How to start a business

They have had a boss, they have executed orders. But now, with the crisis, many of these employees have lost their jobs. Maybe, for years they have had an idea in their head. Or they have cultivated a hobby. Now, perhaps, they are thinking of giving a business outlet to their idea or their passion. Not by vocation, but by necessity. Going on your own, especially after spending time in a company, sounds very attractive: freedom, autonomy … However, being a businessman is a leap into the void. Are you ready?

Do I serve for that? Xavier Dumont is responsible for the Resource Center for Entrepreneurship of Barcelona Activa, the agency of the Barcelona City Council that promotes and advises the creation of new companies. “Around 50-100 people pass through here every day, a total of 10,000 a year. Since 2008 there has been an increase. More and more workers arrive with previous and qualified experience, expelled from the labor market. They are young people, construction employees, over the 50s and women, “he says. It is not only about knowing if the idea is viable but if I, the future entrepreneur, are viable. In what sense?

Unlike working for others, setting up a business means knowing how to negotiate, maybe managing a team, knowing aspects of accounting … “There are people who fail in this change. I believe that something of business vocation you should have. You must possess a minimum of proactivity. And this implies knowing how to sell to clients, organizational capacity and a certain attitude for the quick execution of decisions. On the other hand, if what you like is to analyze things and turn them around, then it is better to employ yourself in a company, “says Alberto Fernández, professor of business situation analysis and management of small and medium-sized companies in Iese. “The entrepreneur is in a permanent internal struggle between satisfying his needs and those of his business. In this sense, you must be clear about how you are going to use your time. If you expect to devote eight hours to work as if you were in an office, leave it. Everyone can be an entrepreneur, in the sense that you can learn. But this does not mean that you see yourself with the capacity to do so, “says Leonardo Zangrano, start-up coach, a consultant who has created a methodology to help in the first steps of creating companies (Learningstartup.org).

What idea? I wish it were possible to always devise original concepts.

If so, you should immediately consider your protection, if you have the requirements, by means of a patent. It is always best to talk to an expert and remember that even relatively simple things can be patented. However, in practice, business ideas are not necessarily the result of a stroke of genius. “I think the idea does not have to be revolutionary, but you have to be clear about what they are going to buy from you and why. It is also said that the idea has to be innovative. But innovation can simply be in the process. It is also essential to know how you are going to sell. For example, if you want to sell cheap, then you will have to open stores in peripheral neighborhoods, “says Fernández. Yes: even with a bar one can specialize in a product or a differentiated service. For example, make it a place to go on weekends with children. “My advice is that if it’s not your sector, then get yourself a partner. Or surround yourself with people who have previous experience. And ask about your idea. Friends often tell the truth. The biggest risk is that you convince yourself that you are the best. You have to know how to listen “, recommends Fernández.

Jordi Vinaixa is the academic director of the Entrepreneurship Institute of Esade.

Jordi Vinaixa is the academic director of the Entrepreneurship Institute of Esade.

 

In this institution, they are setting up a program dedicated to all those employees who have held management positions and who are now studying to set up a business on their own. “Almost always one starts with one idea and then ends with another,” he recalls. For Vinaixa, it would be necessary to ask some previous questions to check its validity and if there is a market willing to pay. The classic example is the country where nobody wears shoes. Is there no demand … or is it a great opportunity? “Does the idea meet the needs of the market? Does it solve a problem or have people already solved it? Does it improve the existing? Sometimes it is enough to reproduce a business that already worked in a country, but implemented it according to the local market, “he says. In any case, before formulating a proposal, Vinaixa recommends adapting it to personal circumstances. “I would reflect on my own assets. Who do I know in the world? What experience can I contribute? What do I know how to do? You have to know your own limitations. “

We have a plan Business schools are almost unanimous in recommending the drafting of a business plan, even in the case of smaller companies, for example, a self-employed. On the internet, there are even standard modules available with a scheme to follow. The projection of costs and benefits should cover a time horizon of at least three years. “To boot, many trust their previous contacts, when they were employed. But, beware, this same network of people does not necessarily serve at the time of undertaking, “warns Dumont. Also, it’s one thing to have a hobby. Another, its business viability. And if you look at a business that works in a country, you have to make sure that the domestic market is compatible. We must also take into account the regulations: there are activities that are impossible here (for example, the mototaxi, which in Spain is not regulated). Finally, be aware that the benefits will come … someday! Because payments can be delayed and the first year it is difficult to see positive results. “You have to know how to hold on for a while. This is not like receiving a salary every month. You have to know how to weather this ordered chaos, “says Dumont.

Leonardo Zangrano points out that the business plan is static

Leonardo Zangrano points out that the business plan is static

while the market is dynamic. You have to be flexible. “On paper, in the beginning, we are faced with a range of hypotheses. You have to validate them as soon as possible because you will not know what your business will be like. For this, you have to find out if there is a need for potential customers. This can be a very simple thing, like hanging brochures with your phone and see how many people keep your number. Or go from house to house to offer hairdressing services for dogs, before checking if it is worth opening a place. In other words, instead of saying ‘I would like to open a store’, the appropriate phrase would be ‘I am forced to open a store’ because I detect a demand. Oh, and never fall in love with your initial idea: it’s the recipe to fail. If what you take is the hairdresser for cats, you must change, “recommends this expert. Alberto Fernández agrees: “In general, business projects cost more than people think. All declare themselves conservative or realistic, but the truth is that almost nobody fulfills the business plan and the risk is to stay with gasoline halfway. I, at the time of making financial forecasts, would follow the policies of commercial aircraft: always keep a minimum of extra gasoline, in case you have to make an emergency landing. “

It is essential, in this sense, to get information. For example, go to the business register to see how many firms already operate in the same sector. Or take demographic data from the neighborhood, to see the profile of customers in the area. Or go personally to try the competition. That is, go to a restaurant with the rivals and see their strengths or weaknesses. “At the time of making estimates and drawing the different scenarios, it is best to measure in small units of time. It is easier to make mistakes in making annual sales forecasts, than, for example, daily. In addition, this tactic helps you establish the final sale price, “says Dumont. For example, it is more realistic to assess how many clients I can serve in my restaurant in one day, instead of foreseeing how many meals I will serve in a three-year period.

I’m looking for financing. How do I sell? Vinaixa emphasizes

that in the US, perhaps the country with the highest entrepreneurial spirit in the world, only 5% of companies are financed with external resources. The vast majority draw on their savings, their families, their friends. It is what, in the jargon of finance in English is called 3f: family, friends, and fools (family, friends … and some crazy). “There is a basic principle. An investor or a bank will not put money … if you do not have money to invest, “warns Fernandez. “Think that you are going to receive a salary, the investor does not. He wants to see a commitment on your part. Therefore, assess your previous experience and the people, if any, that you will take with you, “he says. “At the beginning, there are no assets. The investor demands that someone endorse you because the money does not leave it to the company … but to you! You have to present sufficiently attractive returns because whoever finances you will want the project to grow, “adds Vinaixa. Now, there is a resource that may be more important than money: people. Francesc Hinojosa is an entrepreneur and head of the portal Eureka-Startup.com, a platform that publishes news of newborn companies. “Neophytes often do not take it into account, but the key is to get a committed human team “, whether employees or external collaborators. For example, if you want to set up a gastronomy website, to convince an investor,

the most important thing will be to have a chef who offers good recipes instead of boasting of not having outstanding debts in his credit history. “I tried to start a start-up myself and I only started looking for investors. Well, if the investor sees that you are alone, he is not going to pay any attention to you. The other thing to consider is that nobody knows everything. At first, under the wave of enthusiasm, you think you can embark on the adventure alone, “he says. Sometimes it is possible. Others, no. Also, Hinojosa recalls that it is very difficult for a single investor to accept to take over the financing of the entire project. In practice, public institutions finance if they see that there is a private already involved in the business.

Once the accounts are done, there are two possible approaches: “I want to do this, I’m going to need a money”. But there is also the opposite: “I have access to a certain amount of money, I see what I can do with it and I try to adjust myself”. The problem, in any case, will be getting guarantees. A good strategy is, for example, to secure a customer base before starting to work. It is not always possible. Sometimes yes. One case: sell online reservations for a restaurant with heavy discounts before it opens. So the fish … is already sold before the place warms the stove. Apart from the One One One, you can always go to official institutions, which offer loans with low rates (Enisa, Ctdi, Ico). It is also advisable to consult, when they are available, some public subsidies (young people and women have more facilities).

One last note. To be financed there is also crowdfunding (which is carried out through collective cooperation, with reduced contributions from members of a network, via the internet), a very active process in the cultural sector (for example, contributions are requested to edit a book … to future readers). And do not forget that if you have capital there is also another possible option: buy other companies (maybe your owner retires and wants to transfer his activity). In this case, you do not need to start from scratch. One can stay with an activity that already works and that already has a portfolio of clients. In France, it is a recurring practice.

Choose a legal form. Yes, but which one? From the outset, it is good to remember that you can not always choose. As indicated by Navactiva, the European center for companies and innovation in Navarra, according to some types of activity to be carried out (banking, insurance, travel agencies), the legal form is obligatory. In general, the number of founders determines the choice. When more people come together, the limited partnership, anonymous or cooperative form may be the best option; while for the entrepreneurs who carry out the activity in their own name, the individual company or the unipersonal mercantile society are the most recommendable forms.

The great difference between one model and another resides, essentially

The great difference between one model and another resides, essentially

 

in the responsibility (if it is limited to the capital contributed or it extends to the patrimonial assets of the employer), the economic and management requirements (if a minimum fund is needed for its constitution, if it is necessary to foresee governing bodies), the image that is projected to the clients and the treatment of the Treasury. The limited and anonymous companies are taxed by the corporate tax (35%, 32.5% for SMEs), the cooperatives at 10%, while the individual and autonomous businessmen do it for the income tax of natural persons. That said, you should not obsess either. As Dumont says, “the legal form of the company does not determine the success or failure of the business. It’s just the vehicle. It is the dress that the company puts on, but the important thing is the person “.

I did not have the bureaucracy. What do I need? According to the latest report from the World Bank Doing business, which analyzes in which countries it is easier to do business, Spain is in 44th place (behind Peru, Armenia or Georgia). But, in the section “start a business”, it is much worse: in the 136, for a total of 185 countries. The study points out that in order to start a company in Spain, ten procedures are required and a minimum of 28 days, which implies a cost of 4.7% of the per capita income and an initial capital of 13% of said amount is required.

All locations open to the public require a license

Obviously, a license for a fashion store is not the same as for a butane seller or a nightclub (unhealthy, harmful, dangerous, annoying activities require more requirements). Concession times should take between 15 days and four months. The more complicated licenses are longer, you have to pay some technician and they are more expensive to obtain. Beyond the license, whatever the sector, it will always be necessary to include some generic procedures, such as the prior declaration to the Treasury, the registration in the tax on economic activities, the obtaining of the CIF, the inscription in the Mercantile Register or in the of Autonomous Workers, the registration of the company in the Social Security and the registration of employees, if any, and so on. Some procedures can be accelerated thanks to the PAIT, points of business processing, which for a few years have allowed many steps to be taken instead of going personally to the Treasury or the notary. At the time of looking for a place, there are so-called business centers in certain cities, with much more affordable rental costs.

The worst is when everything is ready to start, the place is already rented, but you can not start because there is a paper missing. “Spain is a guarantor country, being legal requires a process and it is long”, recognizes Vinaixa. “It is terrible, if the money is not paid, the place may be forced to close. Many trusts that things will go well and start the same, although it is not advisable. ” Dumont tries to provide some solution. “The entrepreneur should introduce a clause before paying the rent of a local and condition it to the granting of the corresponding administrative authorization. Also, it is advisable to find out the plan of uses of the City, because perhaps no more commercial licenses are granted in a certain district. “

I already have the company … Now what? Professor Fernandez uses a very effective metaphor

“I can not stay behind the bar and see how beautiful it is”. You have to go look for customers. There is a wide range of possibilities (word of mouth, social networks, promotions, advertisements …). “It takes years before the business works. Five years ago you opened a bar and you lined up. But today in some sectors there is more supply than demand. In eight out of ten cases it fails because it has not validated well previously or for having assumed some wrong hypotheses. I believe that successful start-ups are the ones that validate constantly, even once they are open. That’s how they stay alive, “says Zangrano.

And if I fail? It would be nice to have a plan B. That is, you have to know how to change course on the fly if things do not go well or if new opportunities arise. It can be a boycott, a change of cycle or a technological obsolescence. The business history is full of cases of business reorientation. IBM has left the computers and now does consulting. Viagra was born as a vasodilator product for circulation, to become a drug against impotence … Other times the numbers were correct, but what fails are … people! “One of the most common reasons behind the failures are the disagreements between the partners,” says Dumont. There are ways to avoid it, such as foreseeing a purchase clause between the parties, in case a type of agreement is not reached. And it is always recommended, if one associate with someone, to agree on the charges, the distribution of benefits, the entry of new partners, company policies and line of business to avoid problems. Of course: if one is autonomous, you do not have that problem.

For his part, Zangrano believes that one should not be afraid of failure 

It is even advisable to suffer small failures before reaching the goal, provided that one realizes immediately. On the other hand, in Spain, business failure is experienced as a stigma when, in other countries, like the United States, the fact of having failed represents, paradoxically, almost a solid base with which to start. Because it is known that, in the right measure, failure is always learned. In the end, does it really make up for being an entrepreneur? Professor Alberto Fernández has no doubts: “If you enjoy working, yes. It’s what I call ‘shine in the eyes’. And, in addition, the entrepreneur, in a personal project, grows in difficulties. ” “It’s something rewarding”, reaffirms Vinaixa. “You assume that you are the owner of your own destiny.” The adventure begins.

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