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.

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.

 

business

This next item from the pre-business list is self-explanatory – Business. Basically, what I want you to understand is you need to be certain you can actually offer the products or services that your market requires before you launch your business. Gather all the skills, read all the books and do all the research. 

Before proceeding, please keep in mind that people don’t just buy products or services, they buy what the product or service can do for them. In order words, your business should provide the solution your target market requires. All you need to do is deliver. It’s that simple!

stuff

Continuing from where I left off, the next item on the pre-business list is Stuff. Before going into business, you need to know your stuff – this entails knowing the opportunities and threats in your industry, as well as knowing your strengths and weaknesses, and those of your competition. This is what professionals call SWOT Analysis.

In order to accurately identify the opportunities and/or threats of an industry, and exploit them for business success, you need to first take note of its trends. Trends create opportunities. Trends precede the introduction of innovative products and services. However, you need to understand that trends also have a life cycle – embryo, growth, maturity and decline. Hence, in the same vein, trends reveal threats. Trends signal the end of an era.
For example, over a decade ago, personal computers and the internet gave rise to website development, and interactive software and programs for work, school and play. Now, as most people use their smartphones and tablets for browsing, games and so on, personal computers are being phased out, and the new trend is apps. There is an app for almost everything now. Any company still focusing on website development will soon become relevant if they don’t add mobile site development to their services, or evolve into an app development company.

Spend sometime learning more about yourself, and leverage your unique skills towards your business advantage. If you start a business, and don’t have a unique selling point (USP), you may not excel. You need to make time to study your major competitors also – learn what makes them tick in order to compete, and what makes them suck and exploit those cracks in their operations, product quality or customer service. This will give you the necessary edge. If you cannot offer people better services or better products than your competition, to the consumer, you’re just the same with a different name.
Competition makes business exciting 😀

industry

I ended last year with a list of ten things I believe every hopeful entrepreneur must consider before starting a business venture, and I mentioned I might expand on each during the course of this year. Well, I woke up this morning, and decided to start. The first item off that list is Industry.

It is usually not a bad idea to start your first business in a field that you’re comfortable, or at least, conversant with. It should be an industry that you have the necessary skills for and/or sufficient experience in. This is important because, sometimes, knowledge is all you need to excel. Bill Gates, Michael Dell, Mark Zuckerberg all focused on the Computer Industry, and are wildly successful. You also exude more confidence during networking and presentations because your business evolves around your area of expertise.

However, don’t think there won’t be mishaps though. You will make mistakes as you learn the ropes of business and entrepreneurship. Some may be devastating, and others may be minor, but you’d agree it’s better you don’t make them in unfamiliar territory.