Right time to go it alone

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The Independent Online
DIFFICULT times such as these are not generally considered right for voluntarily throwing off the shackles of employment and starting afresh. Rather, most have an understandable tendency to knuckle down and hope for the best.

But the Enterprise Barometer, produced by Graham Bannock and published by 3i, the venture capital company owned by the clearing banks, says there is no time like the present. The prospects for starting a new business, expanding an existing one or growing through acquisition are all at their highest levels for more than four years.

Sara Williams, author of Break-Out: Life Beyond the Corporation, explains the thinking by pointing out that:

There are many opportunities due to economic turbulence;

Businesses can be bought cheaply or be started up with low-cost structures;

Potential competition is weaker than it might otherwise be.

There are disadvantages - particularly tight finance and low demand (although this may pick up in coming months).

But she provides encouragement by citing the example of Derwent Valley Foods, the snack-food producer founded in Consett, County Durham, in the depths of the last recession. Started with a few hundred thousand pounds, the business was sold last month to United Biscuits for pounds 24m. 'Money is a powerful motivator,' writes Mrs Williams at the outset. 'But money is not the only, nor even the major, cause of satisfaction from building a business.'

For Tim Hely Hutchinson, who has built up Headline Book Publishing from nothing, it is the pleasure of seeing his books on display in airports. For Neill Bell, owner of the Christmas decorations company Porth, it is the achievement. For Brian Box, who entered the conference centre business with his wife Christine at 58, it is the freedom.

So if it is this simple, why does everybody not do it? Well, says Mrs Williams, there are a number of factors, first the loss of status and its effect on the would-be entrepreneur's family.

This is something she is well placed to judge. Not only has she left the Consumers' Association to write about small business, she was co-founder, with her husband Peter, of Value Added Medical Products, which headed the first Independent on Sunday / Price Waterhouse survey of fastest-growing private companies.

Family members can act as a useful sounding-board, but their lives can alter substantially after the jump. She warns against moving house at the same time as setting up in business, especially if it involves extra financial commitments.

Related to this is the detrimental effect starting a business can have on personal finance, not just in the short- term but also over the long- term, possibly as a result of reduced pensions.

Executives thinking of branching out on their own should also be careful about their dealings with their present employers. If they are not approached sensibly, it may result in plans 'being scuppered at the first step'.

Then there is the prospect of failure. Those planning to branch out should consider how they and their next of kin will react to this, she says. 'Raising finance to fund a venture is no guarantee of survival.'

Nevertheless, this book - with its useful tips on how to obtain that finance, how to survive the early years and how to get out at the end, should help.

'Break-Out: Life Beyond the Corporation' by Sara Williams (Hamish Hamilton, pounds 18.99)

(Photograph omitted)

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