Make the break and be top dog

Rob Griffin explains how to make your small business dream become reality

For entrepreneur Sarah Doukas the most satisfying aspect of starting up and running a business is being in control of your own destiny. The founder of modelling agency Storm, which started life in a bedroom and now boasts a multi-million-pound turnover, loves the thrill of turning dreams into reality.

For entrepreneur Sarah Doukas the most satisfying aspect of starting up and running a business is being in control of your own destiny. The founder of modelling agency Storm, which started life in a bedroom and now boasts a multi-million-pound turnover, loves the thrill of turning dreams into reality.

"I enjoy the rollercoaster ride of being in business and the fact that every day is different," she says. "I have never liked being told what to do - which goes back to my school days, when I was a bit of a rebel."

She's not alone. Every year more than 400,000 people make the brave decision to abandon the safety net of the monthly pay check and start up their own firms. Manyare seduced by the prospect of not taking orders, the freedom to plan their own days, no longer having to endure the daily commute into the office and improving their long-term earning potential.

According to Stephen Alambritis, chief spokesman for the Federation of Small Businesses, the vast majority are happy to run small operations and only a small percentage harbour ambitions to grow their firm into a multi-national giant.

"It's really a lifestyle choice," he explains. "They like the idea of doing what they want, when they want and how they want. For most people it's better to have 100 per cent control of a small, successful business than 75 per cent influence over a faster-moving enterprise with outside investors."

So how do you take the first steps? The most important factor is deciding what business you want to start. Have you got a terrific idea for a new product? Can you see a gap in the market for a service? Is there a new and innovative way of producing something that already exists?

Research is crucial. Find out if there is a demand for your idea, and how many competitors are already in the marketplace; and try to anticipate the longer-term changes that could impact on your decision.

Next you need to get some proper advice. There is no shortage of specialists who will be happy to provide guidance, but the best starting point is the Business Links website ( www.businesslink.gov.uk). Here you will find contact numbers for advisers in your area, as well as information on your responsibilities as an employer, and the complex rules and regulations surrounding tax planning.

Your adviser will help you put together a business plan. This should include details of your idea, its market, the potential customers, your premises and a breakdown of the costs. The more work you put in at this stage, the greater your chances of success.

Razia Bibi, senior development manager of the Birmingham Chamber of Commerce and Industry, believes it's crucial that anyone who wants to venture out on their own talks their ideas through with an experienced adviser.

"Our job is to make sure people do the groundwork and explore their idea before they go into business," she explains. "Part of this role is to stop those who are not ready from making a huge mistake."

You will also be able to get advice on raising capital. Today's businesses no longer have to rely on persuading their local bank manager to provide them with funding, although this is still a popular route. There are hundreds of grant schemes for different types of business. The Prince's Youth Business Trust offers low-interest loans of up to £4,000 for a sole trader - as well as grants of up to £1,500 in special circumstances - for entrepreneurs aged 18 to 30.

The best advice is to ask around to see what's on offer. The type of funding - and the amounts you can receive - is likely to vary.

Once you are up and running, it's important to let people know you exist. You will need to consider the best ways of marketing your services or products. Is it worth putting an advert in the local paper or a specialist magazine? Practically anyone can put together a website relatively cheaply; this will act as a permanent online advertising medium.

Jessica Molloy, spokeswoman for the Chartered Institute of Public Relations, recommends spending time to build relationships with the media and other organisations in order to get your name known.

"Let the newspapers know when you're doing something different by sending out press releases," she says. "It's also worth getting out into the local community and getting involved with charities. You might even want to produce a small newsletter which you can send out to your customers."

It's a depressing fact that not every venture will be successful. It is estimated that three out of five start-ups won't be around within three years. Of the 293,000 companies established in 2002, almost 31,000 - more than 10 per cent - have since gone into liquidation, according to analysis of data from the Department of Trade and Industry by Grant Thornton's recovery and reorganisation practice.

Conditions for businesses are unlikely to get easier. A report from accountancy firm BDO Stoy Hayward predicts that increases in inflation and interest rates, plus a decline in consumer confidence, will result in more than 17,000 firms going bust in 2006.

"The UK consumer boom is over and falling house prices are lowering consumer confidence," says a spokesman. It is a grim forecast but start-up businesses can avoid becoming another unfortunate statistic by planning properly - and keeping a close eye on their finances, says Richard Hawes, a partner at Grant Thornton.

"The biggest reason for business failures is poor management," he says. "You need to keep a check on how much money you are spending and how much is coming in."

However, despite the warnings, small business owners say the risks are worthwhile. Erica Gray, 26, had never planned to become an entrepreneur, but now she runs her own home care business with a £400,000 turnover - and employs more than 50 people to serve a growing list of clients.

Gray, from Whitby, North Yorkshire, decided to take the plunge to start a business in February 2001 when she left her job as a supervisor in a care home company.

With the help of her local business advice centre and financial support from the Prince of Wales's Youth Business Trust, she was able to start trading a few months later as SimplyCare, providing care for the elderly in their own homes.

The business has been a huge success. It was awarded Investors in People status last year and won the RBS Enterprise Award for Yorkshire and the Humber.

"I never actually wanted to run my own business, but I just thought I could do things better than other companies in this area," Erica explains. "My advice for anyone wanting to set up on their own for the first time is that they have to be committed and motivated."

WHAT THE GURUS SAY

James Dyson: Dyson vacuum cleaners

"You need blind faith, but you also need to break out of your bubble and take the litmus test. When you start up you won't necessarily be able to afford costly, often inconclusive market research. The best thing to do is take the plunge and be prepared for some honest feedback - families are great for harsh home truths!"

Simon Woodroffe: Yo! Sushi founder

"Focus on what you're good at and let other people take care of things you don't do so well. Don't spend too much time thinking about it - get out there and do some research instead. I have never met a person in this world who regretted following their dreams, even if the business eventually failed."