One of the considerations that may keep professional translators from setting up their own translation business is the need to attract funds to finance the venture. Not all translators are financial experts, and they are not usually millionaires either. For enterprising translators – and indeed for any start-up entrepreneur – the prospect of having to engage consultants for advice on financial arrangements and structures and having to find banks willing to invest in start-up propositions evokes images of a future filled with red tape, stress and dependency in which they are forced to spend more time on organising things than on their actual trade. Below is a concise overview of the financial needs you will experience in the process of setting up a translation agency, and of the best ways to meet those needs.
Indeed, the need to attract start-up capital is by far the most significant of all spoilsports plaguing the entrepreneurial mind in any trade. If your trade is translation, however, you are lucky. The great thing in translation is that the funds you actually need to launch your business are very modest indeed. This is because a translation business’s primary resource is not a product, a service or any item of value – it is a set of skills. Translation skills. And these can be put to use and sold almost immediately, with very little need for any facilitating funds or equipment. You will not need any bank loans to acquire a substantial stock of goods for sale, nor to purchase or lease extensive or extensively equipped business accommodation or hire a variety of skilled employees to get your business started. Nor are there any concerns about R&D investments or indeed any other type of up-front investment that may need several years to pay off. In fact, a relatively small amount in personal savings is may well be enough for the investment you do need to make: a couple of decent PCs, modest rented accommodation, a company brochure and an effective website. If you start operations on this scale, you are of course not very likely to attract many big customers overnight, but the few that you will undoubtedly manage to capture will bring in sufficient liquidity to fund your immediate needs, which are modest, and may even help you begin to recoup the initial investment almost immediately.
Growth is one of the essential aspirations that drive almost any business. Even for a modest start-up translation business as described above, it is not very difficult to achieve growth. In fact, if the quality of your translations is excellent and your customer service is flawless, growth is almost unavoidable. This means that it will probably not be long before you will begin to feel a need for a helping hand – or indeed several helping hands. As you attract more customers whose orders come on top of follow-up orders from existing customers, it stands to reason that you will need to invest in recruiting one or more professional translators who are able to take over part of the translation work and process it at the required level of quality. At the same time, as you grow, however modestly, the administrative process will become more time-consuming, especially if you hire translators to work for you, so you may also need to appoint administrative staff to make sure day-to-day operations continue to run smoothly.
While growth may be almost inescapable in the early stages of your business’s development, it does have the habit of imploding in subsequent stages if the processes that fuel your growth are not actively stimulated. Small clients are not likely to offer translation volumes that are big enough to keep your people going. Even though you may succeed in attracting quite a few modest income generators in the short term, it may be months or more before each of them returns with a follow-up order. If you have appointed staff in the meantime, you will need to keep them busy. This explains the need for an effective website. Indeed, it is crucial to develop, maintain and continually update a website that is able to alert potential clients to your company. It makes good business sense, therefore, to invest at least part of your initial profits in a professional web presence. The constituent priorities – website development and design, search engine optimisation and the like – require the use of professional resources for them to be effective.
This is where you might be tempted – or indeed forced – to attract external funds. If you are able to show convincing sales results, modest though they may be (but convincing all the same relative to your costs), you may be able to persuade a bank that an additional investment in marketing, in qualified personnel and perhaps in more spacious accommodation makes business sense. Depending of course on the terms of the loan, this might be a sensible strategy. Might. Because from a different but equally valid perspective, dependence on a bank means taking huge, if not existential risks. Even if you experience considerably more financial leeway during the first term of the loan, remember that this sense of relief stems not from the bank’s generosity, but from its intention to make you pay. Anyone contemplating a move that involves the need for borrowed funds should bear in mind that a substantial percentage of businesses that have gone bankrupt during the recent credit crunch, did so because their banks decided to stop funding them quite ruthlessly and reclaim debts owed. Our advice, therefore, is to finance your business needs as much as possible by reinvesting your initial profits and only to attract funds from external credit providers as a last resort. This calls for modesty – in all respects: in how and where you accommodate your translation agency, in the staff benefits you offer and, even more importantly, in the proportion of profits you claim as your personal salary. While bank loans may appear to be helpful in stabilising your translation business, in the end they may prove its undoing.