5-3

Your business idea was a pass and you feel ready to start your own business, now what?

Create a business plan

You could argue that many entrepreneurs have started businesses without ever having a business plan. For most small business owners that’s true but as their business develops you will find that they often start putting some kind of business plan in place so why not doing the right thing from the start.

I think that a business plan is a must-have for two reasons. The first reason is that it gives you the clarity you need to set up and run a successful business. Secondly, it helps you foresee issues you might come across in the future giving you the necessary time to put together a contingency plan to tackle these issues on time.

To come back to our first point, I’d say that before starting your own business you must be very clear about what unique value your service or product offers, what’s the size of your market, who are your competitors and how are you different from them, who is your target audience and how are you planning to reach them and market to them, how much will you charge for your product or service and  would this be sustainable and profitable etc.

A clear business plan will help you evaluate your business performance much more accurately.  For example, you would review your financial plan after the first six months to see if you are meeting your financial forecast. Not meeting your projected sales or profit means that something is not right and that you’d need to review your PMF, marketing strategy and so on and unless you have a business plan you can’t do this.

Put together a company structure

It’s hard to think about the company structure when the company itself involves only you or you and your business partner yet that’s such an important part of setting up your business.

Every company big and small must have its own rules, policies, culture and systems in order to function and you need to decide what yours are now rather than later.

To give you an example your company structure will include things like…

Get your paperwork and legalities right
Get your finances right

as a new entrepreneur,  we can be easily distracted by wearing different hats and only think about the company’s account when the end of year accounts are due. It is easy to pay an accountant to return this for you but what insight has this given you into your business? If you are lucky enough to find a great accountant, which isn’t often the case, he or she will make a few suggestions to improve your cash flow or revenue in the future but this can already be too late. The truth is that you need to look at your finances week on week and month on month to see where you are going wrong and you could improve your cash flow before it all dries up. This is easier said that done, when you just start you don’t usually have the funds to hire or pay for a bookkeeper. But if you follow my advice, do not compromise on this, if you cannot hire someone to do your bookkeeping and you cannot do this yourself, get your business partner to it and if you don’t have a business partner look for one. It is better to get a slice of a bigger cake than a full slice of a smaller one.

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