Business Start Up Advice

For any new venture business startup planning is probably the single most effective way of avoiding many of the pitfalls that can make the difference between success and failure.

The best starting point is to write a business plan. A business plan is necessary, not just because your bank will require one if you are seeking a loan, but because only when you have put your ideas into some logical form, can you be sure that you have thought about everything you need to consider. For example, where will you work from, what equipment will you need, where will you get your raw materials from, and so on? All the information you will need to start your business and get it running must be put down on paper.

Once you have written it all down you then need to arrange it in a logical sequence, that will give you a framework you can refer to in order to check your progress. The plan needs to provide a timetable detailing each step you have to take to set the business up, market it and then progress it. It should cover the first 12 months in detail and the next 4 years in a more skeletal form.

Once you’ve written your business plan you will then need to draw up a financial plan. This will need to estimate what you expect to spend in, say, the first 12 months, and what you expect to earn or sell. As with the business plan, you need as much detail as possible, with the monthly incomings and outgoings. It is always advisable to overestimate your expenses and underestimate your sales so that you build in margins to deal with unexpected events. Your financial plan is basically a cashflow forecast – a forecast of how cash will flow in and out of your business.

Your cashflow forecast will enable you to plan for any potential shortages of cash so that you can decide whether you need to apply for a business startup loan or any other form of business startup funding. Any institution you approach for funding will ask to see your cashflow forecast and your business plan.

If you have been thorough in producing your business plan and cashflow forecast they should provide you with the best foundations on which to build your new business.

Chris Hutchins of the Small Business Advice Network www.sban.co.uk

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