Furlough, Redundancy. What next, job search or Furlough-Preneur?
Redundancy stirs up many emotions but with the current Coronavirus situation, and the news about it occurring with household names, it may not be such a shock to you if it occurs. Nevertheless, you will have an initial reaction, ranging from; anger, why me? to acceptance, it was inevitable – the boss hasn’t got a clue / lockdown has killed the business. These reactions are normal and will pass in a day or two, but then the practicalities of what to do next will hit. Redundancy is also an opportunity to assess your future direction and over the last few months those who have been furloughed will undoubtedly have been reflecting upon, employment, commuting, family, and social life.
By now, those reflections have probably crystallised your thoughts for your future. Peoples' appetite for risk is different, as is their drive to move from being an employee to being a businessperson. But, if running your own business, be it a lifestyle one, or one that has potential to become a household name, or be sold for a significant sum is now your dream, then redundancy could be just the trigger which will set you on the path of becoming a Furlough – preneur when Furlough ends.
The journey of a Furlough – preneur will have its highs and lows. The relief of having clarity that you have made the decision to embark on the journey, will be exciting. But the excitement will then be tempered with some apprehension as the practicalities are considered. So where do you start?
Step 1 – It has got to be something you are passionate about.
Setting up a business is all time consuming. There will be knock backs, these have got to be more than countered by the exhilaration you get when things go well. Make sure that you can see yourself doing the activity for some time.
Step 2 – Is your business idea viable?
Against the backdrop that around 30% of businesses fail in the first two years and 50% in the first 5 years, it shows that many businesses fail, as the idea is not sound, or the owner simply runs out of cash as their pockets are just not deep enough. You will need to examine your business idea to see if there really is a market, and if so, how big is it, and where can it be found. Be under no illusion, starting out is not easy. 95% of businesses in the UK employ less than 10 people. All those businesses are vying for work. There is a lot of noise to overcome and competition to compete with. You will have to set your-self apart, by being able to communicate what differentiates you.
Setting your self apart, requires you to explain what you do, often in under 60 seconds. Capturing people’s imagination to take note requires practice. A common reference to help you develop your pitch and focus your mind, is to look at the Simon Sinek video about the power of “why” and develop the idea why someone should buy from you. https://www.youtube.com/watch?v=IPYeCltXpxwIt is not easy, but when you have achieved it, everything else will start to fall into place.
Step 3 – Preliminary market research
The market research might take the form of an online, discussions with people you know and anyone who will give you the time. If you can do a trial run and gain some experience on what a customer thinks, that will help inform you as to whether, or not, the idea is viable. Set yourself a time limit for the trial and learn from any setbacks. The information will be invaluable as you go forward. A good read on this process is to Google the “Lean start-up”. Spending time planning and developing an idea can be very wasteful. Act, learn, and refine. As you do, better responses from customers will boost your confidence that you have made the right decision and will motivate you onwards.
Step 4 – survival budget
The lock down has given people an opportunity to examine their spending. Things which may have been “unnegotiable” before are now imaginable and the time people have had to reflect has given them the time to assess what is important to them. The other consideration is long term financial planning. Up until now you probably had goals which you have been working towards but when were they last seriously reviewed, e.g. paying off a mortgage, taking a pension lump sum. With a redundancy payment you might be a lot closer than you think. So, the next step is preparing a survival budget, which fits with your proposed lifestyle and commitments that you do not wish to change.
Step 5 – Prepare a business plan
Many people go on start-up courses, get taught how to write a business plan but never refer to it again. Some business coaches say having a plan is a waste of time and advocate just plunging in, but not having a plan is planning to fail. In the first instance, prepare a plan and check that your survival budget is met. By planning and setting out the basics of the business you will have direction and by building the financial business model you will gain an appreciation of where the sensitivities lie.
Step 6 – Get help
In challenging economic times there are opportunities, there are new problems to solve, there are highly qualified people looking for work and government stimulation packages often mean borrowing money is cheap, but initially gaining sales is the priority. The sales are not only dependent upon a product or service being differentiated but the price, or fee, must be pitched at a level the market will bear. For established businesses, the costs are relatively constant, but for a start-up, there are the additional costs of starting up. By trying to recover the start-up costs in the price, either the price will have to be set too high and sales plummet or there is no profit made which can be used to fund growth. To propel the business forward rapidly and take advantage of the conditions, it is worth considering a loan to spread the start-up costs.
The government has a loan scheme for start-up’s to fund purely the start-up costs. The loans are an incredibly low rate, so the repayments can be accommodated in your pricing, without making you uncompetitive. As mentioned above, a start-up is seeking to gain more sales, so marketing is a key element in the first couple of years, getting a logo, setting up a web site, obtaining signage and printed materials such as business cards are all essential. If you can prove that there is a market for your business idea, and are ready to start marketing in earnest, then a start-up loan could be for you.
If you are ready to become a Furlough – preneur, and would like to get some more pointers, then please contact me or if you are already on your way and would like to apply for a start-up loan to spread those initial one off costs, then please go to: https://transmitstartups.co.uk/ref/smc/
Applying for a loan using this route will give you the added benefit of getting help completing the application.