especially in finance – you need to network because in the early days you won’t get enough work by word of mouth alone. I have gained clients through local auditors who have recommended me to their clients, but those auditors are also my competition, since many companies turn to their auditors when they need financial resources.

With hindsight, is there anything else that you wish you’d done before incorporation?

I would have been more prepared. You can’t think of everything, but my three-month notice period with my employer flew by and I was still working hard, which limited the amount of time I had in which to work on my new life. It’s clear that you need to plan your exit very carefully.

Julian TAll (part-qualified)
Company: Baltic Adventures.
Incorporated: April 2004.

Why did you launch your own company?

As many people say when they start their own ventures, I saw a gap in the market. My company, which launched on the day that Latvia, Lithuania and Estonia became part of the European Union, offers holidays with a difference in the Baltic states –James Bond weekends and ice cricket tournaments, for example.

The Baltics were largely undiscovered territories and they still are to most people. I’d had some experience of corporate hospitality and, to me, the region represented the ideal place for hosting trips, incentive events and team-building exercises, but with a twist. I knew the business wouldn’t require any assets, its overheads would be low and it would incur costs only once revenues were coming in. I went from full time to part time in my job in the City in order to launch the business. I quit my job completely just under a year later.

How’s business?

It’s growing nicely. I’m now employing local people in the Baltics to develop the web site and write promotional material.

What advice can you give to would-be entrepreneurs?

If you aren’t prepared to learn, don’t do it. I’m learning all the time. Differentiation is the key. The travel market is not unique in being saturated. You have to offer something out of the ordinary to get a slice of it. Setting up a limited company gives your business more credibility and hints at a size beyond me and a few local recruits.
With hindsight, is there anything else that you wish you’d done before incorporation?

I would have started on the web site earlier. In the service industry, your internet presence is crucial. Our site is structured in such a way as to show that what we offer does work and that people love it. It has been professionally designed and it now thoroughly serves its purpose. The quality of the site is of the utmost importance, which is why it has, in effect, been a work in progress ever since the firm started three years ago.

Financing the dream

• If you intend to approach a bank, a private investor (a business angel) or a government-funded body for start-up cash, you’ll need a carefully constructed business plan. This should contain details of your company’s shareholderdirectors and their holdings, its other directors and its accountant and lawyer.
• Set out your business goals in detail and how you intend to achieve them.
• Include an assessment of the market, explaining your enterprise’s unique selling point and showing that you have considered its location carefully to ensure that it can access the chosen market. This document will then become your company’s strategy.
• The financials that accompany the strategy will then become your budget.
• As a minimum, they should contain three years’ worth of projected P&L accounts, cash flow statements and balance sheets. These need to link into a financial model.

To give an idea of what a typical business plan looks like, here is how I structured the one I did recently for a new restaurant venture:

• Page 1 Front cover, including the title of the enterprise.
• Page 2 Contents.
• Page 3 Preliminaries: contacts, advisers, copyright notice.
• Page 4-5 Executive summary.
• Page 6-7 Vision, mission statement, philosophy.
• Page 8 Organisation and management.
• Page 9-11 The product: food, drinks, service, style, layout, location.
• Page 12-14 Market analysis: customer profile, macro environment, micro environment, competitor analysis.
• Page 15-17 Business strategy and operating plan.
• Page 18 Swot analysis.
• Page 19-20 Risk assessment: critical success factors, limiting factors, specific risks and solutions.
• Page 21-23 Financial forecast narrative, additional financial scenarios narrative.
• Page 24 Conclusion.
• Appendices Five-year financial forecasts 2007-11. Ingoing costs. Financial scenarios.

What to do once you’ve got start-up funding

Your lawyer will draft a shareholder agreement and issue share certificates. Shareholder agreements are fairly standard, but they are essential because they carry clauses that affect the future use of your shares. Many people don’t refer to them until they want to sell their shares, leave the company or offer extra equity.

Now you have to start thinking about banking,property, staffing and PAYE, IT equipment and telecoms, and VAT registration.

Always try to negotiate with your potential bankers, lawyers, accountants and landlords. Many of these service providers will cut you some slack in the early days if you have a sound business plan and approach every issue in a professional and organised way.


Further information

• www.startups.co.uk is a web site that’s dedicated to helping new businesses. It features a wealth of ideas, tips and case studies.
• For local, practical advice, especially on government grants, try Business Link.
• The Big Small Business Initiative is a not-for-profit group of organisations that offers support and information from a number of partners, including HM Revenue & Customs, the Patent Office and Companies House.
• For younger entrepreneurs, the Prince’s Trust helps people aged 18 to 30 in England to start their own businesses. It offers grants and cheap loans, commercial advice and a free legal helpline.
• The Shell LiveWIRE scheme, sponsored by Shell UK, also promotes enterprise among 16- to 30-year-olds.