Timing Your Ideas to Be Successful in Your Business

Having reassured yourself that your idea is still a good idea which works, the next step is to determine whether the world is ready to buy it. In the business world timing is everything.

Some ideas are merely launched at the wrong time. Some ideas are ahead of their time. The European newspaper, for example, is an idea which might yet prove a success. Some ideas are behind their time. CB Designs provides aluminum and stone signs for golf courses. The company was set up by chartered accountant Chris Boxall. 'We think we have got the product right, but what has gone wrong is the time it has taken to get everything organized and the fact that it was a terrible time to set up such a business,' he observed as the business was becoming established.

There is, of course, some degree of luck involved. You can't be held accountable for acts of God or politicians. But you can for virtually any other event, so there are a number of factors worth considering:

• Is the product or service subject to seasonal variations in demand? If so, how can you reduce these variations or organize the business so that they are not financially disastrous?
• When would be the best time for the launch?
• Are the people who make the purchasing decision working on a budget cycle? Companies invariably have budgets which are allocated at certain times of the year - you need to find out when your potential customer has the money at their disposal.
• When will you receive the maximum publicity?
  

It is worth remembering at this point that even the most brilliant ideas can initially be rejected or dismissed. The inventor of the copier machine, Chester Carlson, had his idea rejected by 20 companies. And though he patented the idea in 1937, it was not until 1959 that a workable office copier came into being. Many other good ideas had similarly inauspicious beginnings. Richard Drew invented masking tape and 'Scotch Cellulose Tape'. Launched in 1930, Scotch Tape totaled $33 in its first year of sales.

These ideas were good ones and they worked, the trouble was that in the case of the copier the product needed a lot more work and, in the case of Scotch Tape, people were unaware of the full range of its possible uses. Sir Clive Sinclair has commented: 'I invent things when I perceive people's need - it is then a matter of convincing people they need it.' Convincing people can take a long time - and a great deal of money. It is preferable if they are aware of the need and you appear to answer it.

What kind of business will it be?

Sole trader

The most straightforward form of business is being a sole trader. Becoming a sole trader involves few complications -you don't have to become a limited company, but you do have to tell your Tax Office and the Department of Social Security that you are now self-employed. Being a sole trader suits many forms of business. If you are working for yourself as a window cleaner, a decorator, writer, gardener or plumber, with a simple business not involving huge financial investments or large numbers of staff it is ideal. The downside is that you are personally liable for any debts.

Partnership

Partnerships can prove difficult. You have to be sure that your business partner is someone you can work with. The parameters as to how you work need to be clear from the outset. As partners you are both accountable for the business's debts, contracts and tax payments. The reasons for going into partnership may include:

• complementary skills - one person may be a specialist, the other a generalist, and they both feel the need for the other's support and expertise. For example, one partner may be good at selling, the other at administration.
• wanting to share the burden - it can appear that a business halved is a business with half the worries and responsibilities. This is unlikely to be the case.
• damage limitation - you want your partner's knowledge and expertise on your side rather than as a competitor.
  

Only the first reason is practically viable. A partnership has to be made to work like any other relationship. If you enter into it for negative reasons or with misgivings it is likely to quickly encounter problems. You need, therefore, to map out a partnership agreement with a solicitor (if you don't you are ruled by the antique legislation of the 1890 Partnership Act). Among the issues your agreement might consider are:

• What your different roles and jobs will be. Dividing jobs up at the start might prevent argument later.
• How the partnership's profits are going to be divided and how much income each of the partners will earn.
• A clause preventing either partner setting up in competition with the other.
• The value of each partner's share.
• How arguments should be settled.
  

The agreement must cover as many eventualities as can be imagined and can include matters as diverse as who can sign the partnership's checks to what happens if one of the partners dies.

Limited Company

While sole traders and partners have unlimited liability establishing a limited company, as its name suggests, provides limited liability. Your house and possessions are no longer under threat. The most that shareholders can lose is what they have already invested in the company. For many, limited company status confers a degree of respectability and seriousness. There is no doubt that investors, for example, take a limited company more seriously. On the surface at least, being a limited company sounds more professional. But as you can buy a limited company for a few hundred pounds, this is a mistaken belief.

To make it worthwhile you need to be a significant business with substantial assets and turnover. It does cost money -you have to employ auditors to check your accounts, file returns to Companies House, pay corporation tax and not for getting the sign you need outside the premises to inform people who you are. You may also become an employee paying income tax and national insurance through PAYE.

A limited company has a minimum of two members and a secretary. It is a legal entity rather than a person and gives you the protection of not being personally liable for the company's debts. But you have to be wary of carrying on running the business when it is technically insolvent - when it owes more than its assets. If you do so you can become personally liable.