CONFIDENTIAL

INTRODUCTION

The "Entrepreneur?" questionnaire, which you recently completed, asked you questions about yourself, your values, about things which are important to you, and about how you work with other people.

This report is individually prepared for you personally, based on your responses to those questions, and discusses a number of factors about you in relation to self-employment. It is not a statement of absolute truth, but rather a series of observations, deductions, and inferences and should be studied carefully to see what lessons can be learned to assist you in deciding whether or not, and how, to go ahead with your new venture. We recommend that you discuss the results in some detail with someone (or some people) whose judgement you value, especially where the comments appear to conflict with your own opinion of yourself. One or two of the comments may indeed be inaccurate, but don't let this distract you from the overall meaning of the full report.

What this report does

The main purpose of this questionnaire is to help you appraise your strengths and analyse your weaknesses more carefully before you embark on the next stage of your career. The report aims to assist you to build on your strengths and to enable you to seek back-up, training, the support of others, or other services to support those areas of your personality and skills/experience needing attention. This applies whatever you decide to do, but especially if you are pursuing some form of self-employed option.

The nature of Self-Employment

Note that many aspects of being a self-employed/independent consultant or interim manager are closely equivalent to other self-employed options. However, in some ways such self-employment can also be close to the role of a professional employed manager in a commercial enterprise. Similar comments may also apply to the self-employment of those considering the purchase of (or buying a major stake in) a significant employing company as (part of) a management buy-in or buy-out. Some of the attached comments may therefore need to be read with caution if you are considering one of these options.

Please bear in mind that many people aspiring to self-employment have a tendency to see themselves through rose-tinted glasses and answer this questionnaire visualising themselves as they would like to be rather than as they are. This is particularly so with the 'social acceptability' questions (e.g. "Are you good with people" or "I learn from my mistakes") where there is a high temptation to say "Yes, very like me" when the truth may be somewhat less positive. Many find it hard to be totally objective about such issues. The comments included in this report assume you have answered all the questions truthfully and objectively.

Please read the complete report before you consider the implications for you and your potential new venture. Many of the comments may apply very closely the second time you read them!

Finally, a word of caution...

We have purposefully set the criteria for success fairly high. Our benchmarks are set for people who can start and run very successful and profitable enterprises - indeed, 'making millions' is taken as the interpretation of being very successful indeed - only the top very few taking this questionnaire will fit this profile. If you receive a 'lower than average' or 'average' result in the next section 'Your personal profile', it does not mean that you cannot be successful, but rather that your level of success based on the above criterion is unlikely to be 'very high indeed'. However, many people run independent businesses that they themselves consider to be successful e.g. where the business provides them with employment, or meets a need such as topping up a previous employer's pension (adequate or less than adequate), or a role which covers the costs of a 'grown-up hobby', or indeed one which represents a very satisfactory second income to support a main income stream earned elsewhere. We each have different criteria for our own success and you must apply these to your own situation. What we have done is to paint the overall canvass.

The section which comes after 'Your personal profile' is entitled 'Areas for further consideration' and sets out some comments we believe you should find helpful if you decide to proceed with establishing your new business.

SECTION 1 - YOUR PERSONAL PROFILE

INTRODUCTION

The personal profile of the successful entrepreneur can include a wide range of qualities, skills, and experience which in part depends on the business sector of the venture he/she has started and method of entry for the operation. Even where budding entrepreneurs have similar profiles, some will succeed and others fail as fate or external circumstances play their part. Self-employment may suit some people and be a disaster for others for reasons only discovered long after the decision to start up the venture has been taken. However, a careful review of your strengths and weaknesses and of this profile will indicate your general potential for success. Remember - if you are serious about your new venture, it's better to face some perhaps unwelcome truths now, rather than meet them and their consequences a few months after you start.

Some key factors for success include resilience, persistence/determination, hard work, having selling and marketing skills, showing sound judgement, having a 'killer instinct' or 'ruthless streak', showing sufficient flexibility, being customer aware at all times, having the ability to play hunches successfully, with creativity and self-confidence, coupled with some previous experience in the same business area. You certainly also need to like the work you do, as it will form a major part of your new life.

Your Responses

As we mentioned above, we have set fairly high criteria for the definition of 'success' - put simply, this could be defined as 'making a lot of money'. Using this criterion, as an overall comment on your responses to the questionnaire, we must ask whether you feel you really are prepared to make the necessary sacrifices to run a successful business and to question whether you have the necessary skills and experience to do so. Compared to our role model of 'very successful entrepreneurs', your responses show significant gaps. Might you be better going back into employment - or do you perhaps want a part-time non-demanding role instead which might allow you to venture slowly and carefully into the field of self-employment? Based on your responses, it appears that staying in, or returning to, employed status would be a better option for you than self-employment, if it is available. For some people, the dream of self-employment should remain just that - a dream, long maintained but never to be pursued. There appears to be a high risk that self-employment could, in your case (if involving a significant investment), lead to you losing everything rather than earning your fortune.

It could also be that your criteria for success are materially different from the 'very successful entrepreneurs' considered as role models, for example if you are looking for a small second income or a part-time fairly undemanding role. Carefully evaluate what you want to achieve out of the new venture and your chances of achieving success in your terms.

If you believe that the surrounding circumstances give you no other option but to try to start your own business, and especially if you have concerns about doing so, review the major areas identified in the report below as requiring attention and seek appropriate professional and other assistance to address them, especially before investing heavily in the new venture. Plan your approach carefully.

Perhaps you could seek assistance in actually running the business by involving a partner, making sure that he/she has at least some of the necessary and missing skills, or has worked in or run such a business as you plan to start. You yourself might benefit from a period as a paid employee or associate working in a similar business for a time to gain valuable skills and experience, and perhaps making new business contacts before starting out on your own. (Note that taking up a franchise with business training will not necessarily provide the missing skills to the level you need).

It is perhaps possible that you might make a success of your own business venture measured against 'very successful entrepreneurs', but at present, based on your responses, most of the odds seem to be stacked against you. Necessity or new-found determination, or the ability to find a partner to provide the necessary 'own business' impetus, or even sheer luck, may be what you need to move you along the road to success. Alternatively, your own criteria could be different and success against these different criteria can be possible; in either event, care and preparation are essential.

In getting ready for your new business, the preparation of a comprehensive business plan, whether or not anyone else is involved in your decisions, could make a significant difference to the chances for success. Business plans are not just for banks and do not require extensive financial analysis. More important is a review of the key strengths, weaknesses, opportunities and threats for your planned venture, considering the 'what if' questions and what you can do about them (e.g. "What if sales are half what I expect?" or "What if there is too much work for me to handle?") The most important part of the plan is the thinking that you put into it; it is far better to consider problems and possible actions to compensate well ahead of time. Planning is hard work, if done properly, but invaluable for a new venture.

AREAS FOR FURTHER CONSIDERATION

Determination

Most believe that a key determinant of creating a successful business is a fiery determination in the founder to be responsible for an independent business and a keenness to make a lot of money. Your responses to the questions show a lower than average determination and, whilst this does not mean you cannot be successful in running a business to your own satisfaction, it seems unlikely that other people will describe it as very successful, especially in financial terms. Does your commitment measure up to your business needs?

Effort

In most cases starting a successful business takes more time and effort than operating in it as an employee or manager, the compensations being the responsibility, ownership, etc. If you are not happy with the prospect of undefined working hours, the need to work longer and harder than before and possibly being unable to take normal holidays (for financial or other reasons), certainly in the early stages of your business, then establishing your own new business may not be for you. Consider alternatives such as involvement in an already established smaller business or simply a change of scene from your present or previous employment.

Initial income

Most businesses take up to three years to achieve a 'normal running rate' of income, i.e. to become fully profitable, and many fail in the first three years. If income is essential to you in the first year or two, the option of taking employment while you establish a 'fighting fund' or 'war chest' before you start your business may prove attractive. If you have achieved or put by some initial funds to start your business, consider carefully how long these funds will last and how you will replace them. In consultancy for example, individuals sometimes gain an initial contract from a former employer or client but then find the follow-up work difficult to obtain.

How will you protect your position after the initial period?

You can also make money by not spending it or by generating another income alongside. Have you really exhausted the possibilities for reducing your spending - or of possibly persuading other members of your family to contribute to the overall income? If you really do want to start a business, you may have to consider some alternatives which presently are unpalatable to reduce your outgoings or generate other income (at least temporarily).

Risk

In considering the move to self-employment from employment, many see the self-employed option as much more insecure, with higher risks - offset by more excitement, reward, independence etc. In the last ten years, traditional employment has become much less secure and you may wish to consider, and then seek to evaluate, whether the risks and insecurity of self-employment really are greater or are they just different from those risks met in employment. Perhaps the key to success in this environment is to seek to anticipate problems, measure risk, and plan for action.

Work-rate

Experience seems to show that the work rate required in starting and running your own business is often much higher than it is in employment. This seems particularly so in the early years of the new venture when the entrepreneur has to cover a multitude of tasks, not only for the base business, but all the support services as well. Your responses indicate this increase may not be to your liking, (unless you are already working all the hours available and cannot work more!), so perhaps you should rethink your objectives to allow you to meet lower targets or accept a higher work rate.

Operating Style

Self-employment also brings with it some added responsibilities and you may not be able to operate completely as you wish. Customers, staff, suppliers, the bank, etc. all make demands on your time - some of which may not have interfered with your previous working or social life.

Selling

Possibly the major requirement in operating your own business is the ability to spot selling opportunities and then to make the most of them. This means not only actually selling the products or services on offer, but also exhibiting sheer enthusiasm for your business when discussing it with all and sundry. Unless you have organised a partner or employee to carry out the sales function, this seems to be an area you will need to address fairly urgently either by formal training or possibly by on-the-job experience - ideally at someone else's cost.

Whatever your business, it will involve selling. We asked you about 'selling to my friends' - if this makes you feel uncomfortable, you should analyse why. Is it because your assessment of selling is incorrect? You should see selling as a process of meeting a need or helping someone achieve something they want easier/quicker/better.

Plans v Action

In considering the options of planning or action as a first step, your responses to the questions have not indicated a real preference. In a new business, both planning and action are required, but a balance is needed between the time needed to prepare detailed and costed plans and getting 'out there' to win business and achieve sales.

If you are going to be in business on your own, you will need to provide all the expertise - which means being able to swing easily from planning to action - and back again if results do not meet your plans.

Status Symbols

Status symbols are not essential for most forms of self-employment and, indeed, they often cannot be afforded in the early years of new ventures. Some would say that those who require status symbols are unsuitable for this type of business. However, you will be responsible for the investment of your firm's hard-earned cash and should you want to indulge yourself in such symbols, you will need to achieve greater-than-average financial success.

Stress

Stress can be caused by many factors. Problems seem to arise if someone has too much or too little stress in their lives (measured against their own individual standards). There is no doubt that embarking on any new venture can be stressful, especially when starting up your own business, and someone with your scores should be aware of the risks and use stress management techniques accordingly.

For most people, the stresses and strains of running their own business will exceed those of employment - although this may be compensated for, or even overcome, by the 'buzz' gained from owning the business and deciding the policy and action. It is unlikely too that a new business will reach 'steady state' for a few years (some would say "It is never in steady state") so perhaps stress levels may remain higher.

Independence

In your excitement to establish your own business, you should not overlook the new risks and potential problems you may encounter. Some of the excitement may be just the difference self-employment shows from your last role and it is possible that this will fade in a year or so. Your new-found independence can be glorious when things are going well, but may prove lonely and depressing in times of crisis. Starting your new business venture is probably one of the major investment decisions in your life - in financial and 'lost opportunity' terms. It could prove useful to prepare longer term plans for the business - at least in outline - and consider a number of alternative options and approaches. How does it really compare with employment (risks, rewards, pressure, opportunity, career, etc)?

Survival planning

People skills

One of the key attributes of the successful entrepreneur is the ability to 'sense' other people's needs, emotions etc. and to manoeuvre his/her way through to success as a result. This is almost essential for success in managing a smaller business, in developing markets, in achieving sales and, more importantly, repeat sales from existing customers. You have identified this as an area where further development of your skills may be needed.

Determination

To operate your own business successfully will require tough action, which you seem well prepared to take, indeed may enjoy. You will, however, also need to carry your employees, customers, suppliers and others with you in your search for success, and caution may at times be advisable when you 'know what needs to be done'. This may then enable you to achieve the objectives you have set for yourself, even if it entails not taking all of the tough action that seems indicated.

Criticism

Criticism comes naturally to some people, particularly when faced with someone starting a new business. Learn to pick out the good elements from the bad and review these carefully. You must decide which, if any, to take on board and to adopt those which will improve the business. It can be just as much a mistake to adopt any and all criticism offered as to completely ignore all criticism. Often too, a helpful comment from someone can sound like criticism to the recipient - check it out!

Alternate views

Two major benefits often seen by those who are about to start their own businesses are the time saved by the absence of meetings, and no longer needing to persuade colleagues before taking action i.e. being able to operate quickly on one's own. The converse is that there is no longer anyone with allied interests with whom to 'chew the cud' on major issues or changes. If you enjoy being able to discuss problems with others prior to taking action, or you rely on the skills of others to some extent, you will need to consider putting these in place for your new business - whether on an informal or formal basis. However you will need to remember that other people will no longer have the allied interests that your former business colleagues had.

Contacts

The originator of the saying "It's not what you know but who you know" had people wishing to start their own businesses in mind. Whatever your venture, the generation and maintenance of business and personal contacts is critical to success. Contacts can lead to business opportunities, identification of the right suppliers, or just people to talk to in times of crisis. Your responses indicate this is an area where you lack confidence in your ability. Unless you have identified others who can maintain the business contacts for you, or your business is much less dependent on contacts - e.g. if it gets business from 'passing trade' such as a sandwich bar in a railway station - spend time considering, and possibly seek professional advice on, or training in, how to overcome this potentially major constraint.

SECTION 2 - SPECIFIC ISSUES

The next part of the questionnaire asked you about three specific areas which will impact on your new business venture - money, family issues and business skills; detailed comments on each area follow.

SECTION 2(a) - MONEY

Many new businesses fail for financial reasons, although the causes behind these financial reasons may be nothing directly to do with money. In any new business, more attention than usual will need to be given to the financial side of things as the business has no reserves generated in previous years to fall back on should problems be met. In the specific area of money, your responses indicated the following key concerns:-

The safest route to establish most new businesses is generally to minimise the spend until after income is received. Having a high 'burn rate' i.e. rate of spending, increases the chances of having insufficient cash to continue, as well as increasing your investment in the business which must be recouped from the profits to be generated later. Some businesses do require a high initial investment, but in these cases you would be well advised to evaluate fully any alternative strategies and consider how to minimise the risks.

In the smaller business, the phrase "Cash is King" is even more vital than ever. As well as introducing and maintaining appropriately detailed and regular day-to-day or management accounting procedures, the founder of an independent venture needs to concentrate on the cash aspects in order to stay in business. This includes the need to know the cash position on a daily basis, managing relations with the bank, chasing payment from debtors and, sometimes, staving off creditors.

You were asked whether you would sell your house to remain in business. There is no suggestion that you should do so, nor that this is a requirement in any way, but we are drawing to your attention that it could become the only way to continue in business. Professional lenders are very likely to seek personal guarantees from the owners of a newer business, who are then at risk if the business falters. Conversely, until the business is reasonably well established, equity investors may be uninterested; even when they will consider investing, they will be seeking sufficient reward for their perceived risk. You should evaluate most carefully how much cash is needed to sustain the business over the next three years, where it will come from, and how much is required for a sufficient contingency fund. It is VERY DIFFICULT to raise additional cash later, especially if the need for cash arrives when you hit problems and if you have not been meeting the agreed targets.

Your answers suggest that you have not yet fully identified the risks involved in your business venture. You should seek to identify such risks, discuss them with others in similar business, as well as talking to your professional advisors and any others able to offer advice, and then evaluate the costs and implications of failure. Only then should you proceed to act on your plans.

SECTION 2(b) - FAMILY ISSUES

In this section, the word 'family' is used to describe those close to you, whatever the relationship. It includes people who will be affected by your decisions, people with whom you relate regularly, and those who have concern for your welfare.

Moving into self-employment can cause a number of stresses and strains to emerge in your personal life, if only because the divisions between personal and business life become more indistinct. Be aware that what seems obvious to you may not be clear to your family (and vice versa) and pay particular attention to the following:-

The establishment and operation of a new business is very time consuming and you will need the support of all of your family in your decision. Conversely, you may be able to derive some family benefits by involving them in your business decisions, by being able to pay them for work done, or possibly by using 'flexitime working' to enable you, for example, to attend that school sports day or some similar non-work event occurring in working hours. Overall, it is likely that you will have less time for yourself and your family in your own business than in employment.

Apart from understanding the need for you to spend more of your time on business matters, your family will need to support your decisions to move into self-employment as it will affect them in a number of ways, some of which you may not be able to predict. They will not need to be as committed to business issues as you will, but they can assist, or hinder, your success.

You may have considered your options and wish to proceed to establish your own business, accepting all that this entails in exchange for the personal and financial benefits you believe you can foresee. It may be somewhat harder for those close to you, who may not derive the same pleasure from the new work environment, to accept restrictions on their spending or expectations. You have indicated this to be an area of concern for you, which should be addressed before you become too attached to your plans.

Some of your friends and neighbours may envy your decision to opt for self-employment, others may see it (for example) as the result of your inability to gain permanent employment or as a lower ranking job. For those who have held senior positions in industry or commerce, the impact of any perceived loss of status may, perhaps surprisingly, be shared by the partner and children.

SECTION 2(c) - SPECIFIC SKILLS

In this section of the questionnaire you were asked about specific skills related to the running of an 'own business' rather than about the specific skills you would need for the business idea itself. In general, the establishment and running of an 'own business' requires a wider range of skills than in employment; you identified the following as worthy of further review:-

It is axiomatic that there are a number of skills essential to your business and there are others which are desirable, but which could be either learned or subcontracted out. Your responses to the questionnaire identified that you feel a lack of necessary skills, which is part way towards gaining these skills by learning, development, or subcontract/staff employment. Discuss with someone you respect and trust how you might gain the missing skills through reading, courses, training, assisting others in their business, or by using others in your business etc.

Professional advisors will be needed in most self-employed situations, if only for accounts and any legal issues (e.g. contracts). To identify someone suitable, the best recommendation is a personal one from someone operating a business of similar size. Try to line up your advisors before you need them desperately, and remember that in most cases they charge for their time on an hourly basis - so prepare well for meetings.

If you cannot identify a lawyer through your business or personal network, you could contact the Law Society for suggestions and if you similarly cannot locate an accountant, get in touch with the Institute of Chartered Accountants, the Institute of Chartered Management Accountants, or the Institute of Certified Accountants.

Before you spend too much time, energy and money on your projected business, you should establish whether there really is a market for it. This does not necessarily mean engaging the services of a market research agency or purchasing expensive reports. It is more a matter of proving your hunch that the business can survive and prosper by asking potential clients/customers and other contacts for their views. Most of your contacts will be only too happy to comment, and you should carefully prepare the questions you want to ask - to obtain as much information as possible whilst you have their attention. Collect and analyse data of a qualified and quantified nature on the market, competition, customer views, preferences and experiences, etc.

In a smaller business, the boundaries between sales and marketing can become very blurred. Marketing may be defined as the process of attracting and meeting potential customers to enable the selling process to be planned and undertaken and you will need to plan your approach to this. A substantial amount of marketing can be covered by hard work and common sense, but you should review your contacts to see if any might be able to assist you in developing your initial ideas for marketing.

In your new business there is no-one but you to 'make it happen'. You recorded a doubtful response to the question about this and must consider whether you have the ability to get your new business off the ground sufficiently quickly. The market you are entering will provide some competition for your business and you will need to be fleet of foot to stay ahead.

When the unexpected happens or an unplanned event occurs, the ability to identify alternative routes to the objective or a way to overcome the hurdle just encountered can be the difference between success and failure. Your belief that you do not generate business ideas easily may just indicate that you will have to 'try harder' to overcome problems - or work with someone more alert to opportunities - or that your business faces a longer, slower and tougher path to growth.

This is the end of your report.

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