Auckland Small Business Help

Steps to Starting a Small Business

Are you looking to start a small business or looking for help with your startup Business ?

Starting a business takes courage and skill, and often the initial personnel involved in the startup business will lack some of the less critical skills or experience, eg office administration etc plus often the workload involved does not warrant a full time person in the role. This is the perfect situation for outsourcing particular roles or tasks to those experienced in providing such roles.
However there is one task that must at least be overseen by the originator of the business.
It is that of creating the Business plan, the method of taking the ideas of the business originator and putting them into some sort of structure that defines what the business is about and where it is intended to go.

First step with any Business is the Business Plan

Without even the simplest of plans the business is unlikely to be successful, as it will be directionless.
The Business Plan is just like a Road map.
If you know where you are going, because you have been there before, then you already have the plan in your head.

If you have not been there before then you need to look at the map, plan a route to get to where you want to go (do you want to provide an ongoing income or build the business up in preparation for sale  or combination of both etc) and how you are going to get there, ie using what mode of transport(product or service), where will you buy fuel (money), will you need others to help you get there (co investors, co directors) or need to have someone drive you there (workers, contractors, outsourced services etc).

The Business plan makes you at least consider the important aspects of the business, and you can choose to determine if they are relevant at that point, or if some planning needs to be put in place to take care of them later.

The Process makes you think

When writing a business plan, the very thought process of considering one aspect will often bring up another that had previously not been even thought about.
For instance, when considering how your business will market its product or service, (normally with very little budget), all sorts of opportunities should come to mind that are suited to the particular product, such as local papers, free websites, direct marketing letter box drops or targeted prospect offers, Trade-me, Trade & Exchange, Clubs & associations, Joint Ventures with complementary businesses  etc
Without going through the plan building process, the chances are that many of these sources would not have occurred to you, or appear when you are half way through an expensive marketing campaign.

Everyone is on the same path

It is well worth spending some time developing a decent business plan so that everyone involved knows where the business is heading and how it is expected to get there, and of course you will know when the goals have been  reached.
From the top level business plan will be generated the lower level working procedures, which will make them congruent with the overall plan, rather than being developed in isolation and at risk of being at a tangent to the master plan.

However, realise also that the Business plan should be flexible and will often change due to business environment, law, cultural factors or financial constraints etc. If the plan is written in such a way as to make change easy, then it provides a useful reference of the majority of issues that need to be reconsidered in the new direction.

So the first step to  Starting a Small  Business (and many existing businesses that have evolved uncontrolled) is the Business Plan
There are many Business plan tools available. The trial version of this one may be useful to you for checking on the financial viability of your projected sales and business overall.

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Auckland Small Business Help

First Steps to Helping a Small Business that is having Trouble

With any Small Business that is finding times hard in this economic environment, there are some fundamentals that make up the starting blocks of recovery.

Cashflow

Preservation of Assets

Reduction of Liabilities

Develop a plan

Cashflow

“Cash is King” and is particularly so when a business is struggling.

Take a close look at the cashflow:

Where is the money coming in from and where is it being spent.
The old 80/20 rule is useful in these examinations,

Income
80% of your income is probably coming from 20% of your customers- so concentrate your efforts on them.

Can you increase your sales by presenting a particularly attractive offer to your existing customers ?

Can you get referrals from your existing customers by offering them an incentive to bring in new customers ?

Instead of spending your advertising on blanket adds, can you spend money directly on existing customers to get more sales,

If you use advertising to bring in customers, look closely at how effective it is – can it be measured, can you reliably say $1 spent on this medium will give me $x worth of sales ?

If your cost of goods /production has gone up, have you increased your sale prices to reflect it ?
If the market can’t take a price increase, can you package something else with it as a cross sell or up sell, that will give you better margin (the classic “Would you like Fries with that ?”, “Would you like to upsize that drink ?” )

Expenses

80% of your expenditure is probably coming from 20 % of your creditors, & the chances are that the Banks or finance companies  are one of the biggest.

Can you reduce your borrowings by using the income to pay off debt rather than your own wages or “luxuries”.

Cut back on anything that is not involved in the money making process (except insurance)
ie make sure every dollar spent is moving towards getting another dollar back from a sale.

If you rely on advertising, don’t cut back on the dollar value, but take a close look at how or where you are spending it. Target your advertising dollar.

Can you do a joint venture with your suppliers where they put up some money or resources for a promotion or supply their product at a discount, ie reduce your input costs and increase your sales at the same time.

Preservation of Assets

Do what you can to ensure existing assets are protected from being lost to a firesale or creditor action.

Talk to your Accountant or Lawyer.

Reduction of Liabilities

Do what you can to reduce your Liabilities, either by selling assets that are saleable, or finding other sources of funds such as investors rather than Bank or Finance company borrowings.

Carefully assess what the income is currently servicing.
Is there lots of high credit card debt or penalty overdraft debt that could be reduced by restructuring  loans or consolidation, ie increase loan on house at 8% to pay off credit card debt at 22%

Look at the Business Holistically and Develop a Plan

Decide on how the Business is going to move forward from the current situation and write at least an overview plan.

Can you make more in the end by spending a little more in one area, rather than insisting that every area cuts back to the bare minimum?

Will  you trade at break even levels for a while – turnover at breakeven is better than no turnover at all.

Most importantly- make sure the staff are with you and that they understand what you are trying to achieve.
If all they see is cutbacks, they will begin worrying about their jobs and productivity will fall.
If they see there is a plan and that they have an input into the viability of the Company (with possibility of reward also) the plan is more likely to succeed.

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Small Business Help