The majority of UK freelancers and micro-business owners are self-funding rather than relying on external financial support, according to a survey of more than 500 micro-businesses by FreeAgent.
All across the country, business owners are mindful of the importance of conserving funds and are seeking to keep costs low.
Frederika Roberts is self-employed as a professional speaker, and also has past experience in setting up and running a micro food company, which she self-funded.
‘Having already run a business entirely by ‘bootstrapping’, I knew that there would be an extended period of time at the start of launching my speaking business when I’d have to make ends meet with my own funds,’ she says.
All in all, the company has required around £10,000 over the past three years in professional development and networking, as well as costs of brand and web design, web hosting.
Roberts is now investigating the best way to incorporate so that her company is able to access grant funding.
‘This will enable us to work with a reputable university in order to have research carried out into our work and validate our results,’ she says. ‘Grant funding will also enable us to make our services available to schools that don’t have access to the required funds to bring us in.’
In terms of bootstrapping, she advises that businesses should have some personal cash reserves. ‘It helps if you are in a relationship with someone who has a stable income stream so that you at least have some financial stability while your business is growing,’ she adds.
A new career, built on bootstrapping
Emma Mapp says that losing her job at the height of the recession in 2009 was the best thing that could have happened to her. Rather than trying to get another job as an unfulfilled city lawyer, she acted on her long-held dream to turn her passion for photography into a career. She put £5,000 into the business and spent it largely on marketing and product manufacture.
‘I knew from the start that I did not want to borrow money, be in debt or have someone else vested in the business, and decided to give it a try on my own and be sensible with my budget,’ she says.
She will reinvest the money made from sales of her present collection to make more products for her next.
In terms of bootstrapping advice, she says there are so many free resources out there to help you make sensible decisions what to spend your money on. ‘Utilise them and talk/network with as many people in your industry as possible. After all, it’s not what you know!
Unlike Mapp, Barrister Julia Furley decided to remain in the law field when she set up JFH Law LLP in 2010. ‘Part of our business plan was to apply for a criminal Legal Aid contract,’ Furley says. ‘There is only a very small window of opportunity to do this, and as such we made the decision to leave our respective jobs, set the business up and apply for a contract within a couple of months.’
Using personal savings
Reluctant to take on large debts, Furley chose to use personal savings to finance the business, with her and her business partner each investing £20,000. ‘In addition to the money we paid in, we also agreed not to take any money out in the first year so that we could give the company the best chance of making it through the first year,’ she says. ‘I continued to take some cases at the independent bar for the first six months of operation so that I could afford to pay my bills.’
The money was used to secure an office, create signage, develop the brand and create an online presence, and being gifted office furniture from a barrister’s chambers that were moving premises, was a fortunate event that saved some money.
The main expense was staff. ‘Because of the way that legal aid contracts work we were forced to employ additional solicitors in order to maximise our access to courts and police stations. This meant that we had to pay salaries despite the fact that we had no work when we actually began the business,’ Furley says.
Six years on, the business has developed well, but a reduction in legal aid has meant that it is no longer viable to run a small criminal law firm. ‘With this in mind we diversified very early on, and now employ mainly civil lawyers,’ she adds. ‘We are in the process of redeveloping our online presence and embarking upon a much more focused marketing campaign to take our selves to the next level, which requires a significant investment. However, as the business has grown we have continued to live well within our means and have the financial resources within the company to pay for it.
Furley says that businesses shouln’t be shy about asking for help. ‘When we set the business up we realised how many useful people we know; from website designers, to branding experts, copywriters and stationers. It is fine to ask favours as long as you are willing to return them in due course!’