Advice to write a plan to start your business

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February 2015

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5 Important Questions To Guarantee Your New Business’s Survival

Written by , Posted in Business, CSR, Leadership, Sustainability

Cityscape with a new business.

5 Important Questions To Guarantee Your New Business’s Survival

 

So you’re an employee looking at your boss and thinking, “I can do what you can do, but better.” You weld better, write better ads, speak to customers better. Why wouldn’t you do a better job? The other employees look to you for direction when the boss isn’t around and confide in you about the petty things Billy did yesterday. The boss never hears that stuff because they trust you more. Well, go ahead. Start a new business. I’m sure there are enough clients in the city to split up. You don’t have to steal anything from your boss and eventually everyone will know you do things better in your new business.

Before you toot your own horn too much, you probably want to think of the iceberg concept of business. You’ve seen the top third of doing the work, welding, writing, speaking to customers, but have you looked at what lies beneath the surface? Do you know how to deal with a petulant employee who thinks they can do it better? Can you deal with an unhappy customer or better yet, a customer who is just as happy to leave you stranded without paying as to give you what she owes you. Paycheques always have to be paid, customers have to be happy. The saying the customer is always right has merit whether they’re right or wrong. A happy customer might tell one person, but an unhappy one will tell ten.

So what should you be asking yourself before you open a new business a and burn any bridge of possibility of returning to your old job?

1. Do you have something that is monetizable?

Just because you can do something doesn’t mean you should do something. You have to be able to sell your service if you want to make money. Too often I’ve see someone who loves to do something and they think they should be able to make money from it. There are at least three people a week on CBC’s Dragon’s Den begging for capital so they can sell the widgets that no one wants to buy. The moral of this story? Make sure the widgets are useful and people want them before you make ten million of them for export.

2. Is your business model Sustainable?

Sustainability isn’t just a buzzword. Your customers want to know you uphold the three pillars of sustainability. They want you financially viable, to be a steward for the environment and that you treat both your customers and employees with respect. Financial viability proves you will be around today and a year from now. That strength is what keeps them coming back because they aren’t going to buy from you if you aren’t going to be able to service it. As we move forward, protecting the environment will become more important. Resources are becoming more scarce and wasting them can’t be hidden, especially in a world of instant messaging and social media. That social media will spread the word about any disrespect you display, be it to customer or employee. Disrespect your clients and they stop buying, disrespect your employees and they stop working or worse. The beer can boycott is a perfect example of disgruntled employees taking a stand against their employers. Great timing for the Superbowl, eh?

3. Do you have enough capital to keep your new business floating?

Starting a new business isn’t easy and certainly isn’t cheap. Your start up costs are going to mount: webpage, advertising, inventory, machinery, and the list goes on. You aren’t going to go out on day one and make a million bucks. Hell, most fail in the first three years. That means hard slogging for a long time before you pay yourself. And that garbage about paying yourself first? Try telling that to your suppliers when you need inventory. Trust me, it won’t fly.

4. Do you have a plan for your new business?

I don’t know how many times I’ve had clients in front of me and the first thing they say is, “I hope to have this in place by January.” And you want me to invest in you? No thanks. Come to me with a plan, and make sure that plan has a back-up plan, and please don’t have a divestment plan if that plan fails. New businesses without plans sometimes succeed, but do you really think the truly successful companies that broker deals in the millions of dollars did it without a strategy? That’s like saying a football team will win the Superbowl without a playbook.

5. Are you prepared to do the administration?

This is the 2/3’s under the surface. Paying the bills, making the invoices, collecting the money, especially collecting the bad debt and every once in awhile you’re going to have to clean the toilets. Why? Because your mom can’t always be there to do it for you and unless you have more money stashed away that you forgot about when you started the new business, you can’t afford to pay someone else to do it. Do you know what 110% means? It means as far as you’re concerned 9 to 5 is no longer an option. Now off you go. Welcome to your new business.

Ultimately, you can’t just pack up your desk on Friday and open a new business on Monday. There is a lot that goes into a start-up business and statistics show that you’re likely going to fail. Some people do their work phenomenally, but the background work falters. Go in eyes wide open and be prepared for when everything hits the fan and remember even though that angry customer wasn’t right, he WAS right. Profits may be your goal, but your customers don’t care. They want a service and most of them don’t want to pay as much as you want to charge them.

Opening a new business can be very rewarding, but it isn’t easy. Think you have what it takes to maintain a business? Answer these questions honestly and you’ll be one step closer. Need help with that plan? Drop me a line or wait a couple weeks for when I post my how-to book on planning writing.

  • Richard

    very GOOD STRONG POINTS john and relevant. As an entrepreneur, a lot is familiar. I think starting your own business can be rewarding but its not for everyone. Besides the extra work hours and commitment, it takes that different mindset, the entrepreneur, the gambler, the risk taker. If successful rewards exceed regular Joe 9 to 5ivers. Profit potential doesn’t exist in a salaried position.

    • John Kent

      Thank you. It is an interesting dynamic that employers have to balance. A great employee often has aspirations to start their own business. The situation does present an opportunity however to create unique profit sharing pay structures to build a stronger employees as well as buy in for those employees.