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When to take the plunge?
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sally_in_wales
Downsizer Moderator


Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales
PostPosted: Sun Mar 25, 07 2:32 pm    Post subject: When to take the plunge?  Reply with quote    

How did those of you with small businesses take the leap into being wholly self employed? I've got myself stuck in a bit of a vicious circle at the moment where I need to roughly quadruple my takings on the business to be able to afford to pay the bills and eat and thus go fully self employed, but whilst I am working almost full time I can't produce more stuff, and its not worth advertising or trading more widely until I can keep up with an increased demand. I've toyed with looking for a more painless, properly part time job, but the likelihood of getting something part time on a rate of pay that makes it worth the travelling and getting used to a new role seems a bit unlikely.

A sensible option would be to continue as I am for another year or so, pay everything off and stockpile some emergency cash, but I'm really really struggling to maintain the pressure of both jobs at this level and I'm starting to go a bit flakey, I don't want to cut back on the business as it is growing and its what I want to do long term, but I can't quite see how to take the leap without going completely bankrupt.

What did other people do?

Nick



Joined: 02 Nov 2004
Posts: 34027
Location: Hereford
PostPosted: Sun Mar 25, 07 2:34 pm    Post subject: Reply with quote    

Could you sub out your production to anyone else, to help you stockpile, um, stock, allow you to grow and relieve some pressure?

Mary-Jane



Joined: 13 Jan 2005
Posts: 18397
Location: The Fishing Strumpet is from Ceredigion in West Wales
PostPosted: Sun Mar 25, 07 2:40 pm    Post subject: Reply with quote    

Could you take a sabbatical (paid or unpaid) from your employment for say, 6 months? Then try build up your business to see whether it would be realistic to take the plunge completely...

dpack



Joined: 02 Jul 2005
Posts: 35510
Location: yes
PostPosted: Sun Mar 25, 07 2:45 pm    Post subject: Reply with quote    

with the building firm i used to run it was
left work did 3 months work on my flat ,did a mates etc etc
in manufacturing i would think build up a market and go full time when the trade is booked
try to clear out goings / debts first
when is a good time ?
when it seems possible when the adding up is done
always keep a monkey under the carpet for emergencies

Nakipa



Joined: 01 Apr 2006
Posts: 20
Location: France
PostPosted: Sun Mar 25, 07 3:11 pm    Post subject: Reply with quote    

I am sorry but I think that is incredibly cruel and selfish.

Monkeys should be free not in zoos or under carpets.

N x

jema
Downsizer Moderator


Joined: 28 Oct 2004
Posts: 26642
Location: escaped from Swindon
PostPosted: Sun Mar 25, 07 3:26 pm    Post subject: Reply with quote    

I sort of fell into self-employment via redundancy. So can't give any insight really.

hedgewitch



Joined: 26 Nov 2005
Posts: 5834
Location: Daft wench GHQ
PostPosted: Sun Mar 25, 07 3:51 pm    Post subject: Reply with quote    

We had 3 months of dosh saved and gave it a go. It seems to be working out, but there are a few differences worth noting.

Our business is training/consultancy and has no stock and few overheads in the equipment line so quite unlike your business.

We had an initial contract worth an additional 3 months money to us, so this took is into six months without hassle. This was living almost on fresh air to make it spin out without any extra work if we didn't get anything straight away, but I expect you're more than equal to that kind of challenge, Sally.

We had agency work options as a backup in case we got stranded or needed to cover a couple of months of slow cashflow. Also, I am in the line of work that has short-contract jobs and that I can dip in and out of anyway, so this was useful to fall back on.

We look set to make our first year without having to take outside work, though I have taken a part-time job because, ironically, this will help to grow the consultancy side of the business (that's a looooong story!).

But it's been a scary ride sometimes and wouldn't be for everyone.

Things I'd get in place -

Your mortgage - get this as the best/cheapest option before you take the plunge. Look into one of those 'drawdown' accounts - the single account and mortgage if you need access to small amounts of dosh. I found that places wanted 12 months of business accounts etc before they would consider taking it on so am probably paying more than I need to as I didn't think ahead.

Credit cards - if you have interest free deals or need them, get then in place before you leave the day job as it will probably affect your credit rating.

Assume the bank will not lend you any money as a business, no matter what they say when you are looking into business accounts. They lie. This includes a credit card and an overdraft facility as well as an actual loan. They will reveal later that their policy is not to loan to a business that hasn't been going for at least 12 months. Fortunately, we didn't need this but it was annoying. We are looking into formal complaints/legal action against them because of the material they sent out to us and the bad advise in this area were given initially.

Nick



Joined: 02 Nov 2004
Posts: 34027
Location: Hereford
PostPosted: Sun Mar 25, 07 3:58 pm    Post subject: Reply with quote    

Also, in my (limited) experience, there's always tons of work about that pays OK. Assuming you have some skills, you can sign on with an agency and get daily rates. You could pick up extra work around business, to cope with slack times. And, would you consider taking a mortgage holiday? We spent a year not paying anything but interest because Louise decided working for a living wasn't for her and went to become a teacher.

dpack



Joined: 02 Jul 2005
Posts: 35510
Location: yes
PostPosted: Sun Mar 25, 07 4:14 pm    Post subject: Reply with quote    

Nakipa wrote:
I am sorry but I think that is incredibly cruel and selfish.

Monkeys should be free not in zoos or under carpets.

N x


im not sure there hasnt been a translation problem

monkey=500

so that would be a ir problem rather than an rspca one

trunk monkey seemed quite happy

Stacey



Joined: 18 Jul 2005
Posts: 8380
Location: Kernow
PostPosted: Sun Mar 25, 07 4:17 pm    Post subject: Reply with quote    

Hmm - it's a tough on sure enough. I'm in a vaguely similar position of having to build my stock up as I go along but if I had to work full time as well I think I'd combust. I'm not sure there is a right time to leap with the sort of stuff we do sally. I like Nicks idea of agency work as I've realised that it's unlikely that I'll make enough money to keep the family by making felt. I've realised I'm going to have to do workshops etc as well. One thing I'd advise through having watched two contemporaries is don't borrow any money. The woman who borrowed buisness start up money etc is really struggling whilst the one who didn't has broken even and taken off. I think we're lucky in that we don't need premises and can work from home to start with so we don't really need to borrow start up money.

sally_in_wales
Downsizer Moderator


Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales
PostPosted: Sun Mar 25, 07 4:48 pm    Post subject: Reply with quote    

I am lucky in that I havent as yet found anything I can't really turn my hand to so picking up agency work shouldnt really be an issue if pinch comes to shove. More number crunching tomorrow to see how much we actually need to scrape through a month. I'm just going quietly mad at work, I can't seem to see any light at the end of the tunnel other than getting out and working for myself properly

Penny Outskirts



Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....
PostPosted: Sun Mar 25, 07 4:59 pm    Post subject: Reply with quote    

Redundancy did it for us too, so I' not sure that helps too much.

Have you ever tried taking your things to some suitable shops and seeing if they'll do a sale or return deal for you? That would give you more of an idea how much stuff you could shift if it were advertised?

MarkS



Joined: 01 Aug 2006
Posts: 2626

PostPosted: Sun Mar 25, 07 8:46 pm    Post subject: Re: When to take the plunge? Reply with quote    

sally_in_wales wrote:

What did other people do?


Dunno. they didnt really tell me much
http://forum.downsizer.net/about17871.html&postdays=0&postorder=asc&start=0

JB



Joined: 08 Jun 2005
Posts: 7748
Location: 91 N
PostPosted: Mon Mar 26, 07 8:59 am    Post subject: Reply with quote    

Redundancy would be a good option for me but otherwise I'm holding onto the job while I have it so that I can get a mortgage sorted out as getting a mortgage when I've been self emplyed for a short time isn't a good plan. Unfortunately that means that everything is on hold for me as well but that's more to do with practicality than anything to do with confidence (not that I have any confidence either but we've worked out that we can survive on just Mrs JBs salary and a much lower input from me if need be)

judith



Joined: 16 Dec 2004
Posts: 22789
Location: Montgomeryshire
PostPosted: Mon Mar 26, 07 9:10 am    Post subject: Reply with quote    

For me it was my sister getting married that provided the impetus!
We had bought our first house together, so I sold out my share to my future BIL and bought my own place. Once that was set up, the remnants of the profit and a small loan from my parents gave me the means to go it alone.
I was also in the fortunate position of being able to take some existing customers with me with my old employer's blessing.

HW is right - you need to get your finances sorted and have a financial cushion salted away if you want to do it without too much stress, particularly as you will have to buy in materials. 3 months is a good amount, but calculate the figure generously as it really does take at least that long to get the cash flow running.

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