Balance It Up When Setting out; 'Sound Financial Management Should Be the Bread and Butter of Every Business, Especially during These Tough Economic Times'

The Evening Standard (London, England), August 11, 2010 | Go to article overview

Balance It Up When Setting out; 'Sound Financial Management Should Be the Bread and Butter of Every Business, Especially during These Tough Economic Times'


Byline: Lucy Tobin

START-UP business activity remained resilient during the recession, and now new bank figures suggest the number of entrepreneurs in the UK is growing.

Despite the torrid economic times, almost 130,000 plucky entrepreneurs were willing to have a bash at luring cashstrapped consumers to part with their coffers in the last three months of last year, according to the British Banking Association. The number of start-ups was only about 4% lower than before the crunch kicked in in 2007.

Normally, experts expect the level of entrepreneurial activity to dry up as a country's economic health declines, but that didn't happen. Now, as the nation crawls out of the downturn, we are seeing a surge in the number of start ups. Statebacked lenders NatWest and RBS say they have opened start-up accounts for 100,000 new businesses over the past 12 months, and the rate has now picked up to 2000 per week.

In part, this is because funding is not a crucial issue here. Entrepreneurs tend to use their own cash, or borrow from friends and family and put in "sweat equity", rather than take out business loans. And while unemployment levels remain high, it looks like increasing numbers of Britons are branching out alone.

In the capital, the biggest growth sectors for start-ups were legal, accountancy and consultancy firms and retailers: 26% more accounts were opened for the start-ups in these areas this June than last, according to NatWest. Construction, which has been battered during the recession, saw 13.2% more individuals open new businesses.

The statistics also suggest there will more hotels and restaurants around London: the number of fledgling businesses in the hospitality sector rose 9%.

Peter Ibbetson, chairman of small business at NatWest, says the figures "tell us that confidence is there and entrepreneurs are seizing opportunities despite tough market conditions".

If you too are keen to launch a business, here's how to get started: THE BUSINESS IDEA The best way to clarify your start-up idea is to set out a business plan, especially as this will be useful if you need to approach any individuals or firms for financial support, now or in the future.

A business plan should include an executive summary -- an overview of the business, a description of the market and how you will cater for it, a marketing and sales strategy, your business credentials (and those of staff, if applicable), your operations -- from premises to IT systems -- and financial predictions.

The free advisory group Business Link has an easy guide to each of these aspects on its website www.tinyurl.com/8ku6j ENTREPRENEURIAL DRIVE Researchers have pinpointed the qualities that help entrepreneurs succeed, including self-confidence and passion for a product; being able to work independently and with initiative, being open-minded about advice, plus demonstrating perseverance and commitment. But the everyday reality will boil down to working hard -- probably without a salary for some time -- and being able to cope with lots of admin.

From the first day, you will have to make complex decisions about the nature of your business with the tax man, such as whether to be self-employed, a sole trader, set up a partnership, or franchise.

This will affect your tax payments as well as the financial records and accounts you keep, your personal liability if the business fails, the different ways the firm can raise money, and management decisions. …

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