If you’re jaded with the 9-5 grind and looking to get out of the rat race, what better way than to start up your own business.
Forward looking governments around the world are actively pushing for more homegrown technology start-ups. Countries like Singapore have of the best business infrastructure ecosystem and government support for new companies to set up shop.
Success stories include Singapore startup like Zopim which was acquiredfor $30M. Remember that all great entrepreneurial stories start with baby steps.
Before you fire your boss and take a deep dive into self-employment, here are 3 things you should look at:
- Decide on the industry you’re targeting
A common question entrepreneurs-to-be will ask is: “What business should I get into?”
Those belonging to the Steve Jobs’ “follow your passion and change the world” mantra will advocate doing work that you love. Success will soon follow your passion.
The opposite camp takes a more pragmatic stand, encouraging you to focus on what you’re already good at and be “so good they can’t ignore you”.
Another key consideration will be the industry’s outlook.
You will find much more opportunities sailing in an industry that is riding on raising waves now. That said, there are opportunities in every market even in supposedly sunset industries.
But, your journey would be much easier if you ride on the right waves instead of swimming against the tide.
- Picking the right business entity structure
This is usually an afterthought that nobody really pays attention to. However, registering your business is the very first step you need to take before setting up shop.
These are common types of business structures in most countries you can register your business with:
- Company (Private Limited entities)
- Limited Liability Partnership (LLP)
We’ll not go into the nitty-gritty of each entity as they can be usually found in the business registrar websites of the respective judication you’re incorporating your business in.
Which entity structure to register with largely depends on your personal circumstances.
If you’re a bootstrapped one-man startup with a shoestring budget, go with the sole-proprietorship first to save on compliance and regulatory costs.
Sole-proprietors/Partnership are also usuallynot mandated to fulfil many statutory compliances a Company must.
However, it is important to note that sole-proprietorships are not treated as separate legal entities in many countries and the business owner can be sued in their own names.
In business-friendly countries such as Singapore, newly start-upenjoy 100% tax exemption on their first $100K chargeable income and 50% exemption on the next $200K of income for the first three consecutive years.
Registering a Private Limited entity is still the most popular choice. A company is usually treated as a separate legal entity limiting the liability of owners and is a more legitimate vehicle when raising venture capital funding later stage.
- Financing your business
After a continuous diet of cup noodles and zero social life for the first year, you might finally start seeing some traction and revenue growth.
At this stage, most entrepreneurs might seek external funding to continue scaling up. Without capital, it would be strenuous to continue growing the business organically.
Seeking your first business financing could be a major headache as there’s multiple banks and financial institutions offering financing to small businesses.
The different financing products, packages and interest rates from all these financiers is confusing to say the least. Nobody wants a bad funding deal, so make sure to always compare all business loans and shop around for a suitable financing package.
If your startup has potential to scale rapidly, you could also seek venture capital funding instead of debt financing. Network extensively within the VC space and pitch to suitable investors whom have an interest in your niche.
The entrepreneurship journey is a lonely and tough route to take. You will encounter countless seemingly insurmountable obstacles. By keeping your focus and staying the course, you could still enjoy the exhilarating ride and come up on top at the end of the day.