QUESTION: When is a business not a business? Answer: When it's a self-employed job, of course! No, it's not another 'gem' from the crackers at the accountancy festive bash, but a serious message to be understood by anyone considering a business start-up.
Think New Year, think new start and, for lots of people, that means think 'new business.'
OK, so where do you start? You might think 'I need some money from the bank' which in turn will ask for your business plan..
You may go to the local Business Link or Enterprise Trust to produce one with the prime purpose of borrowing from the bank.
Along the way, you may pick up how to keep the books, how to deal with the taxman etc - and away you go, business is up and running.
But never lose sight of one vital aspect, always think ahead. Indeed, begin with the end in mind! That means picture where you want to be before you even start trying to get there.
Ask yourself what you want from your business and precisely what you are trying to achieve. Then ask yourself how you eventually propose to exit.
What! The end is nigh already? No, not quite. But some day it will happen and in one of two ways. Either you will sell up or pass it on to somebody in the family. Standing on the start line, we are actually looking many years ahead.
It's crucial to have a mental picture of what you want that business to look like in terms of income, profit, size, hours etc. Only when you have that picture can you go about constructing the business.
Look around, you will see many 'tired' businesses. Signage falling down, buildings look shabby, people look careworn - what you see are not businesses at all, but people in self-employed jobs.
Working hard, their bank-borrowing might have become a millstone. Indeed, they may tell you the only reason they continue is simply because they have to pay the bank loans back. That's when having a business is a bind, but it needn't be like that!
Look around again and you will see signs of successful operations. Some are large while others are actually quite small; not always obvious, but very properly-run, providing owners with a good standard of living.
But you don't become successful by accident. You start with a blank sheet of paper. Any accountant worth his salt will work with you to produce a financial model based on what you hope to achieve.
The next question is more difficult - 'how do I get from here to there?' You need a set of milestones, not just to help plot the business journey, but also to keep you on course should events threaten to divert you from the goal.
The milestones should represent achievable targets, short, medium or even long-term. It's important to be focused and know exactly what you are trying to achieve.
If you have written it all down and thought it through, the chances of you actually achieving it are much higher than if you haven't done anything at all.
In my view, this is far more important a lesson to understand than any amount of short-term cash flow, VAT, PAYE and book-keeping because it's the key to the difference between a business and a self-employed job.
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