team

Last on the pre-business list is Team.

Many entrepreneurs the world over, got themselves burned out, or simply gave up before their bright ideas could reach their full potential, because they thought they could do it all on their own. Human beings are social creatures; we’re not built for isolation. You can’t succeed on your own. You need, at least, one person in your corner.

As an entrepreneur, you need a support system – people who can and will encourage you, people you can draw strength from, people whose faith in you keeps you going. This support system can be your family, friend(s), mentor(s), partner(s), spouse, team, or all of the above.

A team is unique. It could be made up of family and/or friends. Most entrepreneurs are very reluctant to bring people on board, because they could be swindled by them, or become problematic/more trouble than they’re worth. Those are possible scenarios and very valid reasons, that’s why the kind of people you pick is necessary. Notice I said “you pick”, that’s because you do the picking, not the other way around. You should pick people who share your drive, share your passion, and most importantly, share your vision.

Once you have like minds working with you, you have people you can bounce ideas off of; people to brainstorm with; people to take on the world with; people who can do certain things better than you can; people moving your business forward by investing their contacts/talents into it; people who push you to be better, people who build, inspire and motivate you; people ready to go the distance with you. That is a team!

cash

Next on the pre-business list is Cash. It is the blood of the business; hence, essential to its survival.

Cash refers to the money coming in (revenue) and the money going out (expenses). To be successful, your expenses should never be consistently more than your income; luckily, this is actually manageable as it is pretty easy to determine and control [to an extent] your expenses as they would most likely be recurring (fixed/overhead costs or operational expenses) – utility bills, rent, salaries/wages, new inventory, and so on.

You don’t necessarily need money to start, but to grow and expand, you need money. Money can come from family, friends, grants, angel investors, partnerships, bank loans, or venture capital. If you’re seeking investment, you should seek in that order.

Before seeking investments and venturing into business, you need to, first, be disciplined with your personal finances. If, for example, you’re a spendthrift, and you don’t get your spending under control, you will bring that weakness into your business; before you know it you’re taking funds from your business is offset personal debts, and it’s a slippery slope from there.

Disciplined people work with budgets, so if prudence is a challenge for you, or you’re prone to it, you need to create a budget. A budget is simply creating a balance between your income and expenses, so you don’t spend more than you earn. A good budget has income portioned primarily into bills (phone, internet, power, water, heat and so on), groceries, savings, transport fare/fuel for vehicle and/or generator (gas/diesel), clothing, and miscellaneous (birthday cards, gifts, medical emergencies, repairs and so on). Everything has to be properly planned such that there are no constraints.

Beware, it is one thing to have a budget, and quite another to follow it. The true discipline is sticking to it long-term, and adjusting it as you see fit as income increases/decreases or responsibilities increase/decrease.

As soon as you’ve mastered making and following a budget, you can apply the principle to your business. However, this time, the budget will be called an Income Statement. Remember to ensure your expenses don’t surpass revenue too often, or it will be RIP business venture. Once you can maintain cash flow and steadily increase revenue, while keeping expenses low, you’ve begone to make a profit. You make enough profit, you can start repaying loans, and reinvesting into the venture. Now, you’re in business!

suc

As promised, I’m resuming with the pre-business list, and next up is Start Up Costs (SUC). Start Up Costs is basically everything your business venture requires to get up and running. If you’re a serious entrepreneur, it will be a part of the Financial Analysis section of your business plan.

I’ll segue here, just in case I haven’t previously emphasized the importance of a business plan. It is absolutely crucial. It is your road map, and possibly one of the most important documents you will ever own. A good business plan should have an Executive Summary, Company Overview, Market Plan, Operations Plan, Financial Plan, and Corporate Image Package (CIP). The Financial Plan should consist of the balance sheet/personal networth statement, start up costs (SUC), revenue model, projected income statement (profits and losses), and projected cash flow/projections (monthly, 1 year and 3-5 year projections).

The Executive Summary and Financial Plan are the two most important sections any investor worth his/her salt would want to inspect first, more so the financials. Therefore, do not make the mistake of educated guesses or guesstimations; not only will that reduce its credibility, but you will grossly underestimate what is required, and consequently run out of money. Hence, when preparing your SUC, you have to really take the time to think everything through, make a list and do your research on the costs/prices of the requirements.

Generally, your SUC should basically center around current assets (like cash-in-bank, and inventory) and fixed assets (like equipment, and office space). By way of example, a standard SUC sheet should contain: furniture – abc amount, internet/telephone set up – xyz amount, consultation/license fees – abc amount, desktop computer/laptop – abc amount, car/van – xyz amount, and so on. You should even list assets required that you already own and their current values., as well as prepaid expenses, like company registration fees, and so on.

’14 review

This year was a big one for me – well, maybe because of two major, life-altering decisions. Okay, I’m being melodramatic, but this year I did a week long fast, and I also took a plunge by moving to Nigeria for business purposes – I won’t share my plan, but we’ll see what happens.

This journal got 2900 views – primarily from the United States, Canada, United kingdom and 105 other countries. I want to thank everyone who follows my journal – I don’t think of myself as an interesting person, but I’m honored. It’s very encouraging; I do this just to advise and share my experiences with the world – with the hope that it makes someone else’s journey in business and life a little easier. Thank you all who read, share and comment. I wish you all more of God’s blessings always.

Well, that is it from me for 2014. I couldn’t make the time to finish the items from the pre-business list of December 2013, but I’ll hopefully get through it next year (God-willing) – starting February. See you in 2015 by God’s grace.

list plus

The next item on the pre-business list is List, but I’ll also threw in Legals, Insurance and Associations into the mix, because they’re self-explanatory, so pretty short.

List is basically a compilation of everything you need in order to get your home/office space ready for business – office supplies (paper, pens and staplers), laptop/personal computer, internet connectivity, printer, telephone and so on. You want to make sure you have everything down so there are no surprises later on. The list will also help you calculate your SUC.

Legals is simply understanding the legal requirements of and the responsibilities that come with starting and owning a business in the region you are. You have to consider things like income tax, sales tax, corporate social responsibility, lease agreements and so on. Laws vary by country, state/province, even, city/county, so make sure you understand what is expected before you get into trouble with the municipality, or worse, the revenue service.

Insurance encompasses having adequate medical coverage – health insurance, dental insurance and travel insurance – for yourself and/or future employees. In some countries, it is unlawful to operate with sufficient medical insurance. You work this out with an insurance company, or the national social insurance body, depending on the laws of the region.

Associations are good for networking. As a first timer, or even a new business owner in a new place, you need networking events to meet people, talk to people and make useful contacts. Associations also provide a large pool of experience you can draw from. You could mingle with people in a collective body, like the chamber of commerce – most cities in North America and Europe have a chamber of commerce. You could also mingle with people in your specific industry, or a professional body, like association of chartered accountants and so on.

That’s it for the pre-business list this year. I’ll start off next year with SUC. I think it will help a lot of people planning to start a business in 2015.