Friday, March 11, 2011

5 Dangers To Managing Your Own Company Formation

By Carmela Allison Delaney

Before we discuss the bad side to running your own company, it's worth remembering the many good reasons for having your own business. Imagine, in a few years, you could be on a luxury yacht, drinking champagne. Granted, that is a bit of an exaggerated example, but it can happen. A business can be financially rewarding and offer you the lifestyle most people can only dream of. Company formations aren't all hard work!

Running a company can be a huge financial risk. You can end up running into serious debt very quickly if you mismanage your finances. There are several ways to end up in this predicament. Firstly, overpaying your suppliers. You must as a business owner, negotiate the very best rates. You could alternatively employ someone that is able to negotiate good deals for you. Again with employees, do try and make sure you don't overpay them, as nice as they might be! From experience, this is what I have found with all my UK company formations.

Some business owners achieve the position of being able to sit back and let everything run for them, while they are on the yacht we mentioned just now. However, there aren't many people like this. Most business owners are very hands from start to finish. From personal experience, it is always worth setting up a business with the intention that the business works for you, not you working for the business. If you end up permanently working more hours than you would in a nine to five job, then either you haven't planned the business properly, or you have picked the wrong product or service to sell.

The vast majority of normal people find difficult customers hard to stomach. There's not much fun in being shouted at for something that isn't your fault. All the time, you have to smile and be polite. Again, you either need to become very thick skinned, or pay someone that is skilled in the art of customer service.

If you run a business, be prepared for plenty of red-tape and bureaucracy. You need to remember everything from putting up no smoking signs (even if neither you, or any of your employees smokes). A great many companies are hampered by rules and regulations.

Running a business will sap all the energy out of you. Firstly the stress of setting all your systems and ensuring they run perfectly. Then there is the financial burden. Unless you have a service that costs nothing but time to provide, you will need to invest your own money in the business or borrow from the bank. With this, you run the risk of losing everything.

Please don't let me put you off though. Listing five pitfalls was hard work. It'd be testing to find anymore bad sides. You can use a business to do anything you want in life. If you do go ahead with company formations, I hope you are successful.

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