The love and peace aspects go without saying, so let’s focus some more on the money aspect. It’s been a recurring theme in this book and we have just finished focusing on some of the practicalities in the previous chapter – establishing your property budget, writing your business plan, paying for development work, maintaining a cash flow and so on. If you’re setting off on this downshifting journey, making your first million will not be a high priority. But you must be realistic about making ends meet. Many projects have foundered in the short term because of (let’s not beat about the bush) total financial stupidity – budgeting for a £4,500 kitchen but falling in love with a £25,000 all-singing/all-dancing design which you just had to have.

Many others have collapsed in the medium to long term because people have either paid themselves too much as a wage or have been caught out by some emergency in the quieter season, business-wise, when there’s little or no income around. This chapter brings you face to face with financial realities in a simple, checkpoint format. It follows logically through the development of your business, stage by stage. Read it periodically in the future to keep yourself on message (as the spin doctors would say!).

Money matters – it sure does!

We’ll look at this under a range of headings and timescales. You already know some of the detail – it’s largely common sense and we’ve covered most of it at points throughout the book. Setting it out in an easily digestible form, however, will make it simpler to check back on periodically. It’s important that you keep focused on this angle of your future.

So, the headings are as follows:

• Planning: what am I worth?
• Planning: what can I get/do for my money?
• Planning: have I included everything?
• Setting up: what do I really need?
• Setting up: where’s my initial business?
• Setting up: what are the timescales?
• Refurbishment: how much will it cost?
• Refurbishment: have I allowed for contingencies?
• Refurbishment: how do I keep my feet on the ground?
• First year: am I ready for the teething problems?
• First year: how do I monitor cash flow?
• First year: what’s my marketing strategy?
• Longer term: how do I keep ahead (or a head!)?
• Longer term: how do I budget for development?
• Longer term: how do I respond to the bell curve?

Lots of considerations, so only a few pointers for each at this stage. Think carefully about each statement. You may have to gain wider insight through reading more specialist books, attending workshops and so on. There’s a lot to think about.

Planning: what am I worth?

• Be realistic about the expected value of any property you plan to sell.
• Keep your planned borrowings as low as possible – it’s your main, ongoing drain.
• Remember to subtract legal and other related fees from the expected amount.
• Don’t commit everything – keep aside a contingency amount for basic living.
• Write down your final available amount – and keep reminding yourself what it is.

Planning: what can I get/do for my money?

• Keep a firm grip on the maximum amount you can offer on any property.
• Use this as a bargaining tool for properties which have stuck on the market.
• Be sensible about relative urban/rural property values – do you need five bedrooms?
• Be aware of your total cost requirements for moving to/starting your new life.
• Review unnecessary extras (land, outbuildings) -perhaps they are a financial drain?

Planning: have I included everything?

• If it’s a new business venture for you, talk to people who can give you advice.
• Get to know the locality, the services available and the possible shortfalls.
• Plan the transition between selling your present/moving into your new property.
• Have you found out the costs of removal, storage etc. for your location swap?
• What if new property purchase is threatened by slow sale of current property?

Setting up: what do I really need?

• Don’t get carried away by apparently being cash-rich at the point of downshifting.
• Review your potential major purchases – are they really necessary?
• What image would be expected of you in order to present a professional front?
• What budget is required for your agreed list of necessities? Can you afford this?
• Do you have a contingency plan for sourcing extra cash if really necessary?

Setting up: where’s my initial business?

• Have you checked out the competition in your area/market objectively?
• What particular niche are you focused on and are you aware of your ‘brand’?
• Have you checked out advertising and marketing – some have long lead times?
• Do you have a plan for networking and getting your product/service known?
• Can you offer any bargain deals etc. to make your first sales and get things moving?

Setting up: what are the timescales?

• If renovation/rebuilding is required, are you realistic about planning timescales?
• Are you aware of the principles of project planning and critical path analysis?
• With the type of work you plan, is it possible to begin trading in a phased way?
• Can you cope with the actual timescales involved in relocating and setting up?
• Have you planned a strategy for effectively maintaining movement forward?

Refurbishment: how much will it cost?

• Have you planned out in exact detail what your requirements will be?
• Will your tradespeople work to a contract or do they prefer ‘time and materials’?
• With an older property, are you really aware of the condition of the building fabric?
• Do you have a list of work items to be completed, with costs against each?
• If you’re relocating in a remote area, what tradespeople travel costs will be added?

Refurbishment: have I allowed for contingencies?

• With reference to the work list above, which items might ‘extend’ and why?
• If you need to spend more on some items, which items might you put on hold?
• If amending existing systems (e.g. plumbing), is the contract content detailed?
• Can you hold some of your intended work back as phase two, for later?
• Have your budgets included contingency amounts for essential extra works?

Refurbishment: how do I keep my feet on the ground?

• Who will be managing the project? If you, will you be on site and available?
• Do you feel confident enough to consider the options and say ‘No’ on occasion?
• Do you have a system in place for monitoring projected and real expenditure?
• Do you have someone to discuss things with, to prevent ideas being too extreme?
• Are you aware of the choices available so that you can select better-value options?

First year: am I ready for the teething problems?

• Are you marketing for the future as well as responding to the now?
• Are you receiving the deliveries of the stock/materials you require for business?
• Have you built a portfolio of tradespeople to respond to any breakdowns/problems?
• Do you have backup for your key items of equipment/facilities in case of failure?
• Do you have backup support in mind/arranged in case you are sick?,

First year: how do I monitor cash flow?

• Are you budgeting for expenditure or buying because you need it?
• Are you still managing to file all your receipts regularly and systematically?
• Do you feel you have some control/influence over increasing your income?
• Are you managing to service any financial loan arrangements you have in place?
• Are you aware on a week-by-week basis whether you are in the black or the red?

First year: what’s my marketing strategy?

• Are you clear what your key markets are? List them in order of priority.
• How much will you spend on advertising? How do you select the best sources?
• How good are your networking skills? Is it a good way of developing business?
• Will a website work for you? If so, how will you obtain a professional result?
• As well as the above ideas, in what other ways can you get your name known?

Longer term: how do I keep ahead (or a head!)?

• Are you perhaps relying too much on currently having a few good clients?
• Are you still keeping an eye on future markets as well as servicing present ones?
• Do you feel you have control of your work/life balance, with ‘times out’?
• Are you still enjoying what you are doing or do you need to rationalize priorities?
• How has your priority market refined in reality since you started trading?

Longer term: how do I budget for development?

• Can you manage to save some money regularly into a contingency fund?
• Do you regularly review current facilities and identify key development needs?
• Do you use business planning to establish whether development is justifiable?
• With whom will you discuss your plans objectively to establish a way forward?
• Are you open enough to listen to alternative views and review and revise ideas?

Longer term: how do I respond to the bell curve?

• Are you aware that any business will naturally trough after reaching a peak?
• Is your priority to sell for a profit before the peak or to fight to avoid the trough?
• If the latter, what plans can you develop to expand your business market?
• Will it be better to expand existing facilities/services or replace with new ones?
• What continuing personal development will I need to keep abreast of change?

The bell curve concept

This is an interesting idea which is worth reading more about if you’re intending to run your business in a professional way. Put very simply, it proposes that every business evolves through a natural life which can be represented by a graphical line following the shape of a bell. This means that the business should initially increase in terms of success to a peak point. It will then level out for a shortish period, after which time there is a natural tendency for the business to go into decline unless some dramatic changes are put in place. There are several responses to this.

The entrepreneur

Let’s take the definition of entrepreneur as someone who is grooming and selling successful businesses for a profit (which is only one aspect of entrepreneurship but is perhaps the popular understanding). The skill of the entrepreneur becomes that of identifying the point where a business is still climbing towards its highest point of success on the bell curve but is reaching its most valuable, saleable point. He/she is therefore building the company, with a staff and infrastructure which does not include him/herself in the equation, thus allowing him/her (the entrepreneur) to sell up and move on with a fine profit. The implication is that the business will be purchased by another entrepreneur with new ideas, creating a new bell curve, and the business then sets off once more on its upward curve.

The long-term downshifter

We’re perhaps more likely to be in the situation of setting up our business to give us a steady income for many years or until such time as we decide to sell the business as a going concern, thus creating our ‘pension fund’. As this is likely to be a longer-term proposition, we should be aware that we will reach the bell curve peak point sooner or later, and be ready to respond. If we can accept that this decline is a natural state of affairs for the business and is not our fault, we should be able to take preventative action, to maintain momentum.

The decline might be caused by issues such as:

• the property fabric and furnishings needing refurbishment;
• your range of products and/or services becoming tired and dated;
• your enthusiasm weakening, creating more negative attitudes;
• your market changing, without you responding positively to this change;
• the business turning out to be too small to generate an acceptable living.

There are potential responses to each of these issues, and some cost more than others to fix.

The business as a ‘cash cow’

This is the type of response to the downward turn of the curve where one accepts that the business has a limited life and the focus of attention is making as much money as possible from it in the short term, before it folds. Looking around, you’ll see this happening with some businesses where assets are stripped out and sold separately, quality of fabric and facilities is fading visibly, and often services become poor as employee numbers are reduced. Although this is one response to the bell curve situation, it is not recommended.

The solutions and responses which you make will depend on how you see your future and how you want to develop your cash-earning activities. Keep an open and flexible mind towards the ways things are progressing, but be honest with yourself. As we’ve been underlining in this chapter and elsewhere, keep a firm grasp of how your income, outgoings and any planned development costs are stacking up, and be realistic and objective about your overall wealth. Increasing your borrowings to extend facilities makes real sense only if directly increased income can more than match the interest repayments involved. Part of downshifting is reducing the stresses and strains of life, and balancing your finances can certainly become stressful if you don’t keep them under control.

So, in this chapter we’ve spent some time looking at a range of considerations which will become active at different points in our future downshifting life. In the next and final chapter, we will consider and respond to many of the questions people tend to ask us at meetings and seminars when reviewing whether downshifting and relocation is right for them.