Entrepreneurship and the availability of credit in the UK

Year after year, thousands of entrepreneurs try to set up businesses in the UK – however, a great number of these businesses fail… but why?

One of the reasons why new businesses fail in the UK, is because recently (due to the credit crunch) there has been a lack of credit available to entrepreneurs looking to start up their own company – so they simply run out of money.

So, if you are looking to set up your own business – what steps could you take to help make sure it doesn’t fail?

Plan what you actually want your business to do

What is it that you want your business to do/achieve? Is it offering a product, or is it providing people with a service?

You need to know exactly what you want your business to do before you invest time and money in it. Don’t just keep this in your mind, write it down and keep a log of all your thoughts. You can look back at these and learn from any mistakes you may make along the way.

Have a clear business plan

Recent research has found that over 60% of small businesses fail because of a lack of planning and ‘execution’ of a business plan ( http://www.familybusinessmanagement….-business-plan ). If you don’t want to add to this 60%, you should create your own business plan.

Your business plan should include your business’ goals and the reasons why you personally think these are achievable and how you plan to achieve them. It should also include the ‘what, why, when, who and how’ of everything to do with your business.

For help compiling your business plan, you could take a look at some of the templates available for entrepreneurs online.

Your business plan is very important. You wouldn’t want a potential investor looking at a few scruffy pieces of paper about your business, would you? So you should make sure it looks and sounds professional.

Make sure you have enough money

This is an obvious point here, but as mentioned earlier, so many business fail due to lack of funding. So, make sure you have enough money to cover at least your first year of business. You should account for all bills and all other expenses (these will be different depending on business type).

What if it all goes wrong?

Business is all about taking risks – and if your risks don’t pay off, you could end up in debt. So… what could you do if it all goes wrong?

If you have invested a large amount of money into your business, and you have ended up in debt because it hasn’t taken off as you hoped, you could consider several options – for example:

1. You could look into a specific debt solution, such as an IVA (Individual Voluntary Arrangement), or a debt management plan – your suitability for either of these will depend on your level of debt, amongst other things. Debt solutions are specifically designed to help people repay the money they owe in an affordable and realistic manner.

Or…

2. You could pitch your business to investors – asking them to take a look at it to see if it can become a profitable venture – and if they think it can, you may still be able to recover the money you have lost (through their investment).