How to Bake Your Business Idea and Eat it Too.
“Your Step-by-Step Guide for Start-up Business”
Dr Jim Porter
Learn How to:
Kick start your new business
Plan how to initiate the different processes
Learn how to deal with stumbling blocks
Manage your business tension-free
Copyright
How to Bake Your Business Idea and Eat it Too
Dr Jim Porter
Revision: SW11.001
Copyright © 2011 – All Rights Reserved.
Smashwords Edition
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Thank you for respecting the hard work of this author.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without the written permission of the author.
ISBN:
978-1-4658-5180-2
Publisher: Smashwords, Inc.
INTRODUCTION
LEARN ABOUT:
A recipe for success
The importance of small business
Entrepreneurship
How to use this guide
Over the years, I have studied many books on entrepreneurship, innovations, business management, leadership, and most importantly on success. Books on success have had the most impact on my career and personal life; they made it rather easy to identify the attributes and personal qualities that helped me achieve success, and acknowledge what needed to change in my attitude and behaviour to achieve greater success and happiness.
Throughout my career, I have been intrigued by the science of success and how simple and easily accessible it is. Yet many of us, particularly those who need success the most, are unaware of its existence or unwilling to take the first step to discover what could be a life-changing experience. In business, the majority of success comes from an entrepreneurial spirit and the strong desire to succeed. However, judging by the relatively high failure rate of start-up businesses, it is evident that many are ill-prepared, and some are ignorant of the fundamental basics required for success.
Through in-depth understanding of the material produced by leading institutions such as Harvard and INSEAD, and books written by great authors such as Napoleon Hill on success, Tom Peters and Stephen R. Covey on leadership, and Jim Collins on corporate issues, I have developed unique understanding of the prerequisites required for success. They often go beyond the skills and knowledge we acquire at university or whilst working. We are taught to graduate from college, seek a job and build a career, but are seldom taught how to create job opportunities for ourselves. Whilst many governments provide support to start-up businesses, many fail to equip them with success education they desperately need.
A RECIPE FOR SUCCESS: THE $25,000 DOLLAR STORY
Throughout my career, I have come across many interesting tips and practical advice for getting the job done, or achieving one’s own goal. This brief story is amongst the best and I thought of sharing it with you, as it illustrates clearly how you can succeed in your mission to build your start-up business. The $25,000 dollar story is available on Tom Peters’ website (www.tompeters.com). The story reads as follows:
“A man approached John Pierpont Morgan (1837–1913) known as JP Morgan, an American financier, banker and art collector, held up an envelope, and said, “Sir, in my hand I hold a guaranteed formula for success, which I will gladly sell you for $25,000.”
“Sir,” JP Morgan replied, “I do not know what is in the envelope, however if you show me, and I like it, I give you my word as a gentleman that I will pay you what you ask.”
The man agreed to the terms, and handed over the envelope. JP Morgan opened it, and extracted a single sheet of paper. He gave it one look, a mere glance, and then handed the piece of paper back to the gent, and paid him the agreed-upon $25,000.
So what was on this single sheet of paper that was worth $25,000? Oonly two sentences:
1. Every morning, write a list of the things that need to be done that day
2. Do them.”
At the beginning of the twentieth century, this same success recipe was attributed to the success of the second largest steel maker in the United States, and one of the most important heavy manufacturers in the world, Bethlehem Steel, under the leadership of the American Steel Magnet Mr Charles Michael Schwab.
If you wish to apply this success recipe to your business, you may wish to use “The Success Diary” which can be obtained from www.thesuccessdiary.com.
WHY WRITE THIS BOOK?
There are many books written on this subject matter, yet the search for a book that motivates and inspires whilst at the same time offering a simple, step-by-step guide does not exist. This book aims to emphasize the qualities of success, whilst taking entrepreneurs through a journey of discovery into the world of business, step-by-step. It is my desire to have this publication, configured as a guidebook, to help anyone who wishes to start their own business to be inspired and motivated, whilst following a clear process that would certainly increase their chances of success.
This book has been written for two reasons;
To provide a comprehensive step-by-step guide to new business owners
To integrate business development (inspiration and motivation) into what appears to some a very challenging and testing time.
By and large, this guide is unique in its nature, as it combines personal development with entrepreneurship. It offers the reader an easy-to-follow guide to starting a business. It helps navigate through complex jargon. It offers a practical advice as well as insight into the best course of action needed to be taken during the development of the business.
Businesses, small or large, contribute to the development of industrial economies around the world and form the backbone of developed economies. They generate immense job opportunities to millions of people and significantly help the growth of national Gross Domestic Product (GDP).
The Importance of Small Businesses
Business is hard to define for the very reason that there is so much of it around us, in all sorts of different shapes and sizes. It is important to question what a business is, because people tend to think in terms of large, well-known, successful businesses whereas business is, in fact, everywhere.
Any typical high street will have banks, newsagents, supermarkets, salons, cafes, restaurants, and so on. Business is such an integral part of our lives that we do not normally stop to think about it. But where does a business come from? How is it run? What makes it succeed? Why are people attracted to this field? These questions take us to the importance of business in today’s world.
To start with, the reality may appear to be somewhat grim. According to the Small Business Administration in the USA, more than 572,900 new businesses started in 2003. However, 554,800 businesses closed within the same year, and 35,037 additional businesses declared bankruptcy. It is estimated that 66% of start up businesses survive for more than two years, and nearly 50 survive for four years.
Business successes are attributed to a number of factors, including the availability of capital, the owner’s education level and commitment, and the owner’s drivers for starting up the business in the first place; to be one’s own boss or to spend more time with the family, to realize a life’s dream ambition.
The data, or the facts and figures, relating to start-up businesses give inspiration for newcomers in this field. In the Middle East, approximately 250,000 people create their own business each year, which equates to nearly five thousand new entrepreneurs every week. Nearly eighty per cent of these start-up companies stay in business for at least one year after opening. Most of these firms are established within six months and around seventy five per cent of all new businesses are set up from nothing.
In the US, small businesses (<500 employees) provide 50% per cent of employment opportunities, and businesses with less than 100 employees employed 41 million people. To further emphasize the importance of small businesses to the national economy, let’s look at their contribution to the US economy. According to the U.S. Bureau of the Census, small independent firms (< 500 employees):
Represent 99.7% of all employers.
Employ half of all private sector employees.
Pay 44.3% of total US private payroll.
Over the last decade, generated 60 to 80% of net new jobs annually.
Create more than 50% of non-farm private GDP.
Generate 13 to 14 times more patents per employee than large patenting firms.
Entrepreneurship
Business may mean different things to different people. However, businesses enable objectives to be achieved that could not be achieved by the efforts of individuals on their own. Businesses come in all shapes and sizes, but have three factors in common: people, objectives and structure. It is the interaction of people to achieve objectives that forms the basis of a business. Some form of structure is needed within which people’s interactions and efforts are focused.
Reasons are diverse for opening up a new business and they vary significantly from one case to another; some people start their own business as a means to earn more capital, while others strive for the feeling of freedom, flexibility and independence from working on their own initiative. Some entrepreneurs consider it a challenge to prove their mettle, and consequently they identify a gap in the market and use it for their advantage. There are also a few who want to use their leisure time to start a profit making venture.
It is an undeniable fact that many people nowadays feel bored of working for others, and seek the satisfaction in taking initiatives and new challenges in life, with a dream of commanding their own destiny. Of course, there are some people who are tied up with family commitments and they search for a family-friendly lifestyle. Some of them are inspired to pursue their own business by family, friends or colleagues, while others start their own business with a view of job security. This sounds straightforward, but we have already identified that those who come together to form businesses, those who work in them and those who manage them may have different objectives, needs and understanding of the businesses.
It is undisputable that starting a new business can be an exciting, inspiring, liberating, challenging and rewarding enterprise. This book will help you to plan and succeed in your business journey.
POINT TO REMEMBER: Many people wrongly believe that it is hard to start up a new business. The challenge is to keep it once started. This is why we have to think deeper and work harder.
HOW TO USE THIS GUIDE
This Business Guide consists of four sections; section one, represented by the first chapter, concerns the Primary Steps that help you to reflect on whether your business proposal is feasible and has sufficient potential to generate a profit. You will be advised to consider your skills and resources, and check whether proceeding with your business plan is the right option for you.
While section one engenders a lot of convictions in you as a beginner, section two, Laying Foundations, chapters 2 to 5, helps you to identify what needs to be done to get your business off the ground. You will find out how to explore your market and make appropriate plans to deliver your business concept. You will also be guided on how to tackle vital issues related to your business plan. Finally you will learn how to set up your business appropriately and legally.
Section three, Managing Business, chapters 6 to 8, gives you practical and user-friendly tips on running your business, and includes the type of advice you can look at for quick and easy reference. You will also be informed how various rules apply to small businesses.
The fourth section, chapter 9, is a concise Business Directory of key UK-based organizations that provide help and advice to small business firms. I have also taken care to include some useful web links which provide further information related to the topic under discussion.
The ‘POINTS TO REMEMBER’ are vital tips about specific topics, and provide valuable information for your onward business journey.
CHAPTER 1: ASSESS YOUR READINESS
LEARN HOW TO ASSESS YOUR READINESS TO START UP YOUR NEW VENTURE:
Is it a viable proposal?
Are you well equipped?
What comes next?
IS IT A VIABLE PROPOSAL?
So many great business ideas never grow into successful businesses purely because the obvious gets lost in the mix. There is a wealth of new business guidance available, so much clever, astute and thoughtful advice in fact that it can sometimes become a little overwhelming.
To start a good business, you need 100 per cent dedication and commitment. The feasibility of your business idea is centred on whether you will be able to make proper sales to generate sufficient profit.
To take that leap into the unknown of running one’s own business is a very brave thing to do. It requires strength of will and character and plenty of self belief and confidence, but whilst you are pumping like mad on that foot pump, desperately trying to keep your ego afloat, it is important to let more than a pinch of realism into your life.
To be a new business success story you will need to honestly assess the risks involved and calculate the cost of failure. Letting over-optimism skew predicted turnover or profit is a dangerous game. You can achieve success by focusing on the strengths and opportunities of the business, and by identifying the weaknesses and threats to you achieving your goals.
To check if you are on the right path, ensure that;
You focus on end customers
Assess the likely competition
Define your target market
Learn the importance of sales and sales techniques
Work out your costs
Be realistic.
Start by identifying your business ideas.
Your qualifications and personal experience
Available resources (local manufacturer, addressing market needs, innovation)
Finding solutions to existing problems
Franchise
Refine your business ideas and pick the most promising.
Ability to finance
Access to technology
Availability of resources
Market size and competition
BE CUSTOMER CENTRIC
Your marketing activities should address the highest requirements that your customer has. To do this you need to have some idea of what the issues are for your customers. To achieve this you will need to segment your customers into groups with similar needs.
Successful businesses should always be focused on their customers. Their needs are top priority while delivering a business product and the service should be provided at a reasonable price.
You can apply direct or indirect marketing strategies to sell your products, but care should be taken to provide a service that addresses customer needs.
You have a better chance of running a successful venture when customers feel satisfied with your products and service.
Right now there are thousands of people out there trying to start up a successful small business. Only some of them will succeed, even though they may have very similar products or services to those that failed. What is it that successful entrepreneurs do that makes their business grow and thrive while others fade away? Here are a few suggestions:
Forget the recession doom and gloom – You can certainly pay some attention to how a poor economy affects your customers’ buying behaviour, but do not let the gloom in the media get you down. If your product or service is truly valuable, people will still buy it.
Find something new to offer to your customers – If people are no longer buying what you are selling, it is a sign that it is time for a new approach, not a huge price cut (which devalues what you have to offer). Bring something new to the table, whether it is holding a workshop or launching an e-book. Get people excited about your business again and sales should soar.
Stop guessing – Rather than guessing what your clients and customers want, why not just ask them? An easy to use free service like Market Survey is a great way to get quick feedback that will really help.
Stop doing it all yourself – This is a big one. You cannot wear fifty different hats and still expect your start up business to be successful. Outsourcing may seem like an expense you cannot afford, but the simple truth is you cannot afford not to. Get help with the bookkeeping, building your website, promoting your business, or even just for going through your email. Your start-up business will be all the better for it.
Be realistic about the nature of your customers. Not everyone will buy from you, so you need to be specific, initially, about your target group of customers. At the beginning, you will find it difficult to sell your products or services to other businesses unless you gain an excellent track record of your business.
Usually, larger firms prefer to buy from big suppliers that can guarantee great volume and consistency of goods. Gradually you can think of widening your market towards this line.
You will find a good number of customers for your products or services, even though they are somebody else’s customers right now. Persuading these groups of customers with your attractive products and services is the challenge waiting for you.
POINTS TO REMEMBER: Customers are the prime focus of a successful business. If you can find a market slot you need to be able to meet its requirements.
EXPECT STIFF COMPETITION
If you are an aspiring small business owner or entrepreneur, you have probably discovered that knowing who is going to buy your product is very important in order to design successful marketing campaigns.
Market research – check the conditions of your target market (for example, the city or neighbourhood your business is going to be located in) and see if the product or service you provide has a large enough client base in order to be profitable. Before you know if there are enough potential clients, you have to know who your potential clients are.
To identify your target market, you have to define what need your product or service fulfils, and what kind of people have that need. For example, if you sell a pet product, you need to know how many pet owners there are, and if there are people considering adopting or buying a pet, because new pet owners are also (if not more) likely to buy pet products. You can also consider, as potential clients, friends and family of pet owners, as they can give the product as a gift.
If you continue your market research for a period of time, the data can show you market trends. If we continue with the pet product example, it can show you how many new pet owners there are every month, or how often they replace their pet accessories, and if the replacement follows a seasonal trend.
Knowing this kind of information can help you create more effective advertisements and marketing campaigns, and gives you insight into other areas that you may not have considered as relevant to your company that could bring a healthy amount of new and repeat customers.
Competition is tough in any field of business. Unless you come up with a unique product, you will not be able to hit the market. Most small businesses face stiff contest in offering similar products. For example, even if you are planning to set up a Chinese restaurant in your locality, you will have to compete with other food outlets in that area. Your restaurant should attract the attention of people in the local area, and gradually they will become interested in trying your cuisine.
FIND YOUR NICHE
Marketing is all about getting people to know what you have to offer them, so that they can buy from your instead of your competitor. When you begin any kind of business, nobody will know what you do or what you sell, unless someone tells them, and if you are not one of those with a ‘revolutionary new product’ that people are telling each other about, then you are going to need to do some marketing.
So if you already have an idea for a product, then you have probably identified a need that is not being properly covered by existing products in the market. You have a good idea of who is going to buy your product because you probably are one of those people who is not happy about the experience you had with what’s available.
Knowing who is going to buy your product is called market research. Many businesses become successful by targeting a small or distinct segment of a market (niche), and eventually they become the number one supplier for a large number of customers.
Having a good business idea in itself can help you to define your market position. It tells you what sort of customers you are looking for and what they really want, so that you can decide exactly what to offer them. If you know your target market segment you probably know, or have a very good idea of, the kind of lifestyle they have, so you know what values they have and what they expect from your product.
With that knowledge, you can create your company identity by taking those values and presenting them as yours and your product's. People will relate to you and will be that much happier to buy your product from you.
Creating a company and product image is called ‘branding’. Once you have created your image, you need to know who you are up against, and that means analyzing the competition.
You probably have a very good idea of the competition in your target market if you have already developed a product or business plan, but sometimes you have to go a little deeper and understand who else could be interested in the same market. You also have to know who could be a potential buyer for your business in the future, should you choose to sell your start-up.
LEARN THE MARKETING STRATEGY
Now that you know your potential customers, it’s time to start marketing to them. Your advertisements and marketing efforts will be directed pretty much by your company image and brand; you don't want to engage in marketing that goes against that image, or nobody will want to buy from you.
If you have done all the groundwork, then this step should be easy, as all you need to do is make things happen in the real world. Ads, promotional events, maybe even athlete or celebrity endorsements, all help you get some publicity for your business. Just make sure it fits with how you pitch yourself as a company; remember that perception is reality.
You will need to measure the success of your marketing campaigns. Easy ways include giving promotional codes, or having customers mention that they saw your ad when they buy. Another way is to keep track of how many customers you had during a campaign and compare to a previous, non-campaign week.
You could also consider things like average ticket and number of purchases, and keep track of what products are most popular. Then take out the products that aren't performing well; keeping them may be a liability in the long run.
CHECK THE VIABILITY OF YOUR BUSINESS IDEAS
When you think of your own business, creating and fostering a positive mindset is the most important thing you must do to put yourself, and keep yourself, on track for success.
The foundation to building a positive business mindset is personal integrity – knowing who you are, what your gifts are, what your mission is, and having the strength of your convictions.
You need to ensure that your business mission and practices align with your personal beliefs, ethics and motivations. When you create your business around strong ethics, you know where you want your business to go, how you want to get there, and why.
When you have a positive mindset based on personal integrity and authenticity, it is easy to bring on the best team members and clients, to create market services and packages that reflect your passion, make consistent business decisions, and establish a strong reputation and ‘brand’.
When your business goals are in alignment with your core values and passion, when you are not simply getting through this day, week, or month, stamping out fires, you are more likely to take things one step at a time.
Your time and energy are freed up to allow you to focus more on the long-term view. Success is not complicated – it's a matter of being persistent and focused on a daily basis.
Fostering a mindset for success is as simple as knowing who you are, and why your work is of value in the world, and using that knowledge as the foundation for your daily decision making and actions. By aligning your actions and decisions with your core values, you are giving yourself the gift of authenticity, clarity and focus that will help in bringing your products to the world.
KNOW YOUR COMPETITORS
A good knowledge of competition in the market can reduce tension and the possibility of unexpected loss of your projected profit.
A business without competition is quite unthinkable in today’s world. Instead, healthy competition in the market is always encouraging. It is important that you assess how the competition is going to affect the marketing of your product.
You will have to make sure that there is a unique slot for your product in the existing market. When starting up a business, it is important to ensure that your business is lean and efficient, and this is particularly the case when wider economic conditions are difficult.
Your product has to be impressive and attractive to the customers, and then you can feel relaxed at the entry of your product into the market.
LEARN HOW TO PRICE YOUR PRODUCT
The pricing of a product usually depends on the cost of its production. Care must be taken to reduce your business costs by considering whether any element of your business product or service can be removed, while allowing the product or service to meet its requirements, and identifying whether there are any cost-effective alternatives that can be introduced.
You may be able to make savings on your fixed costs (often called overheads), which you pay for regardless of how much you produce or sell. They include rent, rates and wages.
You can make savings on your variable costs, which are linked to how much you produce or sell. Variable costs include materials, packaging, overtime and transport costs.
You must have a good knowledge of the current market price of similar products and then decide upon a price that should be competitive. The market scenario and the quality of a similar range of products are to be considered positively.
If you come up with an unmatched price, then your product can sweep to victory in the market. You need to cover your costs and add mark-up, but fixing a price too high or too low can seriously affect the future of your business.
Obviously, setting a price might seem rather straightforward. However, many businesses fail by not taking account of their costs or how quickly these can rise.
You have to cover your overheads. Even if you work from home, you will have to pay for things such as telephone and utility bills. If you employ people, receive legal advice or use the services of an accountant (you will have to pay the accountant as well). And, of course, you need some money left over to pay your own wages.
If you are going to sell through an intermediary, such as shops, you will have to take into account the mark-up or the margin they put on your product. They might be prepared to pay only one third of the actual price of your product and the rest goes to them as their commission.
You also need to consider delivery costs. Of course, you need to recoup these from each sale you make, but you need to think about how building in these costs will make your prices appear to the market.
The cost of making sales can be substantial, especially if you have to travel to meet your customers. If you only make one-off sales, the costs can be even higher, because you have to keep visiting new customers rather than getting repeat orders.
POINTS TO REMEMBER: Be far-sighted and responsible in your cost calculations. Mistakes can be very difficult to rectify.
UNDERSTAND THE MARKET
You need to formulate a marketing plan, setting out how you are going to target and interest potential customers in your product or service.
Before beginning your business you could gather the opinion of your friends and family, or speak to potential customers that will give you a clear picture of the market situation.
Besides setting out what your marketing strategy is going to be, a marketing plan should also set targets, such as how much each marketing activity should increase sales, what the budget is for each activity and who will be responsible for each activity. Some marketing strategies you could use include:
advertising and public relations,
a direct mail campaign
taking an office in a populated city square
an email marketing campaign
setting up a website.
LEARN MARKETING TECHNIQUES
Different techniques of either direct or indirect marketing can be used:
You could deliver leaflets door-to-door. Although most of them end up in the dustbin, some will have an impact on your business and may lead to sales.
You could meet customers face to face to show them your product and explain its uniqueness and advantages.
Usually, direct marketing is not advisable unless it turns into a huge demand in sales.
You could also seek the help of efficient suppliers to help your product have a bulk sale in the market.
EXPERIENCE THE REALITY
If your business idea is still holding you up, the next question you have to address is the practicality of your proposal. Some ideas that work on a small scale might not be recommended for a profitable business.
If your idea involves producing something, or people visiting you, you need to think of securing a workplace, because your home will not be sufficient to meet your business demands. Having an office space and workplace in two locations can create an additional expense that will have to be covered by making good sales.
No matter how good your business idea, all business involves certain risks, and some projects are more risky than others. You will have to spend a lot of money before making a single sale of your product.
Finally, you should consider whether you really possess what it takes to turn your idea into a successful business venture.
POINTS TO REMEMBER:
Being successful in a certain field or possessing certain skills may not qualify alone to be successful in business.
Successful business ideas focus on customers, and it is best to search for niches that may benefit from your skills and expertise.
The success of your business idea depends on your ability to realize sufficient sales and make enough profit.
Be careful – you must ensure that all expenses, small and large, are take care of when working out your product cost, as it will be rather difficult to correct afterwards.
CHECKLIST: Evaluating your business idea
When evaluating your business idea, check the following statement and tick accordingly
Activity------------------------------------------------------------Agree----Maybe--------Disagree
- My business idea can be harnessed
-I have considered all the advantages or benefits of the idea
-There is a real need for the business idea
-I have identified the exact problems or difficulties my idea is expected to solve
-My business idea is original or is a new combination or adaptation
-I am aware of the immediate or short-range gains or results can be anticipated
-My idea can be patented
-The projected returns on my investment is adequate
-The risk factors associated with my business idea are manageable and acceptable
-I know of the long-range benefits that can be anticipated
-I have checked the idea for faults or limitations
-I am aware of the problems that my idea might create and I know how to address them
-I know where to get the skills and resources I need to develop my business idea
-I know of the level of complexity that will be encountered during execution or implementation
-I can work out several variations of the idea
-I can offer alternative ideas
-My business ideas have a natural sales appeal
-The market is ready for my business idea and customers can afford to buy it
-I am aware of timing factors and constraints
-I know what my competitors are doing in this area
-My business can be competitive
-I have considered potential user resistance or difficulties
-My business idea fills a real need, and if necessary the need can be created through promotional and advertising efforts
-I can put the idea into operation in a controlled and timely fashion
You should pick and choose the answer that best suits your circumstance, depending on the type of business and/or the type of product or service you want to evaluate.
ARE YOU WELL EQUIPPED?
Don't fall into the trap of starting a particular business just because someone tells you ‘it’s a sure thing’. Potential customers will only part with their hard-earned money if you convince them that they’re getting their money’s worth, so you'll need to know what you’re doing, no matter what the task.
A good business idea is essential to setting up a successful business. When market and employment conditions are uncertain, starting your own business may be an option worth examining. Much will also depend on your knowledge, skills, experience and personality.
KNOW YOURSELF – RECOGNIZE THE FACTS
In an economic downturn, overall economic activity decreases. As a result, businesses could experience falling sales, cash flow problems, employment freezes or redundancies. However, in such a climate there are also opportunities to be exploited.
By choosing the right type of business and conducting it in the right way, your business can thrive even in a period of recession. A well thought out business idea, proper sourcing of finance and good business planning can ensure that your business has the best chance of success.
Make sure that you have a realistic business proposal. Being your own boss can be exciting, liberating and challenging. It can help you to develop your leadership skills, excel in new areas and get satisfaction through experiencing new adventures.
TEST YOUR BUSINESS IDEA
You can use the volatility in the market and economic downturn opportunities to define what you and your business want to achieve. You need to ensure that the customer is central to your business concept. Consider whether they would really buy your product or service, particularly in the context of the current market.
Difficult market conditions are often caused by very specific issues, such as unavailability of loans or difficulty securing finance for example.
Diagnosing these issues and seeing to what extent they affect you, will allow you to rethink the nature and scale of your business. Understanding these issues will help you to develop strategies for coping with them.
REALIZE YOUR POTENTIAL
Business is not meant for all;
You need to have a true potential and full focus in this field.
You have to keep your confidence level high, as business involves risk taking and making sacrifices such as working long hours, especially when you’re trying to get the business off the ground.
There will be lot of challenges you have never faced before, and at times you will have to make quick decisions without much deliberation.
There, you alone will have responsibility for such decisions which may have wider consequences to your business.
You need to be mentally prepared to face the challenges that your business field demands.
Very few find the pressure of running a business too much. Most people succeed on their efforts. There could be days when you may wonder why you ever decided to start your own business.
You may also feel that it is the best thing that you have ever done. However, a lot of adjustment is needed from your part when you decide to work for yourself. You will still have family responsibilities which should be properly taken care of; this often makes it difficult to work from home.
KEEP AN EYE ON YOUR FINANCE
A self-directed working environment will of course render you a better standard of living and a decent source of income. At the same time, you might have to adjust to lower wages or sometimes nothing at all to begin with. Even when your business is settled and established, your monthly income can fluctuate, depending on how well your business is progressing.
You should have certain practical considerations, such as how you are going to pay the rent or mortgage and other running costs. At an early stage of your business, you might need to cut short your extravagant costs.
Business finance is one of the most important aspects of running and maintaining a company. Finances dictate the success or failure of a company, and if you do not properly maintain your finances, then problems will arise. Commercial finance is something that every business owner must deal with and understand.
Part of business finance involves setting up proper cash flow. A business person needs to clearly define his accounts receivable and accounts payable. He needs to maintain a steady and balanced cash flow at all times. The accounts payable must not exceed the accounts receivable.
POINTS TO REMEMBER:
Start-up business owners require financing to enable them to proceed forward
Remember, it is less costly to make mistakes on paper as it can be easily corrected
Having a brilliant business idea alone is not enough for a successful business.
Real success relies on your competencies, commercial acumen, your own experience as well as personality
Decide, is a start-up business meant for you?
A business person must also carefully manage his debts. He should never let his debt get too high or out of control. He should maintain regular payment schedules to ensure he does not fall behind on repaying any debt.
It is important for any business person to maintain a budget, much like they would for their household. This will help them ensure they are keeping track of all the money coming in and going out of the business. This is a good method to avoid getting into too much debt.
Business finance is something that many people do not think too much about when starting a business. This is why so many businesses fail. When a business is starting up, lenders like to see a good business plan in place, including a financial plan. This shows the business person really understands all that is involved with making a business successful.
You must also be careful regarding the health issues of your staff. Adequate insurance coverage can help ensure better health prospects of your employees. Good health of your employees should be one of your greatest concerns, as any negligence in this area can have wider consequences to your business.
You will also have to think about your future business prospects. It is a good idea to have an advisor to discuss your pension provisions, for example.
There is an element of risk with any new enterprise, and many people try keeping their current job while building up a business in their spare time.
KEEPING RECORDS
As a business owner, you must keep clear and concise records, as it is extremely important to keeping business finance under control. Your company should either hire a professional or use some type of bookkeeping or computer software to maintain accounting records.
Proper record keeping can also be helpful when applying for a loan. Lenders prefer to have records to refer to when making a decision on a loan, especially for a business. Businesses are seen as risky because they can easily fail. Lenders like to see proof that your business is doing well, or at least a forecast that shows the company will do well.
You should have your business finances in mind at all times. Money is the biggest indicator of success in business, so it makes sense for it to be one of the top priorities of you.
For proper business finance, you should maintain records for all of the money going in and coming out of the business, and keep track of all debts and money owed to the business.