I enjoyed a conversation recently with a potential start-up entrepreneur. As is typical in these conversations they tend to be very one sided with the enthusiasm and readiness of the potential new business owner flowing so profusely that all caution gets thrown to the wind.
Certainly there can be benefits but only if the idea, leverage, commitment, plan, actions and follow-through come together properly.
Leverage: All that you bring to the table.
- Management expertise
- The Plan
Commitment: Why you will stay focused
- Purpose and reasoning for the goals being set
- Understanding the potential for success and failure
- Certainty of sustainability
· Business Plan: What the results will look like.
- Starting position; assets and liabilities; your opening Balance Sheet
- Control points, financial, forecasts, measurable targets
- Ability to monitor and criticize your own progress against the Plan
Action, Execution and Follow-through:
- Leased or owned premises
- Renovations and capital cost budget
- Working capital budget – gas to cross the dessert
- Monitoring progress
- Measuring sales to targets
- Measuring margins to targets
- Controlling costs
Look at the start-up as a giant jigsaw puzzle. You need to set the borders and start filling in the pieces one at a time. Figure out what you don’t know yet and then set about to educating yourself on each “piece” of the puzzle.
Bring in the services of professionals to help teach you what you do not know. Your trusted advisers could and should include:
- Assistance with accounting and bookkeeping set-up
- Assistance with your opening Balance Sheet
- Assistance with reasonable assumptions and forecasting
- Advice on the value of the business if you are buying from others
- Vetting your lease; renew? How long?
- Assisting with renovations contracts
- Advice on buying into a business or franchise
- Advice on the correct business structure; proprietorship, partnership or corporate
- Options for financing
- A second set of eyes on the Business Plan
- Assistance with account set-up
- Cash flow management systems
- Advice on insuring your business
- Fire protection
- Business Interruption
- Public Liability
Real Estate Agent:
- Finding premises and desired location
- Negotiating a purchase if required
- Assistance with early lease negotiations (subject to lawyer vetting)
Think of what each of these advisers can bring to your table then leverage the knowledge gained to move forward. This is all part of your research and due diligence. In some cases you will pay up front but in others you will get advice based on the desire for each to do business with you. A small price to pay for help in uncovering the pitfalls you might face. It is sometimes better to walk away early than to risk and lose all you have worked for.
As in the jigsaw puzzle you can start a file on each so multiple references can be made time and again as you work your way to launch date. In the process you will either lose your desire to proceed as you begin to uncover the risks involved or you will become more enthusiastic than ever because the research gained will guide you towards overcoming all obstacles to success.
What are you doing to prepare for success?
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