Is Planning Just Another Brick In the Business Wall?
You probably already know the statistics regarding the survival rate of start-up businesses. Nearly eighty percent of small businesses don’t survive the first three years and only five percent of online businesses survive that same period.
In the words of Professor Julius Sumner Miller, Why Is It So?
Maybe it’s just too easy to set up a business in this country. In fact, the World Bank Study researched 189 different economic regions and ranked Australia as the seventh easiest place to start a business and the fourth easiest place to get credit. We have very few start-up barriers and on average it takes just 2 days to get up and running. Also, we now have a generation of people looking to ‘get rich quick’ using the pulling power of the internet and social media. Their impatience means they pull the trigger on their business idea before they get professional advice. You don’t need to be Confucius to know that businesses built on rocky foundations often collapse.
Laying the foundation ‘bricks’ of your business is critical and they include the right business structure, appropriate insurances, the most suitable accounting software and a business plan that incorporates a marketing plan and cash flow budget. Entrepreneurs in a hurry often bypass getting sound professional and instead rely on ‘Professor Google’. The consequences of the wrong legal advice, the wrong tax structure and inadequate insurances can be catastrophic. In this blog we are going to specifically examine the importance of planning during the start-up phase of your business.
Another Brick In the Wall
When it comes to planning, a lot of business owners think like Pink Floyd, “All in all it's just another brick in the wall”. However, developing a plan is a key part of your business foundations. Failing to plan is planning to fail. There are so many things to complete before you open the doors of your new business, which is why we recommend you have a written business plan.
Basically a business plan should provide an overview of your current position, where you plan to go and how you intend to get there. Within the plan, you need to demonstrate your current financial position and how it will change over the next few years. Having a business plan can deliver substantially more than just a document to satisfy your financiers. It can be a road-map for your business growth and success that both business owners and staff can refer to for guidance and direction. A business plan lets you establish your list of priorities and measure your success.
Most business owners fail to make a start on their business plan because they are either too busy or don’t understand what is required in the plan. Too often they are working IN the business dealing with day to day issues instead of working ON the business with strategic planning. Devoting some time to work on your business is an investment that can pay substantial dividends.
To succeed you need a clear vision for your business and a business plan will convert that vision into strategies and steps. Your vision should outline where you want to take the business in the medium to long term and can be expressed as a series of objectives. So many business owners fail to put pen to paper because they are waiting for more certainty regarding their current financials, funding, sales or partners but your business plan should steer your activity, not the other way around.
By creating a business plan you can increase the value of your business, attract funding and partners, align strategy with action and improve your decision making. We believe every business should ‘start with the end in mind’ which is why we are so pedantic about helping clients with their business structure, accounting software selection, website and marketing plans. This is also important from a business planning perspective because you need to consider the financial outcomes you would like to achieve from the start. Using some financial modelling tools we can prepare ‘what if’ calculations including your best and worst case profit scenarios.
In summary, starting a business is a bit like a game of chess, to succeed you need to make the right opening moves. That includes building your business on solid foundations that includes a business plan that incorporates a marketing plan and cashflow budget. We have templates available to assist you and talk to us today so we can help you build your business on rock solid foundations.