Having a business idea is more than just thinking of a need and filling it. Over the years of helping new businesses set up, a common problem is those with a cool idea but is not profitable. Proper business planning is an exercise that should assess your business idea’s potential viability. It is just as acceptable to have an idea that is something the customers would love. Only to discover it won’t work as a business. Better find out now, rather than after losing your life savings.
Consider Various Options
You should never tie yourself entirely to one idea. This way you run the risk of having tunnel vision. If you remain open to alternatives, explore other ideas and variations of your plan, you never know what you’ll come up with. Think of the discovery of penicillin from mold in a contaminated petri dish, and you’ll see, often the most important discoveries happen by accident.
Write a Busines Plan
Any good plan needs to be written down and recorded. Business plans have a defined structure and explore all aspects of the business to examine if they will work. Think of it as constructing an argument in favor of being successful. Every claim in this document needs to be backed up by evidence. If you claim x amount in sales, where are they coming from? You claim a type of customer will be interested, why? Have you conducted any market research to show this?
Accounting & Book-keeping
If we are to be able to assess how profitable our business is, it is key to be on top of accounting and bookkeeping. Reports such as the balance sheet and profit and loss report are indispensable tools in this endeavor. You can see how much money you owe and how much is due to you at any one time. Without such information, cash flow can choke the life of your business quickly. It is best to employ an accountant and/or a bookkeeper to take care of this for you, and accurately prepare these documents for use. Have a look at a quick guide to virtual bookkeeping services for 2021 to see how easy it is to have this information prepared and available online.
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What’s in a Name?
What you call your business can have an impact on how successful you are. Do you include a geographic indicator and explicit reference to your trade, such as Townsville Stone Masons? Or would it be better to build a more enigmatic brand, imagine if your company was called Purple Baboon, it could be anything, but once you have a reputation, it would be more distinctive? Naming your business is just one aspect of the image you are projecting, but getting it wrong can harm your profits.
How to Adapt
Things will never happen as planned, so we must adapt as we go. When we post our financial statements, we should analyze them and compare them to the original projections. Do they match up? If not, why not, and what can we do to improve them?