Most entrepreneurs want to start a business to create a new business with something they are passionate about. They have dreamed of this for a long time and thought about how to start their business so that when the opportunity arises, they are ready to go.
A business started out of necessity is usually initiated through some sort of bad luck, i.e. a job loss, redundancy, or even ill health. These entrepreneurs are hesitant because, in all honesty, they would rather be working for a large corporation with the guarantee of a monthly income, however for whatever reason, that is not an option. As with all entrepreneurs, be they averse to starting a business of not, they have a particular knowledge or know a specific product that they think is of value to others. To be able to share this knowledge/product with the world is all they know so, if the only way to be able to use these specialities is to create their own business that’s what they do.
Why Start a Business out of Necessity?
As previously touched upon, the reason for starting a business out of necessity is usually down to the job market. If you have bills to pay, and are used to a certain amount of cash coming in every month, but you have been made redundant, you may start thinking about where the money is going to come from. You might use the redundancy money to invest in the ‘products’ you want to sell – or to set up a home office to sell whatever ‘service’ you specialise in.
If your previous employment allowed you to meet clients who wish to follow you to any new position (as long as this has been agreed with your ex-employer), you may feel that it is a win/win, as you can reap the rewards of the full billing, rather than the salary you were on.
What to Think About Before Jumping In
It is important to remember the little jobs (as well as the big ones) that are undertaken while you were employed, will now have to be carried out by yourself.
You will, of course, need to know how to run a business financially. You will need to produce invoices and bills to be sent out in a timely manner. You will also probably need to negotiate payment of said bills as a large entity can withstand not being paid for 90 days whereas you (especially at startup) are going to need a quicker turnaround. Will the Client/Customer be OK with this?
Unless your speciality is accountancy, you will need to employ an accountant to do your taxes and to basically make sure that you are not breaking any rules in respect to earnings and deductions etc.
You will need to do your own Marketing, and this can take a lot of time and effort on Social Media and Search Engines etc. If you don’t have the knowledge to do this yourself, you will need to pay someone else to do it…if you don’t advertise, how will you get new customers?
What happens if your Broadband stops working or your computer breaks?
Fundamentally, you must think about all the things you took for granted whilst being employed.
There will always be a tendency to get overexcited at new prospects, especially as all the benefits you reap will be your own, but there are certain things you should always pay heed to:
- Don’t overcommit. If you can’t fit something in, you don’t have a backup, so be honest and give alternative times or dates for business you don’t want to lose…give them a carrot to keep them interested (maybe a discount for waiting?)
- Get Involved in Networking. If you have never had to tout for business before, networking events are invaluable. At these you will meet people who are interested in your service/product, that’s why they are there. You can also use these to get to know other like-minded entrepreneurs who you can bounce ideas off and learn from.
- Have a business plan. Where do you want to be in 6 months? How will you know if you have achieved your target if there was no target placed in the first place? Give yourself objectives in palatable sizes…if you don’t plan ahead you are setting yourself up to fail.
- Be Positive! So, you didn’t want to set your own business up and you are only doing it through necessity but once you have committed to it, you must maintain a positive approach to everything you are doing. Positivity is infectious and your clients will see it and have more confidence in you.
Stick or Twist?
To start your own business (whether through necessity or entrepreneurship) takes a lot of confidence in your product or ability. If you believe in it then what’s to lose? It is easier if what you are selling is a service as you can begin the process by simply becoming self-employed. However, if you have a product, this usually requires investment and can result in you being worse off than when you started, so think carefully before taking on the responsibility.
One thing is for certain, there are plenty of people out there who will take the chance as it is in their nature to do so. If you are only starting a business out of necessity, you are already behind them in the race so, learn to WANT that business – just make sure that you know everything you possibly can about the business needs beforehand and you could just overtake these over-confident chancers.