The chancellor,
Gordon Brown, is planing to change the
qualifying period at which Capital Gains Tax
(CGT) is most favourable to investors in
small businesses'.
At present, an
investor has to have a 25% stake in the
business for 10 years to qualify for the
lowest CGT. Under the new plans, investors
can have as little as a 5% stake in the
business for the proposed new time period of
4 years to qualify for the CGT starting rate
of 10%.
Another expected
boost is a change in the CGT 'relief', which
presently starts at 5%, to be reduced to 2%.
This will benefit, in particular, the
skilled staff required by small business who
are seeking, the booming, 'equity for
knowledge'.
The problem with
either of these new business entry routes is
whether or not you will be able to use your
personal strengths and business experience
to the full: day in, day out.
Having a few
customers and contacts from your old firm is
a traditional route to a new business, and
is of course a good reason to be hopeful.
But, if you asked yourself what type of
business you are best suited to start, it is
unlikely that you would always choose the
business you worked for as an employee.
Another way into business is the local
opportunity that is now up for sale. The
only suitability being locality: you could
probably think of a few more relevant and
similar scenarios.
Most successful
small business owners and entrepreneurs
would be successful in a number of different
businesses that they had no real knowledge
or experience of. Why? Because they have a
broad understanding of all aspects of
business, they have total commitment,
sufficient financial understanding, and play
to their strengths in their daily dealings:
of course, if they once sold vacuum cleaners
and they worked for Hoover in the sales and
production departments, what a bonus!
The tale goes,
that if an English and Asian person wanted
to start a retail business in their local
town, the English person would walk down the
high street, see that their was not a local
shoe repair shop (and they having been a
shoe repairer) would open up a shoe repair
shop. The Asian person would walk down the
same high street, and on seeing two
newsagents they would open a third
newsagent. The new newsagent owner knows
that there is a need for a newsagent as two
have survived. They also know that if they
can give a better service than the other two
newsagents, one, and possibly (hopefully)
both of them would have to closedown: with
the new newsagent buying the goodwill (the
other newsagent had better watch out!).
So what should
all this tell you? Understanding what makes
you and a business tick, together with not
underestimating the culture associated with
small business ownership are essential to a
business being successful: not continuity of
experience and knowledge. Some of the
greatest gardeners have lost their life
savings on a nursery that turned out to be
an oasis ; a 20-year British Gas veteran
lost his house due to that gas fitting
business going bang; that great salesman who
sold ice to the Eskimos could not compete or
sell ice cream in his local town.
Finally, have
you thought about the company that employs
you at present? Is it possible that the
reason you feel you can go into competition
against them is because they have lots of
business, happy customers, great work
colleagues and a growing business? If so,
add to the above list the fact that your
boss is a natural business owner in his
chosen element, and you have not seen the
boss defend his territory, yet!
