Starting your own firm? Before you dream big, do the maths.

You are entertaining thoughts of starting your own business, and so at this stage, your thoughts are likely consumed by the complexities of leaving your current employer with your reputation and finances intact. A noble concern, certainly—but just one of many that should be keeping you up at night.

Let’s talk clients.

Some will follow you enthusiastically. Others will express regret, but stay put. A few will consider your departure a betrayal, as one memorably did to me. Clients are not sheep. Do not assume a stampede in your direction.
And new clients? They will arrive in fits and starts. Some will admire your team’s credentials. Others will associate “small and new” with “cheap and cheerful.” Which, if you’re not careful, is exactly how you’ll be treated.

One friend’s firm, launched with a sterling investment banking track record, found itself stuck in a Catch-22. The banks wanted to see a track record before hiring them. But they couldn’t build a track record without being hired. Reputation, it turns out, is not always enough.
The lesson? Optimism is fine, but prudence pays the rent. Set aside enough capital to weather a slow start and delayed payments. Because delay they will.
Your first year will be a golden window. Novelty buys you meetings, goodwill, curiosity. Use every moment to build. Because novelty fades—and then you’re just another small agency chasing the same work as everyone else.

Differentiate or die.

In a crowded market, being just another competent supplier makes you price-sensitive. And there will always be someone willing to undercut you. Stand for something—or get ready to race to the bottom.

Location matters more than LinkedIn will admit.

Yes, remote working exists. So do actual clients. If you plan to charge real fees, sooner or later, you’ll need to meet people. In person. In commercial hubs. Not on the edge of a National Park.
I live in Chichester—beautiful, historic, genteel. Also, economically sleepy. The commercial buzz of London it is not. PR firms in places like this tend to serve smaller clients, on smaller budgets, with generalist needs. Specialism—the thing that lets you charge more—becomes harder.

Funding: the grim reality.

Banks will lend you money. If you’re willing to put your house on the line. And if things go south, they won’t be shy about calling it in.
Most founders self-fund, or tap tolerant friends and family. When we launched Hogarth, we did it ourselves. That meant clarity: who’s in, who’s paying what, who gets what share, what we pay ourselves, and—critically—which clients might come with us.
A quick tip: assume even your friendliest clients will delay payment. Big companies excel at moving slowly.

And suppliers?

They won’t know you. Many won’t trust you. No credit history means you’ll pay upfront. We did. It hurt.
One exception: an office supplies company offered us 30-day terms. We rewarded them with a decade of loyalty. A rare bright spot in a cash-stretched start-up.

Office space: it gets expensive fast.

Yes, home offices are cheap. But they’re lonely, unimpressive, and no substitute for culture or credibility. Co-working can work—for a while. But sooner or later, you’ll need your own place.
And when you leave? Surprise! You might owe for dilapidations—returning that tired office to its original pristine state. Budget for carpets, partitions, paint.
Then come the extras: rent, rates, insurance, utilities, mysterious municipal levies. It adds up.

IT is now your problem.

No more helpdesk. Just you, a laptop, and Google. Buy decent kit. When I left Engine to start again, their IT head told me 90% of their problems came from PCs. We bought Macs.
You’ll need cloud backups, antivirus, mobile tech, and accounting software. Excel is not an accounting system. Use Xero, FreeAgent, or QuickBooks—and hire a real accountant.

Marketing: not optional.

Website. Branding. CRM. Travel. Entertainment. Networking. It all costs money—and all of it matters.

And staff?

Your biggest cost. And your biggest headache. Salaries, NI, pensions, healthcare. Recruiting is hard. Keeping people is harder. Your plans will change. Often.

So:

• Prepare a cash flow forecast.
• Be conservative.
• Plan for pain.
• Don’t mistake enthusiasm for readiness.

Twelve Lessons Worth Tattooing on Your Brain

1. Clients are unpredictable. Plan for a few to follow you—and more to stay behind.
2. Capital is your cushion. Optimism doesn’t pay rent.
3. Make year one count. The “new firm” buzz fades fast.
4. Differentiate or die. If you’re not distinct, you’re replaceable.
5. Location counts. Be near business, not just beauty.
6. Remote working is overstated. Real relationships need proximity.
7. Self-fund where possible. Banks have short memories and long contracts.
8. You have no credit. Suppliers want cash, not charm.
9. Budget for space properly. Offices are expensive—and deceptively so.
10. Tech isn’t optional. Buy smart. Plan ahead. Avoid cheap regrets.
11. Staffing will dominate your time and budget. And your sleep.
12. Everything takes longer. And costs more. And goes sideways.

Hope fuels the dream. But cash keeps the lights on. Plan for the setbacks, pad the budget, and assume nothing will go quite to plan. That way, when the curveballs come—and they will—you’re still in the game.

An invaluable legal “just in case” document

Setting up a business partnership is rather like entering a marriage—replete with heady highs, inevitable lows, the occasional misunderstanding, and, predictably, a rocky patch. Hence, a Shareholder Agreement is not merely advisable—it’s indispensable.

If you find yourself among fellow shareholders (and not merely dallying with option holders), it’s high time to remedy any absence of such an agreement. Its primary purpose is to safeguard the interests of you and your principal co-conspirators, particularly in the context of a limited liability company—a structure your clients will likely insist upon. Essentially, it codifies the basics of operating your enterprise: when to consider a sale and how to shield yourself from the unsavoury antics of a partner engaging in dubious side deals, for instance.

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Since every venture is apt to hit a rough patch, straining even the sturdiest of relationships, you must decide whether to design “divorce” to be a walk in the park or a bureaucratic slog. We opted for the latter—a deliberate choice to deter hasty, emotion-fuelled decisions, as enshrined in our own 57-page Hogarth Shareholder Agreement.

For your amusement—and perhaps enlightenment—here’s a summary of the topics it covers:

•  Designating the firm’s auditors, company secretary, and legal advisors;
•  Ensuring that all transactions are conducted at arm’s length;
•  Obligating the maintenance of various types of insurance;
•  Specifying the content and deadlines for monthly and annual accounts;
•  Safeguarding the corporate form and status of the business;
•  Defining the procedure for appointing new directors;
•  Imposing financial borrowing limits;
•  Setting restrictions on loans to directors;
•  Outlining directors’ remuneration;
•  Capping the value of contracts that any shareholder may enter on behalf of the firm;
•  Specifying the identity of the directors;
•  Detailing the mechanism for raising additional capital;
•  Regulating the transfer of shareholdings;
•  Prescribing the process for winding up the business;
•  Upholding the confidentiality of business information;
•  Empowering the company to enforce its rights against recalcitrant shareholders;
•  Stipulating non-compete arrangements; and
•  Determining the dates at which a sale—or “realisation”—of the firm might be contemplated.

Admittedly, the sheer scope of these provisions may seem daunting. Yet remember, this document is designed to protect you. In its absence, I have witnessed founders embroiled in disputes that are as stressful as they are unsavoury. By prioritising the creation of a robust Shareholder Agreement, you can sidestep such pitfalls and secure a smoother business journey.

In short, consider this a grown-up business document. Now, do yourself a favour and get on with it.