Challenges ahead for start-ups and what they need to prepare themselves for. © colourthinking 09.04.2020
Robert Toru Kiyosak writes about how people starting businesses to get a job. People also start businesses because they have some natural affinity and people ‘pump them up’. Obviously, there are numerous other reasons, made redundant and have some cash, get sick of seeing the boss drive in n Mercedes and so on.
Number ‘1’ preparation is –
“Am I Suited to run my own business”
So, it is more than just an idea, some money (very often not enough money is a significant reason business fail) and a desire. Are the actual skills and experience complete or do they rely on the input from others? Often in the corporate world, while someone may have a responsibility for a process, they also rely (often more than the realise or admit) on the support and input of others.
Number ‘2’ preparation is –
Is there a known, apparent, recognisable & valuable difference to offer?
Is there is no ‘tied’ potential client base, and the business has to ‘push into the market’, as a brand new ‘brand’, it will need to have a recognisable difference.
Reaching critical mass to reach ‘break-even’, to arrive at that stage within the financial resources of the start-up, it will need to be offering something different that is valued.
Number ‘3’ preparation is –
Is there a business plan?
This could / should have been mentioned as no 1, but until there are some questions asked, too often it can be seen as a non-necessary, a slowing down nuisance. The questions that are asked through this plan are imperative to identify risks & opportunities relative to the business. It is a discipline that benefits from external input to move away from the energy and emotion of the individual wanting to start the business! That blind relentless energy is so important to succeed and a major reason that businesses fail – refusing to be rationale, to listen, to seek input that doesn’t match the realisation of ‘the idea’ – often, just another couple of months planning would make ALL the difference. Is there a strategic plan – yes, even a small business needs to know where it is heading.
Number ‘4’ preparation is –
Understanding the numbers!
There are so many helpful inputs from numbers but so many businesses, start-ups and others, do not actually either develop the numbers prudently or understand them when they are developed! They do not even know the difference between ‘gross’ and ‘net’. Today there are so many easy to access and maintain, financial ‘weapons.
It is OK to engage a bookkeeper (an input that is tax deductable) and that way not only do you avoid penalties for late lodgement, but you get to know, each month (lodge monthly until your experience catches up with your excitement)exactly where you are versus ‘break-even and profitability. Not too late to identify fixes!
Number ‘5’ preparation is –
Is there an escape plan?
Things can go wrong! Of course they can also go well! Either way, in the business and strategic plan, it is useful to forecast both. Because it is going well doesn’t mean it has to keep going; however if not careful in the panning, it may not be easy / possible to sell / get out of for whatever reason. Harking back to the beginning of his article, it can occur that divestment is difficult, and the operator gets trapped. “It’s profitable but I am tired of working for myself, but I haven’t sent it up to sell”. It isn’t profitable but I am caught, I am making losses, drawing don n my home equity and can see no positive future. Yes, a strategic and operation (business plan) is essential.
There is much more to drill down on, production plans, financial plans marketing plans human resource plans – …….. this is even before we address C19 and the like – opportunities abound, as do risks!