Are you interested in starting a business? One of the most important tools for improving your success is a Business plan. Did you know that depending on the industry, 90% of new business start ups fail within the first 5 years, yet franchises have a success rate of 90%. Why is that? Clearly the difference is in the planning. When you purchase a franchise, you are actually buying the franchisor's experience. He has provided all the leg work to develop a system with a proven model. That is not to say that you should solely focus on franchises. Far from it. Many successful businesses are created every day. But take the appropriate steps to develop a comprehensive plan for your business. First, decide on what type of business you want. Do market research to understand who your clients are, your suppliers- will the cost of shipping take away a competitive advantage?. As well, decide how you will promote your business, especially with limited financial resources available. Decide how you wish to own your business. Will it be a sole proprietership, partnership or a limited company? Each has their advantages and disadvantages- consult with your accountant and lawyer. Provide some background detail to establish why people would use your business over a competitor. Why are better than the competition? How will your operate your business day to day? Will you manage the business and be the main labour source? Describe where your business will be in 5 years. Do you anticipate rapid expansion, or plan to sell the business once it is successful? Do you have a succession plan to sell your business? The next step is develop the financial forecasts. Create a balance sheet listing the assets you are providing to the business, equipment, land, buildings. These may become your collatoral for financing purposes. Also list the liabilities you can reasonably expect such as credit terms from suppliers, lines of credit, loans and mortgages to start and operate your business. Finally you will be left with the difference between assets and liabilities, which is your owner's equity or net worth. Spend some time to develop a cashflow sheet listing revenue and expenses for each month within a 12 month period to identify problem areas, or even how you need to manage your debt repayment. Many times lenders will arrange your repayment schedule to coincide with your cash flow. There are many different financing options available to business. Some businesses have specific financial markets to tap into. I regularly get asked, "where are the grants to start my business". Unfortunately, unless you are into high-tech, leading-edge business there is NO grants available. There are however, Banks, Credit Unions, government sponsored lending agencies, friends, relatives, and angel investors. We will talk more about different lending agencies in a future discussion. This discussion is not intended to scare you away from business. Business can be very rewarding financially. Business can also provide you with the freedom and flexibility to live your life to the fullest. But don't kid yourself, it is hard work. It may also leave you with many sleep-less nights while you become a success. Check our website out for additional resources and information about how we can assist in starting your business. Until next time..... Comments Your comment will be posted after it is approved. Leave a Reply | AuthorEconomic Development Officer, PEPS ArchivesOctober 2011 Categories |
RSS Feed