It is much better to do your business plan before starting your business because you will have the time and also you will be able to think clearly rather than only giving it a passing thought. If you do that then you will have a clear idea about all aspects of the business and a clear direction to take with starting up.
It will also mean that you will be able to address any issues that need improving before you actually start operating.
What is your business going to be doing?
Now is when you need to thinking about why you are starting your small business.
Is it because you:
- have always had a mad desire to run your own business
- have a burning need to prove to everyone how good you are at selling
- are fed up with being bossed around by a so-called manager who knows less than you do
- really want to seriously commit your whole being to running a successful business
That is what you need to be thinking about at this early stage? These thoughts should be clarified in a business plan.
How Much Do You Know About The Intricacies Of Your Selected Business?
For example, if you want to have a small manufacturing business at home, do you understand all the council regulations that will apply to what you are setting up?
Many questions need to be answered before you start your small business.
Have you had discussions with your accountant?
A discussion needs to be held regarding your present financial situation and the forward view of your business as well. You need to know about the taxes relating to your business and how you should prepare for those.
I know of one lady who got so excited about buying her dream cafe. I, as a business broker at the time, representing the seller, asked her if she had the finance. Her answer was, “Yes, my husband just borrowed against the house to buy a semi-trailer so I should be able to get a loan.” Immediately alarm bells rang because I knew where they lived and I thought ‘semi trailers are not cheap so there is probably not enough equity left in the house to borrow more money.’ That was exactly the case and the woman was devastated, but unfortunately she had no idea on finance and that there is a limit as to what can be borrowed.
Also, it is not a common occurrence for a bank to lend on a home business anyway. It is more likely the best you can do is get a personal loan if you have equity.
Before making too many commitments in setting up your business you need to know:
– If you have available the needed amount of funds
– If you don’t have available funds, can you get sufficient money to start and fund the business
– If the business is going to earn enough for your needs
– What entity you will use to buy the business, i.e. the names on the business ownership papers
By addressing these questions at the beginning you won’t get into trouble later on and have added expenses in changing any documentation you may have to fill out. Financing a business is a big issue and needs to be very carefully thought out.
A business plan will help you analyze many areas of a new small business and you will be able to solve many of these situations before they arise and affect your new business.
By doing a business plan for your small business before you start spending money you will be well on the road to success. Your planning will be so much clearer and you will have more understanding of your stock, staff, marketing and finance. Having a business plan at the outset will help you start on the right footing with answers carefully answered and you will know exactly what you have and what you do not have.
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