2. Before Proceeding



STAGE 2 - BEFORE PROCEEDING

Step 1 - Carry out research and check your market demand
This is the Research section.

You will need to carry out some basic market research. You'll need to accumulate information that will tell you what your potential market and customers could be. You'll need to know what competition you have and what they are up to. You'll also want to know how others in your industry or profession (your competitors) were doing.

What you should do:

Research –

  1. Carry out basic research (get a research coy to do if necessary)

  2. What is the market out there? more info..

  3. Who will be your customers? more info..

  4. What will be your competition? more info..

  5. Who will be your suppliers? more info..

  6. What will be your business “uniqueness” or product differentiation? more info..

  7. Is there room/demand for your type of business

  8. Will you buy in products or make them yourself (or have them made)

 

Step 2 - Work out your finances incl start up costs

This is the Finance section.

You now need to find out how much money you have and what cash you will need. What are you really worth (in assets and money in the bank) and what spare money will you have to put into the business. Remember to make provision for your family’s living expenses.

You'll need cash aside for your mortgage, your groceries, car running and the kids schooling. Bring that all into account

What will be the cost of going into this venture anyway?

Work out what it will cost you to initially set up the business and what cash is needed to run the business for at least 6 months without depending on income from the operation itself. If you don’t have enough cash of your own and need to borrow money how much would you need and who will you approach for the loan.

What you should do:

Finance –

  1. Calculate your Net Worth and available security more info..

  2. Calculate Money you need for living costs (6 mths) more info..

  3. Work out what spare money you have to put into the business

  4. Calculate potential Start-Up and Operational Costs more info..

  5. Work out your Source and Use of all Funds list more info..

  6. Work out your potential source for loans required more info..

  7. Calculate your target return on investing in the business more info..


Step 3 - Assess whether your business is feasible. Can it could be profitable

This is the Feasibility section.

Will your business succeed? How feasible will everything be? Will you make a profit?

Carry out the basic calculations and get them checked by your accountant who may also have to help you with the figures anyway. If possible see how current businesses similar to yours are doing.

Are they struggling or are they doing well? Do some discreet detective work. Be smart and obtain information from their suppliers or other businesses they deal with. Be diplomatic but clever. An honest spy. There is no law against finding out how competitors are doing.

See if you and your accountants (or a business friend) can make up some profit budgets for your business. Also do some cashflow budgets because you’ll need to keep a close eye on your cash situation at all times. These budgets would simply be sensible guesstimates of the potential profits and cash flows you could achieve in the next 12 months.

What you should do:

Feasibility –

  1. Do Feasibility calculations to see if venture could be profitable more info..

  2. Do simple report of how others in the same business are doing

 

Stage 4 - Have your accountant take a last look. Final talks with family

This is the “Accountant Look Over” time.

It’s time to have another meeting to get your accountant to put everything under the microscope. Make sure you have prepared that big list of questions again covering everything that’s still puzzling you. Get all the family involved if necessary. Even the kids (not the dog) may have relevant queries. Do not miss anything out.

DO NOT MISS ANYTHING OUT !

Have a big list and get your money’s worth for once. Your accountant will not mind answering your questions.

Make sure your feasibility figures and profit and cash budgets are all fully checked. This is most important.

What you should do:

  • Make a huge list of all unanswered questions that you may still have and get them answered by your Accountant. Involve spouse and everyone. Make a big list. You have no excuse after this.

  • Have a 2nd Meeting with your Accountant (check all areas especially research, financial and feasibility, projected profit statement)

  • Have final talks with family – make a final decision to start a business or wait a bit longer

  • If all is GO, move to the next stage and START to things up. If it’s NO GO – Wait.

 

When Ready, Go to STAGE 3Click here