It never ceases to amaze me the number of small business start-ups each fall. It seems people have dabbled at something during the spring and summer, or at least chatted around the campfire with friends to flesh out a business concept. And there are those whose summer recreation and/or job is ending and their winter recreation and/or job is uncertain – a phenomenon I see around here somewhat in the spring as well.Regardless of the reason, I speak with more people in the months of September and October about business start-ups than any other two month period in the year … kudos to all entrepreneurs.
So what to talk about after the initial excitement has spilled onto the table?
Well, if the business is underway, typically there are firefighting items like registering the business, setting up a bank account, and finding where the sales revenue has gone! If not too much time has passed, this may be relatively painless … but if there has been a windfall, well things may be more problematic, especially if employees are involved, sales taxes should have been applied, or other regulatory requirements missed like Worksafe BC.
My first point then is simply this, talk to an accounting professional or business consultant sooner than later once considering opening a business or having already started. It’s a small price to pay, and many offer a free initial consult.
My next suggestion is that a business plan be created. This will be impossible to avoid if third party financing is needed, but even if not, this is a must do.
“Failing to plan is planning to fail.” An overused proverb? Nope. It’s a maxim in business. A business plan is the invaluable roadmap for launching, managing and growing the business.
“But my business is going so well. I don’t need a roadmap! Look at my customer list, my sales, my, my, my …”
Remember, just because a new business is succeeding doesn’t mean it will succeed past its infancy. Entrepreneurs succeeding at their new business are completely taken aback when their business implodes because of the lack of foresight.
For example, employees are needed. Are any out there? What’s their wage? What’s this do to pricing? Or, equipment is needed. How to pay for it? Can financing be in place quickly enough? Where is financing anyway?
In order to put a business concept on paper, much thought and research are needed. Thoroughness will pay dividends by identifying the strengths and weaknesses of the entrepreneur and the business concept and also by defining opportunities and threats within the specific marketplace and the economy in general.
The business plan, after the research is complete, develops three key strategies: the marketing plan – product, price, promotion, unique selling proposition, competition (what to do); the operations plan – people, production, equipment, facilities (how to do it); and, the finance plan – a three to five year projection, explaining all assumptions, of revenues, expenses, financing and cash flow.
Although the business plan is the end product, the business planning process itself allows an entrepreneur to make informed decisions about the proposed venture, avoiding unnecessary financial and legal commitments. Its actual complexity is not what it might appear when the process is taken step by step. Lots of on-line help is available and there is the option of working with a local professional. If you do retain someone’s services, be open-minded but remember this is your venture so be sure to maintain ownership of your vision.
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca