Click here to view the previous video in the series
Starting a business is a big decision, and for most people, they don’t know where to start. The value of planning and research should not be under estimated. You may have heard the saying “Those who fail to plan, plan to fail”. Well, that is extremely true in the business environment.
This short video is aimed at those of you new to business who a looking for some guidance on how to get started.
Do you need a business plan?
The short answer is no. A good business plan is a document that states your goals and how you plan to reach them. It can be a useful tool in holding yourself accountable in reaching those goals. Before you jump into business and even before starting your business plan, one thing you need to be sure about is what it is you are selling. Whether it’s a product or service, make sure it is something that people want to buy and not something you simply want to sell.
Whilst there is not set formula, a good business plan might include the following:
– Background information about your business
– A marketing plan – pricing, demand, distribution, advertising and promotion
– An operational plan – details how you produce your goods or services, staffing needs and any training requirements
– A financial plan – current financing, future funding needs, forecasts, balance sheet, income statements, cash flow statements and risk analysis.
What is the correct business structure.
This is not an easy question to answer. There are a variety of business structures including sole traders, partnerships, companies and trusts. The decision on what structure is best for you requires an understanding on a number of things including legal liability, asset protection, financing, succession planning and taxation.
The right trading structure for you might be different for other people. You should never fall into the trap of establishing a structure based on what family and friends may have done. Some trading structures are difficult and costly to unwind so it is important you seek appropriate advice before commencing your trading structure.
How do I assess the performance of my business?
Business benchmarks are a useful tool in assessing the performance of your business. There are various sources of business benchmarks including the Australian Taxation Office and a number of private organisations that offer their services on a subscription basis. Business benchmarks can assist with understanding the financial and operational requirements for establishing a business. These business benchmarks are also useful in assessing the performance of your business against your peers or your competitors. Just because you are making a profit, doesn’t necessarily mean your business is running efficiently and effectively. Statistics and ratios are useful tools for assessing the performance of a business. Your should avoid being seduced by the top line and bottom line – sales revenue and net profit.
You should also consider other key business drivers:
– Conversion rates
– Average sales per customer
– Profit margins
– Where your business comes from
It’s important to ensure you measure results as much as you can. There is a general view in business that if you can measure it, then you can change it. So don’t be afraid to get the calculator out and look at the results.
This may all seem a bit daunting for those of you who are new to business. The good news is, here at WMS, we have a team of experienced professionals who can assist you throughout this process and can also provide you ongoing assistance throughout the total business life cycle.
DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.