Research
You simply cannot do enough research. It will help you determine if in fact your business will be viable. Don’t rush things - give yourself some time to do this work
In the beginning simply gather information in any way you can –
- Online – this is a probably going to be one of your biggest sources of information.
- People – what are people in this industry saying – try and talk to them face to face at seminars, training, associations etc
- Government agencies – they have a wealth of information that is free and credible
- Marketing – find someone who is in marketing and see if they can give you some insight
What you now have are many pieces (information) that make up a jigsaw puzzle. Take your time, be patient, and look to see what you have gathered – what is the final picture looking like. The trick here is to be impartial and independent – namely don’t let your own enthusiasm, eagerness, or passion overtake you.
I strongly recommend you speak to a business advisor at this stage. Getting this research looked at by a seasoned, experienced advisor can get you on the right track faster, bring to light things you haven’t seen, get you moving in the right direction, and give you the right kind of motivation.
Planning and Budgets
It concerns me that so many businesses, startups or not, don’t give these two the respect they deserve. And this is now especially true in the inflation pressurised economy we now find ourselves. Don’t be under any illusions– not doing these is seriously concerning.
I’m not suggesting Banks are the best gauge in this respect – far from it. But that said, if you or I were to ask a bank for a business loan then a Business Plan and a Budget are going to be at the very top of the things they will ask for. And, rightfully so. It tells them what you are going to be doing, what you think your profits are going to be, and what your talents and expertise are. Being overly optimistic will warn the bank there is an unrealistic business venture being proposed. If it’s good enough for the banks, then it is equally good for you.
Here’s a trick you can use. Do a role play where you are the bank. Look at your submission, or lack thereof, to gauge if your business venture is one you would get involved with as a banker. Be honest, be independent, be realistic as your role play this out – what is your decision? Again, a Business Advisor is worth their weight in gold.
Business plans can be found all over the internet. Go to the state business website and you can get some really good ones. If you have some good spreadsheet skills then then this will assist in Budgeting. All said, as with research, it may be time to invest some of your business setup dollars into engaging with a Business CFO (Chief Financial Officer). A CFO will have a very high level of expertise in financial modelling, budgeting, and planning. And like this practice will have dedicated software designed for this work – and plus you’ll great presentation material for yourself, banks, and other interested parties.
Get the foundations and reality checks in place well before the business opens its doors.
Planning and Budgets – they are only numbers and words, right?
I was a young accountant working for a very big multinational. I was all but finished the annual budget including the support documents (viz the business plan). I was sitting with a senior executive who was touring our facility, and I asked him what he saw in these documents – where they of real value to him? His answer surprised me and has stuck with me. He said (paraphrased) -
… it makes people examine in detail what they are doing, how to improve, to set goals, and be held responsible for their management and actions. At the end of the day the focus on profitability is an essential goal and must be recognised, and obtained. The budget process and the business plan are a method and pathway to achieve this review, and getting results.
… he was absolutely right.
I will also add here the rigorous focus on profitability is undoubtedly one of the most important performance metrics you can have – get this wrong, and the consequences can be extremely serious. Engaging with a Business Consultant and a Business CFO are essential to you, and your business.
A Business Plan for you – a pro tip
Let me ask this – if you were planning a big overseas trip, how much time and energy would you put into the planning and budget? Buying a car? I often use these, and yes, everyone can see where I’m heading. But the reality is there so often much more energy and planning put into these examples than doing the work on starting a business. Get the business right, and the overseas trips and car will come ….
Here is a technique to use.
Great, you found a good business plan online. But right now, put that aside. Get some coloured pens and a A4 notebook. Now draw your business plan. Yes, draw it. You can use labels and numbers, arrows, lines, a drawing of a van, some people here, a building there. Don’t worry about being artistic – get you pictorial down on paper. So, why draw this …
By drawing you open up your creative talents and the process will flow. As with any initial attempts throw away what you don’t like – start again. Drawing may seem childlike, but I assure you the scientific evidence is very real and has merits. In fact, you can use this for problem solving too.
Drawing also helps you sort and manage your thoughts and ideas. The pictures you are drawing need some cohesion, some order for it to work. By using this technique, you are guiding yourself through what you are envisaging in your mind. It can link your ideas and concepts, or show gaps and disjoints.
After your drawing is complete go and look through the research you have done – do the two matchup. And then proceed to the Budget and have a reality check on things. Come the time to write the formal Business Plan it should come together very nicely.
Summing Up
Making a commitment to the items in this blog will give you a great opportunity to really understand what it is you are about to set out on. A lot of your time, energy, and money is about to be invested so making informed decisions will make a very big difference in your future.
If you would like to have a chat and setup a video meeting then please get in contact. Having the right consultant on your team can be the difference between success and failure. And by the way, this practice offers both CFO and Business Advisory services.
