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Taking the plunge to delve into the spiralling world of business is a brave feat. There are many implications involved and a great deal of risk taking; but sometimes these choices have to be made in order to find the success you crave. However, you also need to proceed with caution and be meticulous in order to find your bliss. Questions must be asked in advance. Plans must be made and above all, you must not be naive in the early stages.
1. Have you built a comprehensive business plan? The business plan should be built over a period of 12 months of the year at the broadest possible level of detail. Including wages, municipal taxation, bank costs and more. The plan will form the basis for monitoring the conduct of the business during the establishment period, the period of running the business and for managing the cash flow.
2. Have you established your budget? A budget should take into account all the expenditure components involved in starting a business – branding, renovation, purchase of equipment, design of licensing fees, etc. Do not forget to take into account unexpected expenses at the standard rate of 15%. It is more than likely that your new business will incur some upfront costs. For example, do you need to buy a specific machine to make the things you want. Do you need to look at packing solutions such as https://www.firstfoodmachinery.co.uk/industrial-vacuum-packers/ or equipment for home building? Each industry will require its very own list of items that will need to be first purchased.
3. Have you calculated credit needs? You must take into account the fact that in the first year of operation, business revenues grow slowly and gradually and therefore cash flow gaps may form. In the first year of operation of the business calculate the credit needs as part of the business start-up budget.
4. Have you looked at a business growth plan? A business in growth is very similar to building a home. In both cases it is not possible to do this without an orderly plan and in business this plan concerns the financial as well as the logistical and physical preparation of the business for change. Many businesses that rely on their success so far make mistakes and make growth moves without prior planning, and eventually they run into problems. You must look at how far you think you may grow and how this may change the budgets later down the line.
5. Have you made proper financial planning during growth? This ties in well with the point made above. The temptation to increase turnover without financial control may turn out to be a double-edged sword when financial planning is not carried out. If you overspend or underspend, you could tip the balance, so therefore it’s important to look at every eventuality. Currently, businesses are facing problems that they had never ever probably planned for – a pandemic. So be sure to look at all things that could possibly happen.
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