Making it your business to become a successful entrepreneur

It was the Chinese philosopher Confucius who said: "Find a job you love, and you'll never have to work a day in your life." Whether you're considering going on to third level or entering the workforce straight after the Leaving Cert, you've no doubt given some thought to your ideal career.

If you prefer routine and security, a permanent, pensionable, nine-to-five job might appeal to you. If, on the other hand, you're more adventurous, then you might prefer a career path not mentioned on any CAO form or college prospectus - setting up your own business.

Back in 1996, a transition year student proved that it's never too early to start exploring your entrepreneurial side. When Brian Fallon set up Daft.ie, it was supposed to be just another school project. Now it's the largest property website in the State and last year it was estimated to be worth up to €15 million.

Judging by the latest figures from Bank of Ireland, entrepreneurial fever is spreading rapidly. In 2006, almost 20,000 new business start-ups were recorded, 11 per cent more than in 2005.

In fact, the number of new Irish companies has been rising steadily since 2002. "Over 60,000 new companies have registered in the past four years, with one in 10 Irish adults now describing themselves as early-stage entrepreneurs," says Emer McDonnell, business banking recruitment manager at Bank of Ireland.

So what's fuelling this flurry of entrepreneurial activity? Dr Dan McLaughlin, chief economist at Bank of Ireland, says two key factors are at play. Firstly, economic activity remains buoyant. "GDP [ gross domestic product - the market value of all goods and services produced in the country] growth last year exceeded 6 per cent and 2007 looks set to deliver something similar, which is supportive of business confidence," he explains. "The second point is that the Irish tax system is now much more conducive to risk-taking than it was."

Not all business ventures are destined to flourish, however, and every entrepreneur must accept the risk of failure. But encouragingly, while the number of start-ups has been on the increase, the rate of business collapses has been waning. In fact, the number of companies that went into liquidation - where the company is wound down and assets are sold off to pay creditors - dropped to 280 last year, the lowest level in 20 years.

Nevertheless, such trends are cyclical and business founders cannot rest on their laurels. "Look at any world economy over the decades - nothing lasts forever," says Kenneth Fennell of Kavanagh Fennell, a firm which specialises in insolvencies - where companies are unable to pay their debts - and corporate recovery.

Fennell says even a slight decline in economic circumstances could spark a significant increase in business collapses. He believes the effect of rising interest rates will kick in this year and in 2008. "People's disposable incomes are going to decrease as a result of an increase in mortgage [ rates] and other borrowings. That's going to have a knock-on effect, I believe, in relation to a lot of companies. The retail sector could well suffer - smaller boutiques, restaurants."

With 20 years of dealing with troubled firms under his belt, Fennell has spotted some recurring themes. "The common denominator . . . is cash-flow difficulties."

A common mistake is to assume the firm is a success if sales remain high, even though underlying profits may be dwindling.

Competitive pressures often force firms to reduce profit margins to attract customers, and they may be unable to pass on the costs of running the business.

While some companies experience a long decline into insolvency, others collapse rapidly if hit by a sudden external shock.

Fennell offers some words of wisdom to those in difficulty: "The key to it is, once they realise they're getting into trouble, that they actually do something about it, because generally by the time they get to liquidation, things are really in a bad way."