Want to be a partner because you want to run a business? Why not set up your own firm? You may want to consider this route if you want to be your own boss and want to run your own business. The pros and cons are largely the same as those of being a partner, but there are the addition requirements to be business savvy, entrepreneurial and comfortable with risk.
Responsibility – the pros and cons of setting up your own firm
I have had some great conversations with people who have set up their own firms. It is clear that there is a lot of responsibility, particularly as they have employed staff to support them, but what is also clear is that the rewards of being their own boss and having that freedom, makes it worthwhile.
As an Owner, you will be responsible for every aspect of the firm, the running of the business (and the cost of running the business), the work, the business development, the SRA compliance, the management etc. However, most sole-practitioners (and small firm owners) are not alone. They still have the support of colleagues and employees that they have chosen to bring in and make part of their team. They have chosen what they want the firm to look like and how they are going to make it work.
Most people who set up on their own will choose to become a sole practitioner but some will choose to set up with a business partner who will work in partnership with them and bring something else to the business.
There are of course cons to setting up on your own:
- things will go wrong and you will have to take responsibility and sort them out. This is of course why you have PII.
- someone has to look after all the day-to-day stuff. There is a lot of it.
- Cashflow is king, you have to master the cycle
The key for setting up your own firm is in the planning. Many plan for years before setting up on their own, and have taken the time to plan every detail and come up with a robust business plan before taking the plunge. There are lots of things to consider – for example:
- the Structure of the Firm
- the Services and the Clients
- the Sources of Income
- Support Staff
- Your name, website and SRA registration
- Compliance and Regulatory Matters
If you are applying for any business loans the bank will expect you to know your business plan inside out with a clear plan about how much money you are going to bring in each month (and how you are going to do it). You need to have fully addressed the points listed above. Simply put – you must have a solid plan.
As well as planning everything out as much as possible, you also have to accept that you can’t control everything. Therefore you have to be prepared to be really agile and flexible and prepared to change your business with the times. Think about some of these things to get you started….
- What services are you going to offer? niche? general practice?
- How are you attracting clients?
- Who are your competitors?
- What do you want to do?
- How do you combine practice areas, industy sectors and what you do?
- How are you funding your firm?
- What will you be charging?
- How much capital do you need?
- Will you be investing in actual premises, using a shared office or working from home?
But while you need to ask and answer these questions you also need to have a plan B, C and D.