David Salter, founder and director of the boutique translation company Linguistico, talks about his journey from solicitor to business owner.
There is probably never a good time to start a business. Will you ever truly be financially prepared? Will the economic climate ever really be stable enough for a new business?
But thinking things through carefully, even before you hand in your notice, can help minimise the risks.
Financial challenges
“I started researching my business in mid-2007 and began trading in early 2008. At that time people thought that giving up legal practice to start a business was a ridiculous and hugely risky idea.”
But if you’ve done your research and prepared yourself financially, why wait?
“I had done my research and knew that certain areas of the legal and insurance industries were fairly recession-proof. Companies that had previously employed full-time translators were looking to outsource that work following redundancies and in-house counsel were looking to reduce costs and would be looking to reduce their translation spend at the law firms. So really it was an ideal time.”
Personal sacrifices
Still, in order to give Linguistico all the financial help it could get, David decided not to draw a salary for the first nine months.
“Cash flow is always very difficult for a new business to manage, but this is especially so when your clients are law firms. Law firms tend to bill their clients monthly which could be several weeks after receiving your invoice, then allow their clients a month to pay. Having been a lawyer myself, I understood this so made sure the business financially prepared for delayed payments.”
Financial sacrifice is a harsh reality most new business owners have to face. In the beginning most ex-lawyers starting a business will probably experience a drop in salary and the business will undoubtedly have more outgoings than income.
“I did find the drop in salary difficult initially. But you have to put the sacrifice into perspective. A lawyer may lose their steady income when they hand in their notice, but they will gain freedom, flexibility, the ability to control their future and, if they focus on the positives and are driven by a desire to earn the same or more than they were on before, they will soon find themselves back on the same wage as before. After moving on, many people find they are not actually driven by money at all and that the newly found free time and pride in their job far outweigh any reduction in salary.”
Keeping costs low
“Besides, you can ease that initial burden with careful financial planning. You should never just hand in your notice and leave. You have to think things through carefully, and not just because you need to save up a buffer to cover rent, insurance, IT systems, etc. It’s important to learn about debt ”
“Once I had made up my mind to start Linguistico, I moved to a smaller unit and cut my expenditure until the business got established. Thankfully I didn’t need to cut out too much because I was always more of a go for a surf and barbeque-on-the-beach person than a frequent guest at the Hyatt!”
Finding ways to keep your business costs low, especially in the first few years, can help. Do you really need an office or could you work from home? If shop frontage is key to your business, do you really need extra storage space at the back? At the same time, do you have enough space to grow the business? If you need letterhead, could you design it yourself rather than hire a graphic designer?
“It’s amazing what friends will do when they discover you’re setting up a new business. One of my friends designed business cards for me, another friend designed our first website.”
Simply knowing the financial challenges ahead, or seeking relevant advice, will help. Do you know when you’ll need to make super contributions or contact the tax office (most businesses have to submit quarterly activity statements), what receipts should you keep and how do you invoice clients correctly?
“For the first six to nine months of the business, I tried doing all the accounting myself, but this was a huge mistake. Someone coming from an accounts background might be able to handle the accounts more easily. But for me, dealing with different currencies, foreign exchange brokers and other international payment methods… I needed to employ someone happier with numbers than myself. You have to know your limits and know when to get outside help.”
Breaking free
Starting your own business is a huge commitment, both for the lawyer giving up their livelihood and their families.
“But I have no regrets,” says David. “I still use all the skills I learnt from legal practice, in fact there’s no way I could have set up the business without them.”
“I guess, at first, I might have missed the income and security of being a lawyer, but not anymore. Compared to the huge amounts of happiness I get from running my own business, new skills, loads more free time, a steady and flexible income and a lot more satisfaction, I no longer wonder whether this was the right thing to do. ”