Quality checks for your business plan
This article was published as the Sanlam Business Market, Business Tips: December 2013 newsletter. The Sanlam Business Tips is an incredibly useful and free resource for entrepreneurs. If you have not yet subscribed you should.
Many business plans lead businesses into disastrous situations
We all know we should check our cars before travelling. Equally important is the need to check your business plan for faults and potential failures before making it the core of your business, or using it to ask for finance. Here is a 6 point check:
- Can YOU execute? Failure to convince financiers of this aspect is probably the number one reason for rejection. More critically, it is probably the number one reason for early start up failure. Points to check: Do you have enough knowledge to run the business? The entrepreneur of a business which markets services needs to understand marketing as well as the service. Do you have any experience in this field? Hobbies are often a help in this regard, for instance enthusiastic cooks setting up catering companies. Do you have the time to execute the planned actions, and will your family support that? Entrepreneurship is not for the faint hearted, there will be many late nights and early mornings. Can you take risk? If you are uncomfortable with being daring at times you should plan for safer businesses. Can you lead? You will need to tell people what to do and learn to make uncomfortable, even agonising decisions.
The very first thing
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in November 2012 and is posted here by their kind permission.
The first actions can turn a dream into a business – or a nightmare
Challenge
This entrepreneur has what he believes to be a viable idea for a new magazine. He asks what the very first step should be, in order to bring the idea to fruition.
Response
Of the many things that have to be done to convert an idea into a start up business, which is the most important first step? I suggest there are two equally important considerations; ensuring real passion to launch and run a business, and testing for commercial viability of the venture.
Starting up and running a new business is not easy. It is extremely hard work, risky and unrewarding in the early stages. Start up entrepreneurs work long hours and are confronted with unexpected problems. They need to become instantly proficient in marketing, finance, HR, production, negotiation cash flow management and motivating staff. They risk family disruption, business failure and the loss of substantial amounts of money. Continue reading
Starting alone
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in September 2012 and is posted here by their kind permission.
Leaving the security of the corporate world to start your own business requires more thought than expected
Challenge
A prospective entrepreneur asks how he can make the transition of leaving full time employment in the corporate world to make a career as an independent IT consultant. He does not have enough funds to cover expenses in the early months.
Response
The entrepreneur must have a very clear idea in his or her mind why they want to take this step. Some of the right reasons are a desire to make much more money, to build something lasting, to taste business ownership or to enjoy creativity which is stifled in the corporate world. Wrong reasons include an inability to get on with the boss, grievances about underpayment or a desire to work less. If these or similar thoughts are the reasons for going alone it may be better to change attitude, or change jobs.
Staying alive
A crucial part of the transition from the corporate world into self employment is having or generating the funds to pay for essentials in the early months. This means either having an income stream or having access to money from savings or borrowings. In either case it is wise for the entrepreneur to have a lean, low cost lifestyle, and cut out any extra expenses. Pay off debt, close accounts and trade in the high cost vehicle, but do not cut to the point where there will be pressure from the family to return to the corporate world.
The best strategy is to make these changes well before the start up is launched, and save the excess so that a reserve is available when there is no corporate salary. At the same time initial customers can be developed and serviced out of business hours. Do not take a loan to support living costs. Continue reading
The risk of innovation
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in July 2012 and is posted here by their kind permission.
How to turn an idea into a business without someone stealing and using it
Challenge
This entrepreneur has a business idea, which he believes will be profitable. He is not sure who to talk to or how to go about starting up a business based on his idea. He asks if it is possible to secure a patent or other protection to prevent others from taking his idea.
Response
This is a common situation for many would be entrepreneurs with a great business idea. To develop the idea service providers and funders must be approached and this brings a risk of someone using the idea.
Intellectual property protection through patents, designs or copyright may provide some of the answer, but are not always applicable. For instance a patent applies to something that can be represented by a drawing, model or prototype. It must be new and involve an inventive step. Patents do not apply to computer programs and the presentation of information. Copyright covers written or artistic works and images, but not the ideas underlying them. A legal action against a patent infringer is likely to cost hundreds of thousands of Rand, and could take years to complete. Continue reading
Finding start up capital is a challenge
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in November 2011 and is posted here by their kind permission.
Entrepreneurs need to think creatively about their capital needs
The challenge
My challenge is finding capital. I am a full time mom with no income or assets, so a bank loan is out. I’ve consulted family members with my business plan without success.
My business idea is to supply a niche market with, latest technology imported equipment. I’ve done market research this business seems very promising. But where do I obtain initial capital?
Our response
Getting finance to start a business is very difficult. Whether the investors are family members, finance houses, venture capitalists or angel funders, start up capital is scarce and difficult to secure. This gets worse if the would-be entrepreneur his little or no surety, has not previously run their own business or has no relevant business experience. But good entrepreneurs are a hardy lot, and used to finding solutions to intractable problems, so they do find ways to start businesses despite these problems.
Before answering this potential entrepreneur’s question I would like to pose one of my own: If she had sufficient money to start this business would she commit the funds, even if it was all she had? How sure is she that the business idea will work? If there are question marks then the entrepreneur should go back to the business plan and research more and test the concept to reduce the risk of failure. Few funders will finance a business where the entrepreneur would not risk her own funds. Continue reading
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