Starting a business is much more work than people expect. If the business is something that you plan to do on a very part-time basis or are not dependent upon to replace your employment income, the process can often be simplified. There are, however, a number of important areas that still need to be addressed, for the best interest of your business and yourself. If you are dependent on the business to replace your income, it’s really important to cover off all the bases before you launch, otherwise your career as an entrepreneur might be short-lived.
Let’s start by considering the issue of advisors:
- Do they have the qualifications and experience to help you start your business? Consider their track records, professional designations, areas of expertise, and references. If so, chances are, their advice is worthwhile.
- The role of advisors is to utilize their expertise to ensure that the key issues are addressed. As an example, it is important for your own protection that any legal issues and necessary agreements are in place. The requirements will vary, in terms of whether or not your business is incorporated, for example; regardless, it’s important to take the time to protect your interests.
- Advisors also are able to take a more objective viewpoint, as they are not directly involved in the business. It’s easy to get caught up in developing products and services and thinking about how you can work with customers; however, this is the “fun” part of being in business and there are lots of other issues that need to be considered. Good advisors know where the pitfalls are and it’s their role to bring this information forward and focus your efforts on the important, albeit typically less glamorous, issues.
A good approach is to view your advisors as leverage to move your business forward, as opposed to a barrier to progress. Utilize their knowledge to cover off risk areas and to identify practical ways to get things done. This approach can often be more efficient than trying to figure it out on your own.
In terms of business planning, companies of all sizes and stages of development can benefit from the process. Here are just a few reasons why:
- The business planning process helps companies to develop and understand their business model. Key aspects include defining the market opportunity, who the target customer is, products and services that are of interest to the target customer, how the products and services will get to the customer, and how the company will undertake this process.
- It is typical for start-up companies to have “gaps” in their business models that need to be addressed prior to launching the business. An example of this is how the product will get to the customer (i.e., is the right approach direct sales, a distribution partner, online sales, licensing, etc.).
- A business model that is fully developed and feasible is required in order to create a meaningful forecast of what the company’s financial results could be for the first few years. Why is this important? Two very good reasons come to mind: (i) to protect the funds that you will invest in the business to get it started; and (ii) if financial assistance is required in order to start the business, potential partners will absolutely want to understand the company’s financial situation (especially in terms of cash flow) going forward.
Business planning allows the entrepreneur to make mistakes “on paper”, rather than with their own money or that of investors. Entrepreneurs are nothing if not optimistic, and the reality is that it typically takes longer for customers (and their cash) to materialize, often for reasons that are beyond your control.
It’s important to consider a few things about yourself, too. Are you truly receptive to advice and constructive feedback? Are you “coachable”? Be honest with yourself.
Although asking these questions might be difficult, it’s really important to do so. Having the ability to accept and consider good advice is an attribute of many successful entrepreneurs. They recognize that they can’t do it all alone and that good advice can only make their business (and personal knowledge base) stronger. And given that the marketplace is a tough venue, having knowledgeable resources on your side can be the difference that puts your business ahead.