How to start a business in the ICT sector

Are you hardworking, ambitious and a self-starter? Are you frustrated in your current employment because you do not feel that you are appreciated?

Do you feel that you are too bogged down in paper work and bureaucracy and want to be closer to action?

Then self-employment may provide you with the right formula for satisfying your ambitions. Be advised though that self-employment is not for the faint-hearted. You will be faced with a variable income that fluctuates from one month to another notwithstanding, the fixed personal and business expenses that you need to sustain throughout the year.

If you do not come from a family business background, you are likely to face serious opposition from your family members who may tend to prefer having the security of a lower fixed income stream.

Setting up your own business also means working irregular hours, dealing personally with all operating problems and a significant investment in time, effort and money in attracting business to your venture, the return of which is likely to be reaped in the long term.

On the positive side though self-employment has significant advantages. In the first instance, it gives you the opportunity to realise your dreams while earning considerably higher levels of return.

Moreover, if managed well, you have increased flexibility in balancing your family and work life, especially since you do not need to work fixed hours. You are also your own boss and developing the business is entirely up to you.

Have you set your mind on developing your own business? Is self-employment for you? Successful entrepreneurs typically

• have a clear vision of their future but also an ability to implement it

• make swift decisions and implement them as quickly as possible

• are totally committed and dedicated to their business and love what they do

• have an eye for detail and a capacity to adapt this to suit unpredictable circumstances

• have a sense of independence and being in charge of their own future

• are not motivated only by money but also by their success in their venture

• are willing to lose some control in their venture and distribute some of their shareholding to critical employees to ensure their commitment.

Do you share most of these qualities? If you do, then you have the right attributes to make an entrepreneur.

Throughout this series of articles, I shall be providing you with a few practical guidelines, tools and techniques that could be followed and adapted specifically for your business concern.

In view of the practical nature of these articles, I will describe the process by referring to a hypothetical case of a would-be entrepreneur interested in setting up his own software development company in Malta, targeting companies located in Malta and in the EU.

It must be emphasised immediately at the outset that a distinction needs to be made between small business management and entrepreneurship. The definition of small business management is denoted by size with reference to the number of people in employment, annual rate of turnover and balance sheet value.

In contrast, entrepreneurship refers to the innovative nature of an activity carried out by an enterprise. Typically entrepreneurial ventures are small organisations which have identified an untapped opportunity in the market through new product development or process innovation.

There are indeed many small businesses out there but only a handful are entrepreneurial. Small businesses, if successful, at best generate average returns and profits. On the other hand, entrepreneurial firms have the potential of generating super-normal profits. So my first word of advice is: if you want to set up your own business make sure that you add an entrepreneurial flavour to your operation. It pays.

The articles to follow will address three separate phases of managing your small business and/or entrepreneurial firm through a software development company example. The first series will primarily focus on the start-up stage of your new venture and will review issues on identifying a profit opportunity, owning and managing the required resources, developing a business plan, securing alternative forms of financing, protecting intellectual property and, last but not least, a practical review of ensuring and achieving compliance with the local regulatory authorities.

The second series will explore how your business could grow further and will address issues, such as marketing and business development, achieving and securing second-stage financing, as well as ways in which your business model could be formalised into a more appropriate structure that is befitting of a larger entity than its original start-up stage.

The final series will address the often overlooked but equally important subject of harvesting (i.e. investment realisation) and succession planning, which forms an integral part of your business planning lifecycle.

In the next article, we will see how our fictitious prospective software developer could identify a profit opportunity using information sources which are freely and widely available.

David Galea, B.Com (Hons), CPA Post Grad (Dip) Bus. Admin. (Warwick), is director of 4Sight Consulting Group, an entity involved in the provision of a wide range of professional services through a network of service providers. He has extensive management consulting experience in both the private and public sector. For more information e-mail davgalea@maltanet.net or log on to www.4sight-consulting.com.