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Starting A New Business – Article One

September 10th, 2010

Recently I have spoken to a number of people who were looking for advice because they had either just started or were looking to start a new business. So the next couple of articles will look at some key points to consider if you are looking at starting or buying your own business.

It made me think if I was going to into business today for the first time, what would I focus on, what would help the business succeed and what would make the role of the new business owner easier?

Decide what business you’ll be in

It might sound obvious but you need to decide what it is you are going to do. Will your business be based on what you enjoy doing as a hobby, is it some past employment experience, an exceptional talent you have or maybe an opportunity that you’ve identified.

In the book by Jim Collins ‘Good to Great’ he says find something that you are deeply passionate about. It is much easier to work hard in an area that excites you, rather than just working hard for the sake if it.

What is the best business structure for you?

This is where you need to speak to both your accountant and lawyer. You need to take into consideration your current circumstance, what you hope to achieve in the future, who is involved in the business, both working and from an ownership perspective and how will you protect your business. You might consider one of three options:

  • Sole Trader
  • Partnership
  • Company

Regardless of what you decide, think about your structure in terms of:

  • Asset Protection
  • Tax minimisation
  • Estate Planning

What business finance do you need?

So you’ve got a great business idea now you need to think how you’ll fund it. You’ll need working capital (money that helps pay the bills and ease the general cashflow once you get started). You might need to buy some plant or stock. This might be ‘on terms’ or you may need a block of money to start. Then there’ll be perhaps office setup, premise fit and the list goes on.

Having a strong relationship with your bank or broker assists in this area. You’ll need to work out how much you need, then more specifically if you are going to borrow any funds what it will be secured against.

Business Plan

This provides the roadmap for your business to follow. It should describe what you’re trying to achieve, set some benchmarks in place and provide a course of action for you to follow. All too often business plans are weighty documents that have a lot of words, don’t say too much, get produced once and then go in the bottom drawer. At PlanA Consulting, we understand that a business plan should be a working and evolving document and most of our clients end up with a one page business plan once they have completed their initial Roadmap Planning Day. This means that it can remain front of mind and the important messages don’t get lost.

The next article will look at:

  • Due diligence process
  • Role identification
  • Understanding the numbers to start with
  • Knowing who can help you
  • How to get your message to market

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