Each week I will publish a different perspective from some valuable contributors .
Last week we had a post about exporting by Joe Aherne CEO of Leading Edge Group and President of CPA Ireland .
I hope you find this useful and thanks to all contributors for taking time to share their intellectual property online .
Cormac Fitzgerald FCPA is Managing Partner of Fitzgerald & Partners Accountancy Firm and Vice President of CPA Ireland .
John White FCPA ,Managing Director of JBW Consultants – on starting a new business .
Planning Starting a new business is simple – You just have to sell something to someone for profit!
Or at least that’s what most fledgling entrepreneurs’ initial thoughts would seem to be. But when you break down those three “simple” activities into smaller pieces by asking the: “Who?; What?; Where?; When?; Why? and How?” questions, for each activity, you begin to see that planning your business start-up is actually the key. Get out a pen and paper (or whatever device you prefer) and write down how you are going to “sell something to someone for profit!”.
You know what the business idea is, but what about getting if from an idea to the stage where you get to keep the profit? Consider your customers, location, competitors, finance, human resource, suppliers, logistics, technology, capital investment, taxation, legal issues and ownership structure. You’ll be surprised by what you don’t know. Identify your weaknesses before you start your business and decide how you are going to cover those weaknesses.
People don’t think you know it all – because you don’t! Surround yourself with experienced people that understand you and your idea and are not afraid to guide you with critical analysis. Listen to what your “advisors” have to say; consider what they have said and then decide to either ignore their suggestions, act on their suggestions or explore their suggestions a bit further.
Experienced entrepreneurs got their experience by making mistakes along the way. By not repeating their mistakes your business will get a head start.
Seek out professional and experienced advisors that you can work with and who have a track record with your industry. Ask them about their experience.
With staff, don’t waste time trying to bring on the weak employees. Move on with finding the right people for the right roles. When recruiting staff, give a weighting to the hunger they show for your business and for their own career development. This is more important that picking the genius, because a start-up needs dynamic and enthusiastic team to do what is needed to be done, not just what they were asked to do!
Profit find out what financial assistance is available to assist start-up businesses in your area. Governments want start-up to flourish as they have the potential to employ people who pay taxes and spend their wages! The first three years of any start-up are critical.
You have to invest significantly in Capital and Marketing without any certainty of a return on your investment. If you can find financial support to get you over the initial years this will be invaluable to the sustainability of your new business.
Don’t strip all of the profit out of the business for yourself. As a rough guide (depending on the sector you are in and the level of borrowings you have) try to aim to leave 4% of your turnover in the business each year. This is needed to support growth and to finance your working capital needs while growing your business. But don’t be totally distracted by profit. The real lifeline of a business is cash flow. Make sure you have full sight of and control of your business’ cash flows.
John White, FCPA is the Managing Director of JBW Consultants ( www.jbw.ie ) , a multi-disciplined professional services firm which specialises in support for SME and family businesses. John also serves and a non-executive directors on a number of internationally trading companies.