According to today’s visual infograph, the majority of American citizens have their personal credit under control (but perhaps only just). I imagine that the rest of the world are in a similar boat.
Relevant to all of us though, there are some tips to help you tame the credit beast, and get your credit back on track and working for you, instead of the other way around.
Lately I have had a few reminders of what I am about to chat about. It’s a bit unnerving when people ask “When are you planning to retire?” and I answer with “I’ll never retire, I like work too much!” that covers the fact I probably won’t be able to retire financially. But I guess it makes light of a serious subject and one I have to try hard not to think about too much.
Like a lot of people I didn’t worry much about retirement, putting cash away and anyway I keep hearing stories of people losing money overnight on the stock market and their portfolio value plummets again…
The reminder for this post, listening to people in business chatter away about how things have gone, what they will do when the time comes to retire, how they might sell their asset and in one case a lady who had sold her business, watched it fade fast into obscurity so she bought it back and is building it up again.
So what will you do, sell the business, put a Manager in to run it, expand it, resize it etc? All with the aim of having a nest egg to retire on.
If you do sell, will what you have the cash ‘invested’ in provide for your needs in retirement? How much will you need?
If you build up the business and put in a Manager how will that work out? Will the amount you need to take out hurt the business? Will it be run as you set it up or better? Will things fall in a heap and you need to rescue it… will you want to rescue it!
Lots of great questions in need of great answers. Hopefully your Accountant can set you straight, or at worst your own figures will project a rosy future for you. Lets face it, in the current economic situation there is little to smile about when the notion of retirement looms large in our thoughts. Unless of course you have an asset which keeps on giving.
Franchise opportunities abound, but choosing the right franchise requires careful thought and considered research.
Combing through franchise businesses for sale notices should be less daunting if you implement a well thought-out research strategy. Using online research, industry publications, news clippings and other methods is a great starting point.
When identifying franchise opportunities, consider what will complement your lifestyle, business goals and your skill set. Some aspects to consider are outlined below.
Brand strength? Behind every successful business is a strong brand, bolstered by an enviable reputation. Read widely about how the franchise brand is perceived by the industry, customers and business partners. Part of what you’re buying is the company’s brand equity. What do you estimate the brand’s equity to be?
Finding out about financial health How open and transparent is the organisation about its financial health? A company’s balance sheet can provide valuable insights about how well placed the franchise business is to harness future growth.
Expenses today and in the future Before you buy a franchise, you’ll need to know what set-up costs are involved. There could also be ongoing costs, such as marketing or advertising levies.
Strategic marketing, PR and advertising expertise? Dig deeper into the company’s marketing strategy. What level of investment and support is offered nationally and locally? What marketing and branding expertise does the company offer? How well resourced is the organisation to fund public relations programs?
Systems for success? Systems are essential ingredients in any successful franchise network. How efficient are the franchise’s systems and processes – do they help or hinder your ability to operate the business?
Investigate the level of support on the ground Do they have a dedicated operational and field support team to assist you? Investigate the ratio of franchisees to field support infrastructure.
Consider the commercial environment Determine the competitive dynamics that are likely to impact the brand. Do they have a well-defined understanding of their competitors, future opportunities, trends and issues?
Create a shortlist of franchise business opportunities? Once you’ve created your wish list, shortlist your most suitable franchise opportunities. Map out what works for you and what doesn’t, including the business must-haves e.g. IT and marketing support, costs (one-off and ongoing) and other forms of critical infrastructure.
Talk to franchise owners at the coalface Franchise owners are valuable resources. They can often provide you with the ‘inside story’ about a potential franchise business opportunity.
Lesley D’Arcy – As a franchise recruitment manager at Mortgage Choice, Lesley D’Arcy is responsible for recruiting franchisees to greenfield (new) opportunities as well as selling established franchise businesses. Her career in franchise recruitment spans over 15 years where she has worked with many major franchise brands. Lesley has a wealth of experience in recruitment of franchisees and builds on this experience by unearthing and developing the latest and most innovative ways to help franchisors build their networks. This experience has given her the skills to become an expert in the field of franchise recruitment, excelling in lead generation, screening, qualifying and selling to prospective franchisees.
Oct 8
I love chatting about business, and love to see people put an idea or three into action and get results, but unfortunately far too many people go to get started and so blindly follow the idea their heart runs off with the head and they fail. I don’t want them to fail but they do, the business owner does not want it to fail but it does… Fail, fail , fail… its not a good look!
Therefore, any chance I get I like to mention the basics of business in the hope to make a difference, I like to harp on about the basics and let people know…
Still people get it wrong, some end up with an image like this…
What’s the point of having a great idea and seeing it crash and burn? None, it hurts and can easily hurt others, so stop doing it. The challenge is however people don’t see the “crash and burn phase” they see a rose coloured world of $$ and happy customers.
Consider this, you want to learn to fly, you have the idea, you have the cash to buy a plane, you know full well you can’t fly the sucker until you have been trained and pass the test.
So why the heck do people jump into business (of any size) without the right training… Because they can, and you know what, you can sign up to get business registration on line, get a bank account and so forth and be in business in no time flat. Problem is no training, probably some skills, possibly and few helping hands to get started. and the rest seems to be “fly by the seat of your pants” and hope for the best.
Do some basic research BEFORE getting started and make sure you KNOW what you are in for PLEASE. too many failures in business seems such a waste of resources folks.
Jun 1
It’s June 2009 the global financial crisis is still happening. Watched a documentary on Chinese businesses going under, huge factories closed down, lots of out of region migrant workers now displaced. Sure this was one province (Guangdong) and particularly one city Dong Guan, so probably not a big cross section to measure by. The show was on SBS Australia’s Dateline (May 31) and showed a range of businesses closed and gutted out.
Here’s a quote from the show “In Guangdong province alone, 60,000 factories have now closed down and millions of migrant workers are searching for work.”
My first thought was what were they making? well it’s interesting the businesses included a printing plant, toy factories, and jewelry manufacturing… My second thought was do they make for the local market or export, export… third question, is the product a need or a want, mainly want.
So it comes down to the basics if the majority of what is produced is not for needs when a downturn comes the wants are dropped first. When an external order from overseas is pulled then the whole thing can collapse quickly. as the local economy is hanging on wants, the failure of one is felt across all.
Learn from this huge scale disaster and make sure you have a balance of income from needs based sources as well as wants based sources. If you have shares in a grocery company Co for example it seems logical that they supply the needs of people, then take your own business think about how you can supply to the needs based customers. Think carefully about this as a form of insurance to ensure you can balance your wants and needs to ensure sustainability.
The American Warren Buffet has been in the investing game and winning for a long time, here is his guide to investing and my take on how to go about doing it…
• Hard work: All hard work brings profit; but mere talk leads only to poverty.
- If the hard work you do does not bring profit you need to get to doing smarter work, and work hard at that.
• Laziness: A sleeping lobster is carried away by the water current.
- Clearly the pain of hard work has caused laziness to kick in and you are debilitated by the hassles it caused, this does not happen all the time, try looking for ways to the pain and get on doing what you love.
• Earnings: Never depend on a single source of income.
- Easier said than done sometimes… If you first thought was a Multi level business opportunity stop, it’s not the only answer and it’s not for everyone. So think about income from investments, in businesses, bank term deposits, rental properties etc…
• Spending: If you buy things you don’t need, you’ll soon sell things you need.
- Ask yourself do I really need it, or just want it? Is it for my ego or??? Things you buy should enhance your life, not cripple it!
• Savings: Don’t save what is left after spending; Spend what is left after saving.
- Try putting 10% of what you earn in a separate bank account you can’t touch easily. Teach your kids to do that ALWAYS, and leave the money there, unless they can earn more interest with savvy investments…
• Accounting: It’s no use carrying an umbrella, if your shoes are leaking.
- Having an accountant is like having a great tool you always use in your toolbox, in this case the tool should have been something to fix the leaky shoes with!
• Auditing: Beware of little expenses; a small leak can sink a large ship.
- Keeping track is vital, know if your margins are outside reasonable limits.
• Risk-taking: Never test the depth of the river with both feet.
- always have a back up plan, an exit strategy, a way of measuring how the risk taking is going and do great research before jumping in.
• Investment: Don’t put all your eggs in one basket.
- And don’t harvest just eggs! Spread the load and keep things safe.
There, my take on investing using Warrens guide, notice how we find these things after people have gone to the wall! 
Business, Enterprises, Co-operatives, not for profit groups etc… I implore you to ALWAYS make that little bit extra, that “profit” that “margin”, that bit on the end left over after EVERYTHING is paid for.
Here’s why… In tough economic times, those who can stand the test of time are those who put away for a rainy day, simple. Those with that “bit extra” can grow their business, provide more resources for their customers, give themselves more leverage and build an enterprise which is more sustainable.
I guess in an ideal world your “business” should be such others want to buy it, they covet it’s uniqueness, its service ethic and so on, to really do this you need to have the margin built in so the future of the business is assured, either for you or others who take it on as a franchise or as a “straight” business.
Know what your industry standard is for margins, then beat it by a bigger chunk (so you can have a greater edge in the long run.) It’s all about longevity, sustainability, offering the right stuff at the right time to the right customer mix… it’s up to you but a margin goes a long way to assisting you to be a business owner rather than a business operator.
A margin or cash asset can be the ultimate strength you need to borrow funds to grow with, and let the asset grow, let it provide other investment opportunities without having to spend it, let it be the vehicle to propel you forward ad give yo the edge. Most people when they get a profit spend it and enjoy the rewards (short term usually) that brings. I am advocating you put the money away and leave it away, watch it grow and provide the sort of stability every business needs.
Think carefully about the way you build your business and maybe you even have to alter your mindset/s about Cash and finance to be able to effectively put this sort of plan in place, no matter what, make sure you have a margin of some kind.
Mar 26
As more companies go down, and an unrepentant writhing takes place as people follow the sense of fear pervading workplaces, I am left to ask… Were these big companies not smart, or perhaps should they have been conservative?
Ok a boom is a boom, bust is what it says and no one wants to go bust. So how then do you even out the ride and make things settle down into a form of business which can handle the tougher times. Get conservative, get smart.
There is heaps of info on business smarts, same probably for being conservative (chat to your accountant if you don’t follow…) the idea is to put in action plans to ensure you cover your butt. Meaning put some cash away for a rainy day. If you have more than enough then you can invest some of the rainy day money (preferably into things which you can sell and turn back into cash readily.) then as the investments grow you might be in a position to take on some longer term assets which return an income (read rental property)
By taking this sort of stance you make sure your business has a back up plan and a solid foundation to build security with.
I guess it all comes down to the aim of the business, do you aim to be in business for the long haul and reap it’s various rewards, or simply take risks and live in the fast lane for a while… Conservative or smart, perhaps it’s both.
Positives and negatives abound in the new found financial meltdown news, some people have lost value but not $$ (Big business CEO’s who find their stock options are “a little short on value”) while others have lost $$ but not value (e.g. work has dropped off for some contractors).
Despite all this the average “Joe” is now fighting to keep their jobs or hoping to get another one where the boss is not giving them grief and so the applications for positions has gone down but the number of applicants has gone up. Strange times call for strange answers…
Ages ago I wrote about a tourist town in New Zealand doing Ok, but what would happen in tough times? they supplied to the “wants” of the world and not the “needs” of the world. This put a few noses out of joint, but unfortunately the minute things went haywire so to did the tourists… bye bye, back another day when things pick up.
It comes down to balance (yeah too easy for me to say huh…) if the overview of the situation is too much one way (providing just wants) then hassles occur… if you provide to just needs then there are no want type situations to be taken advantage of. (imagine a supermarket, which just provided basics and NOTHING else… It equates to all work and no play.
So much for macro economic theory (of which I know little formally) what about Micro? Well the situation is this. You are in charge of the $$ at home and the things under your control, so you had better figure out how to balance things there (strangely similar? yep!)
Basic investing 101 says “Have a balanced portfolio” so you buy shares across a range of areas, resources banking etc… This helps to balance things if one goes up and the others go down, but if the HWOLE share market goes down, stiff luck. What it really means is, have some $$ in shares, some in business, some in Investment properties, some in the bank. In tough times you can shift things about to suit.
For most people the balanced portfolio idea outlined is nice but few have the ability to fund this many investment options. Challenging and frustrating all at once, so this is where a BIGGER picture plan comes into being. If you have just shares what are you saving for? An investment property… or the chance to put profits into the bank. Either way your plan should show you the way.
Lets face it many people have been caught out by the current financial dilemma and many more will feel pain before it’s over, but there are those who have taken a balanced approach and will not be doing things so tough as others. Half their luck. let’s hope in the positive future we can all heed their wisdom and build a sustainable portfolio for long term financial support.
Feb 3
The Australian Government is due to release details of it’s next economic stimulus package today 3/2/09.
The previous stimulus package drew bad reviews from what many saw was a flawed package (handouts to family’s). The feeling seemed to be that the money went to frivilous purchases (gambling among them) while some saved the money for “A rainy day”.
The answer? Well the new package will be interesting to see, however the view from my side is this… Support and stimulate those with the most to give back to the community (in long term possible effect) the smaller business sector.
Imagine if they provided a range of effective support services to allow them to sustain their businesses through the challenging times, and then provide a platform to grow from when things pick up. In short training the business community to survive so they can thrive.
Over time the statistics on business failures has never been favourable so perhaps now is a great chance to address this issue. For too long it has been too easy for people to THROW away their hard earned dollars on a business idea they figure will bring them riches beyond compare, yet many find they have to work harder than ever to attempt to survive let alone thrive.
There are already all sorts of support packages available to those in the know, however a more coordinated approach beginning with an online overview of successful business practices etc might be a start, then follow this up with enterprise training packages aimed at giving the end user short sharp answers to pressing business challenges.
I know it may not happen, however the resultant flow on to the community could be immense.
Dec 13
How many times have you heard terms like, “Never give up”, “Play hard”, “It’s all about taking risks…”, “Put your money where your mouth is”, “To make money you need to spend money” “If only we can make it through this rough patch”, “Set lofty goals to get results”, “Put it on the plastic…”, “It’ll be alright on the night”, “If only I had a bit more credit..”
And of course a whole lot more. Many of these are to do with life in general and business as well (often there is a strong connection with both!). The issue, being able to ensure your business is in good position so the above “terms” don’t effect you.
Easy to say but hard to do so lets look at some basics… You sell services or products, your business must therefore make money, you pay for things with that and have some left over all going well. If not you are running a charity and are waiting for the next “grant” to prop you up, if you are in private business this can only happen for so long before things get too bad to continue.
Running out of cash happens, running up a credit card bill happens too! Often too easily, you max the card out, the bank gives you more, the monthly repayments get stretched and before long its out of control. If you have become dependent on it, it becomes a drug.
Over the years I have seen drugs claim lives, and the credit drug seems to almost be just as strong as any substance around! The aim therefore is to ensure you can run without the credit card.
I have had to cut up about three credit cards in my life so far and have now vowed to not have a personal credit card of any kind, a mortgage, or line of credit for an asset sure, but only if I know I can service those loans and do my darndest to reduce the amount owing. My wife first alerted me to my “addiction” and cut up the first card, I owed $1,800 and it was creeping out (doesn’t seem much now but back then I could barely make the repayments if at all.) She looked at the monthly account and there was not a purchase on it for the past four months, I was just paying off things well in the past and not keeping up. The third time… you DON”T want to know… (And I am not telling!)
The next time was a card my wife was offered (special deal in the mail..) she wanted it, she got addicted slightly, I closed the account, I had a card for that account as well and it was not long before the bank was offering us a higher limit… that was the signal to get out so we did. Note it was MUCH harder to close the account than it was to open it.
In business however the stakes can be higher, a big loan to do capital works, buy new stock, the list goes on, but the ability to pay the loan/s back should be a critical factor in doing these things. At the time of writing this we are in the depths of a big financial downturn, the government is handing out cash to families etc to prop things up so more than ever having a good approach to credit risk is vital.
Oh and if you think you can have a credit card account and not tell your partner, think again… they will figure it out at some stage, and the proverbial will hit the fan, and don’t think for a minute it will be evenly distributed.
Here are a few points to stop the sleepless nights, constant worry and hassle credit can bring to some.
Take action to get your business and or personal life in order so you can avoid being stretched, stressed, hassled and have sleepless nights that don’t help your performance at all. “Stop worrying and start living…” Oops! Another term for the list!
Nov 7
In turbulent times there are the basics that need to be looked after like revenue needs to be more than expenses, but then again that should always happen, but in doing the basics an asset protection policy is always good too, who would like to loose a good performing asset right? but I am seeing too much of organisations not looking out for their assets, in particular the employees. So check this article out, It has a few clues.
Even in our own site we have lots of articles on employee engagement to give you more clues.
In closing I think that the basics are often underrated, so ask yourself what are the basics of a successful business and how can we maintain and then build on the basics, provide protection (security) and communicate that your organisation is here for the long haul, in an environment of fear, the security or sense of it will be well worth it in the long run.
Oct 10
An interesting letter to the editor in a local paper about Ben Chifley’s (past Australian Prime Minister) idea of a nationalised bank being a must have.. Well we had that in Australia with the commonwealth bank then that was privatised…
Okay so what if We had a bank that had some form of Co-operative approach or structure. One where the people had a say in how it worked, one where the idea of prudency was revered, where cash (and the customer) were king, and other assets were of value too, but the cash side kept building (perhaps to a debt reserve fund or similar). A bank where the people really cared because the bank was the people. A bank where you as a customer felt like the service team really did care, a bank where the service team not only handed out loans for building houses and businesses but turned up to see it finished…. In short a bank that set it’s own highly rigourous standards without the Government having to intervene, as the bank not only met the stds set but exceeded them with ease at every turn.
In a time of greed, money grabs, plunging values and challenges a co-operative approach could make a world of difference.
Oct 7
The USA market is in a big slide, the rest of the world is falling around it and the big question seems to be what to do about it.
It’s a free market, free to go up and free to go down… Well we are seeing that right now, so do we prop it up with billions poured in until the Government loses out? I guess they have a few “bill” to give, but my view, hang on to it. Use these funds that seem to be so readily available to rebuild once the whole thing has bottomed out. The USA market went below 10,000 points for the first time in ages, the Aussie market is down a few hundred points or 26% over the past few days.
Those in “the know” have pulled out early and are holding on to their cash, ready to buy when things bottom out. Perhaps that’s what the goverment should do, buy shares at the bottom of the market, rather than trying to prop up falling structures.
I have seen a range of TV current affairs shows recently pointing out businesses (reasonable sized ones on occasions), going under and taking investors with them. If you invest in a business it is risky, any sort of business (and I don’t care what glossy brochure or figures they show you…)
So there are risks involved and you can lose money, you can also gain $$ to, and of course that’s generally the aim for an investment. Look I feel sorry, deeply sorry for anyone that loses hard earned cash in a business deal of some kind, and perhaps there should be a leaflet that people have to hand out in any transaction that may involve risk to explain there may be a risk.
The thing is let the buyer beware (Caveat Emptor) but also understand that people are losing day in day out, and the opposite is also true! In a capitalist society like ours the aim therefore is to have more wins than loses.
So guys, harden up, the road ahead is loaded with potholes and challenges, don’t get angry, get smart and find better ways of evaluating a deal or investment in terms you can understand.
So what were the Risk Managers telling the management at Lehmans bank… maybe they should be fired… GROSS Negiligence perhaps? or did their “leaders” not listen…???
I have often said that organisations should have a “Debt Reserve Fund” large or small, if they had a range of assets (cash is a start) then they would have been able to say “Our core business is falling, but our back up foundation is solidly in place.” Instead the US Government comes a ridin’ in, all guns blazin’… “Yahoo! here comes the cavalry!!!”
So if my business fails will the Government give me $$ to prop it up? Hardly, and I barely call the aged pension a payout for years of challenges and ups and downs.
So fellow business people ask yourself what are we putting away to buld a foundation in case of challenges like this, and I don’t mean insurance…
The USA banks, the market slide, you name it the financial markets are taking a battering with trillions of $$ in value lost… The media is alive with speculation, and sensational headlines.
WOW the guys with the money seem to be in a squeeze, now watch as the rest of us suffer in the aftermath.
But hey, I remember hearing (back when Australia had the “recession it had to have”) that since the “Great Depression” (what was great about it?) That financial markets world wide had a range of stop gap measures in place to avoid a meltdown… Oops it looks like someone failed to read that section of the operations manual, oh well what’s a few trillion lost…
The banks are able to gear themselves to the hilt, meaning they have little cash and a lot on the “never never” so they are in a great but precarious position. Anything they make in profits seems to go into real estate (check out their multi-storied head offices) or CEP perks (I’m just jealous!). Yet little seems to build their “cash reserves” to be able to handle challenging times like these.
The same of smaller businesses, many are only a few weeks of “challenge” from real disaster and have to hope that their strategy of “run on a wing and a prayer” will hold up if things go bad (now try and tell me that’s not the case with your business?!).
Really we are all in a similar boat, never far from the dirt we eke a foundation from.
Probably the one thing that rings true in the fullness of time, is clarified by my memory of migrants that saved their pennies and stashed them in tins in the back yard, they paid cash for everything and probably still do. These guys know that a slight breeze can bring down a house of cards, and as such have an insurance plan to cover it, a real one… CASH, not a trumped up piece of paper with terms and conditions designed to trap the unwary.
Maybe you have been in business for quite a while and have most things figured, but how much are you really making?
With so many variables, fixed costs, and “things that challenge your earnings” it can be hard to tell what the take home earnings are.
If you have fixed costs it pays to make sure you have those covered, and knowing how much you need to earn per day (min) to cover these. Recently I met a business person that was sure he was making a profit but in reality he had a surplus, and with added costs from variables he was actually only making a very small profit.
Your business requires you to know if you are making a profit so that longer term planning can take place, otherwise you may find yourself in a tricky business position and wonder how on earth it happened.
Take care to measure carefully what’s happening so you too can get ahead and explore the growth possibilities your business can offer.
Starting a business is a great idea, you think about the possibilities, get emotionally wrapped up in it and then make a start… But there are a few things you may not have thought of, namely how much money you will need to get started and how long you will need to “feed the beast” until it starts to pay for itself.
Starting with the bare minimum is called “boot strapping”, it works on the premise that with what little you have you will generate income and a profit from day one. It has worked for many in the past, however it has also failed many…
Another thought is to start with enough savings to pay wages for a given period (as well as all the other start up costs) until you things to a point where the earnings provide a solid return and can take over from your savings to cover the outgoing costs.
Whichever you choose prudent planning is required (sounds boring doesn’t it…) to ensure you have a lower stress start up to your business. The aim of any plan is to provide you with a guide to ensure success, so go ahead and plan out which one you will use and how to get ahead, after all business is about making a return on the time and money you invest.
When you got started in business you probably didn’t figure on how much it would cost to get started, I guess no one really knows until they have done it. and for so many people in business they find they just don’t have enough to really cover their marketing costs to get a decent response.
There is an old saying that I think came out of the dot com crash… “Want to make a cool million in IT? Start with 2 million and wait 12 months…”
But seriously if you want your business to have its best chance of being seen, being heard, or just plain known… then learn more about marketing so your business idea can reach more people than just your family and friends. Want to know more about how to do just that, then chat to your friendly branding expert.
A friend and I were chatting, he is to be made redundant, and after many years in his role with a big multinational he stands to get a good pay out. He’s still got plenty of time as an able bodied worker and wants to work… But.
There have been a number of larger businesses fold up their operations locally and he’s not about to move out of the area. He could invest the money and watch it grow, his wife is still working a fair bit so that could be useful, but he would probably get bored (in fact I know he would…)
Doesn’t take long before his mind turns to business. “Hey Steve what do you recommend? One of those franchises or???” Well it’s like this it depends on what you want to do I thought.
It turns out someone had given him the hint that a franchise could be useful, I set him thinking by asking… “What do you currently earn per hour, and do you think you could earn that in a franchise, especially if there are people being put off work in the area…” It got him thinking.
But the temptation is there, to the untrained eye it could look okay, you get the system, you milk it and the planning side is partially done, the brand image is there? What more could you want? In all honesty a LOT more.
And here is where most people seem to go astray, they get emotionally wound up in the idea “Be my own boss? YEAH!” and the rest they say is history… It’s all very well for me to say “Go do your homework…” But what if you don’t know what to REALLY research?
So the short answer is to ask lots of questions, check out lots of options, and get savvy on the language, biz speak can be daunting for those not in the know.
In any business there are risks, so before you commit your funds find as many people as you can in that field then ask them lots of questions. In fact I suggest you get to more than 10 in any one group, and then more in other groups as well.
So do the due diligence, and make sure the full on emotional satisfaction you feel in the beginning is something that will last well into the future, just in case things go “belly up”.
May 26
Current news 26th may 08 Victoria Australia. It was announced today that an aged care facility is in the hands of administrators today, 100+ residents are unsure if they will have a place to live. lets leave the emotions to one side for a moment and look at it from a business viewpoint.
Here is a facility one would imagine the operators have figured out what the costs should be, the income, the profit etc. At the end of the day one would imagine it would not be too difficult to figure out if the whole idea was viable or not… So how is it that the are now in strife?
Well I can only guess at that, however as a duty of care one would think they would have covered all bases to ensure this vulnerable sector of society is well catered for.
I don’t want the Government to mandate how these facilities are run, however there should be an equitable model these sorts of facilities should run by to ensure they are viable for the long term, not some device that collapses due to factors beyond the residents control.
Let’s get simple with the $$ and the practicalities of business.
$$ in, this comes from the sale of goods, services and the income from investments made on behalf of the business.
$$ out, these are the expenses your business has.
Profit (or loss) is the difference between the $$ out and the $$ in.
The aim of the business, from a financial perspective is to make a profit and therefore have more in than out. (There are exceptions but in the main this is the main idea.)
With the practicalities of business, either you fulfill a want or a need with the service or product you are offering, if there is no need or want for what you have then no one buys.
So knowing the above points, a few questions come to mind, the profit amount you need to make, and is the product and or service range on offer sustainable when I make that level of profit?
Big questions perhaps, but ones that you should keep quite simple. If you get these right then your business will provide you with the sort of lifestyle you believe you deserve. One way of doing this is to figure out the industry average for profit margins and apply that to your business and or to look at what you need to grow your business to keep up with the costs of living and development that takes place, this way you can adjust the profit to suit.
It might seem okay to provide the market with 1,000 items per week @ $5 each, and make a profit of $4 per unit but if the price of living etc goes high too fast then it can fade into insignificance. Therefore the astute business operator has to make sure they have their finger on the pulse to effectively know what’s going on so they can balance things effectively, otherwise they can soon end up working for very little.
That’s the basics, how you go about measuring them and implementing the ideas presented are another thing, but being able to do so will ensure you can keep ahead of the costs and see things grow effectively over time. Therefore if someone says they do not want to grow their business you know they don’t know about the basics and why it’s so important to do so. Perhaps one of your tasks is to remind them…
When you start out in business or develop a new product there is an inevitable challenge to figure out if the emotion that motivates the initiative is the only thing making it happen or the $$ are a motivator as well.
I guess the ideal is both. People want the product, you make it, they pay the $$ and at the end of the process you benefit by getting $$ in and make more than the cost of the item, therefore you have a profit.
Here’s part of the challenge as I see it, people want to provide “stuff” and so they do so with the intent of it being a, something people want (it fills a gap or need in the market place) or A, something they need. Sometimes however they run into the idea that they can do it at a good price and not need to make much int eh way of $$ (the emotion takes precedent over the practicality of having $$ to run the business and make it prosper.
Lets work on the idea that both can be useful and in the case of a business with two or so partners this might become an issue early on, one wants to solve a problem the others want to make $$. Not a long wrong with that, and in fact if a partner in business does not want to make $$ then I question if they realy should be in business.
So it’s a conundrum that many businesses face how far do I go with both the emotional and practical side of the business and how do I measure this to make sure I don’t tip the scales one way or the other?
Until next time I want you to keep checking your business or business idea for both and see if there is a balance that is readily struck or not.
You have the business set up and things are running ok. You handle customers well, you pay the staff, you keep things ship shape in the bookkeeping area, all seems well, but are you making any money, real money, real income?
In the scheme of things those that have gone from an employee to a business operator will no doubt note there is a big difference between turning up and getting paid and turning up and wishing for more customers, the hassles to stop, and the seemingly endless challenges that creep up and take you by surprise.
Lets do a basic sum here, if you were on $700 a week income (take home) in a job, you had few hassles, in fact you got paid if you were sick, or on holidays… Now as a business owner you are the boss and you only get holidays if your business earns enough, if you trust the staff to run things while you are away etc… the list probably goes on AND ON!
In your business you need to be able to take into account a range of things to ensure viability, the cost of overheads, materials, marketing and so on, then have a margin on top of that to cover wages… then a profit (remember to pay yourself from the wages area!)
So the way forward is to project the cash-flow for your business and see if the amount you have to earn per day is do-able, and not outside your threshold for earning… As an example, if you are used to earning $700 per week, imagine how it might be if you have to turn over $700 in two days, just to make ends meet. For some that trips their mental threshold on money and they fail fast in the business stakes due simply to this psychological hurdle.
Once you establish the cash-flow for the business and how it fits with your money threshold, then ask are other businesses in this industry area able to do that with ease… or is it a struggle?
Answering the vital questions on cash-flow will either open a “Pandora’s box” of issues and hassles, or show the way to prosperity from being in business.
Here’s a tip, if you are currently employed and are thinking about going into business on your own, take a few days leave and check out what similar business types do… if it’s a retail store do some serious spying on them to see how many customers walk in the door, and at what time. Then check out their marketing, is it enough? Is there too much competition? Or is there scope for a new player in the game to take the lead and give it a good shot.
So if you go into business and take the inherent risks that go with that notion, consider the above points carefully, otherwise you may find you will work flat out and get nowhere fast, in fact it may cost you a great deal more than the initial investment.
Jan 30
I learn things from many sources (hey don’t we all?) but today I was listening to a business owner talking on an issue that reminded me of a useful story that fitted to the situation, here it is…
Pete had been investing in shares for many years, and had weathered many ‘storms’ and made and lost lots of $$ along the way. One thing he said that made the difference for him in building a successful share portfolio was using points instead of $$…
“What I realised was I was having an issue about money, if I lost some I would say oh $#*%! then when I made $$ I would say the same but with a positive inflection and think I had made a fortune… On average I maintained a healthy bank balance and it certainly grew well, on average… but the roller coaster highs and lows took their toll on me emotionally… until.. Until I decided to think of the $$ as points. Basically I would say ok, I made x No: of points or lost X No: of points… It meant I was not adding the pressure my mind had created about $$, Simple really and it made the world of difference, it was as if I was using monopoly money in a sense.”
Back to the initial chat I was having… it involved $$ he was stressing out about the amount of $$ he had to earn to break even on a daily basis… no work meant no $$, or low work meant low $$… when the $$ were above his set level he was okay, but the stress the low level caused him could probably become unhealthy quite fast. If your stress is negative you may not perform as well and make a mistake that could cost you dearly.
The real lesson here is changing things that cause our ‘thresholds’ of understanding (in this case $$) so that we can reframe them so they take the pressure off.
Note if you had to earn $1,000 per day to break even in our business and that caused you grief, then altering your mindset to 1,000 points a day might just be the way to reset how you handle your threshold thoughts on amounts to be earned.
In short re framing how we look at and experience things can make a huge difference to your results.
From an original article on various business success pointers, here are the individual “how to” possible options for you to explore.
Covering overheads easily…
Overheads are often the thing, which can break the camels back, so make it easy for the camel and take the pressure off. In this case keeping the turnover and cash flow up so the overheads are not a challenge EVER! (I know, easier said than done…)
Getting an objective view of your business is vital to figuring out which areas to focus on to improve cash flow and keep your overheads under control, so ask lots of questions, observe thoroughly what’s going on.
Now put these things into action and watch the results alter in a positive direction.
I have been on about the Guy Kawasaki 10 – 20 – 30 planning device for a while now (since I found it in early 07) Well this week I had the good fortune to use it myself and have created a template to be used in Power Point.
Unfamiliar with 10 -20 – 30? It’s a simple device for pitching ideas, I see it as a way point in the planning process, not so much as an endpoint which seems so logical when you figure it being used to pitch ideas to investors etc. Ideally if you have a business idea I would STRONGLY suggest you use this to assist in sorting out its usefulness.
So it’s 10 slides presented to a max of 20 mins and the smallest text is 30 Pt. see I said it was simple… but of course there are fairly explanatory headings and some body text in it to assist you to make your pitch viable/useful. I feel sure you will be charmed by the thing once it’s used a few times.
The 10-20-30 power point business presentation
As you will see when you download the file, it is a plain old BxW, simple presentation. All you need to do is put the words in that fit for your project even the basic animation is done (when you view the slide show, you can click the forward button and see each point come up one at a time, how it should be, and not a whole page of text.)
I used it on an idea as a way to ‘flesh out’ a few things and in following the headings I found I was really challenged to come up with appropriate answers, after quite a while of cutting, pasting and soul searching I got it to a point where it seemed to work.
I see all sorts of possibilities with this. For pitching ideas to a boss on an area of business or a dept, which is not doing too hot, to put thoughts together for a business partner to look over, then of course to show info to prospective investors. These days when people pitch ideas at me I say to them to do this, then show me the result, thing is not one has actually done it (yet).
Those in the know, figure that’s because it causes people to look at things logically and not just emotionally.
Have a play with it, read it though, jazz it up with imagery etc and see what happens, I’m sure it has lots of uses, I hope you find the same.
The accountant chatted about the year that was, big deal it had happened, he mentioned a few down points in the year (a few too many for my liking…) but my trouble was I was focusing on short term here and now, not longer term way back when…
So I was on the up and up and he was on the ‘old stuff’ and there was a big difference. It made me flat for a while and in thinking about it there’s nothing I can do about it, it’s history.
Question… how often do you focus on the past only to miss the present, or the future for that matter?
Perhaps it happens too often.
So what can be done…
1. Keep the review times short – our accountant is talking about things six months ago that we knew about and have moved on from there.
2. Follow the plan – No plan no action – No goals no milestones.
3. Work smarter – The way forward may well need to seem like a backward step sometimes so you can move forward, put some serious effort into thinking things through and testing the various scenarios out BEFORE going head long into things.
4. Know your expectations might provide limitations too – Some times I expect gold medal performances from other people or organisations and am disappointed by the results (or lack of them…) Be clear in what you want and make sure they can match to that.
Until next time, keep your business real…
Back in September of 2006 I posted an article here warning business people to only guarantee that over which they have control. I advocated only guaranteeing such things as, “Your Money Back” or “Replacement”. I specifically warned against guaranteeing a customer’s satisfaction because you have no idea what will satisfy a customer.
Better than 9 months after I wrote that article, a Judge in the U.S. took his suit to a dry cleaners that guaranteed satisfaction. They lost his pants. That made him unsatisfied. And even though the dry cleaners offered to buy him a new suit, the judge felt it was more important to make a point and sued the cleaners for $52 million dollars for failing to live up to their “satisfaction” guarantee.
The judge was a judge by appointment. He is no longer a judge because those who had the power to appoint him again, decided that it may be in the best interests of the entire free world that he not sit in judgment of others. That’s great news.
The bad news is, the owners of the dry cleaning business, have lost about everything in an attempt to defend themselves before the lawsuit was dropped.
How much better their life would be today, had they been avid readers of FreeBusinessTips.com.au, had read my article and decided to guarantee “replacement of lost garments” instead of satisfaction?
Warm Regards,
Michael Crooks
Oct 18
Of course you want to sell to people… that makes sense (until they invent a robot that can spend cash…)
BUT, what sort of people? Rich ones? Poor ones? Ones that work? Ones that play? Ones that have too much time on their hands? Ones that make decisions on BIG buying opportunities for a BIG business…
Whichever it is you should be sure that you can target the right people with the right offering and make sure it has a great profit to boot.
Low profit is fine for high turnover items in some instances but it all depends on your business, the costs to bring the item to market and all the rest of it. Remember you are in business so the aim is to make a profit, FIRST AND FOREMOST!
Too little profit means low cash reserves, which means a risk is being undertaken, the list goes on. So you should be thinking about what sort of people to sell to (to ensure a good profit is made) and what to offer them (product’s and services/s) then you should be able to focus on more effective ways to deliver that to them.
Go ahead and think about the ideal customer you would like to sell to, then build the picture from there, the results could well be amazing…
For more information of customer profiling… click here.
When buying any business (or any asset for that matter) it’s advisable to do your homework. Logical? YES! Practical… Not always. In the case of a franchise they (the franchisor) often has the power of numbers, “X number of franchisees can’t be wrong”, (yes some can be ‘wrong’, but they may not want to admit it.) Of course there are other ways the ‘numbers’ can be glossed over to make things look rosy.
It’s time to take a look at the reality for some.
Let’s look at some basics, there are large, small and medium franchises, and most have the basics of a good business so let’s take one group and single it out for viewing… the small franchise.
To begin with you have a reason for looking for a business opportunity, perhaps you want to get out and about more than a job stuck behind a desk, good reason, but in reality the numbers involved might not add up to all you want them to be. Sure money is not everything, but we are talking business so there needs to be some profit, otherwise you are running a charity or a hobby.
The smaller franchises are often to do with home or business services, gardening, dog wash, cleaning, handymen, and so on. The Franchisor offers the business for sale, you want to run it, and away you go. So lets break down some basic costs and look at what happens when it’s all added up. Remember you are in business to make money so you may well be making money to pay for a lot of things BEFORE being able to pay yourself.
Note: I have not put in any figures for any of these as they will vary greatly from business type, to business type and then between various Franchises.
Franchise purchase price – A one off amount, some people take out a loan for this amount, while others may have a redundancy package, savings or an inheritance they will use. Either way it’s money spent on a potential asset, in this case the asset should be one that can appreciate, not depreciate… At the end of the process if you choose to sell your ‘asset’ you would like to think you made this amount back in earnings (perhaps it shows up as profit) or if you can sell the franchise then you would hope to make this amount back in the sale price.
Franchise fees – Monthly amount to keep the head office wheels in motion – area supervisors – master franchisees – admin costs – systems development – Training – Call centre operation, the list goes on. It should be seen as a fee you pay that provides great value to you, and not as a fee that bleeds you dry each month or is seen as a burden of some kind.
Vehicle - Many of the small franchises mentioned require a vehicle, some require specific signwriting which may be part of the initial franchise outlay. You may have a lease on that vehicle, you may have to tow a trailer and want to use an existing vehicle (either way you have an outlay vehicle or trailer).
Overheads – Every business has these, phone, home office, computer, mobile phone, materials, fuel, tool maintenance, liability insurance, sickness insurance (You may well need it!), uniforms, the list can go on and add up quickly.
Marketing fee – This is usually deducted by the Franchisor with the monthly franchise fees and covers some of your marketing costs that the main company will do. Sometimes they want to do more and may ask for an extra levy to be imposed, this depends on the contract and how they can go about it, it can be legitimate but an extra cost to be aware of.
Wages – If you have staff they want to be paid, so think of the workers insurance, the holiday pay you have to cover and so on. If you take a wage out yourself you have to look at it carefully
Profit – The bit left over after all the expenses are taken into account.
There it is, the list of costs, if you look into these for the business you want to buy, you now have a starting point to fully evaluate the situation. This will give you a solid objective viewpoint to work from and not an emotive one which is so often the case with someone going into business for the first time (or even the fifth!)
In an ideal world after the expenses, you will have paid yourself and have a profit to put into the bank and watch it build. However in reality the opposite can also be true, which can shatter a dream in no time flat. Be aware that this can happen.
Remember the statistics do not lie (they may bend the truth a little…) so take a look with both eye’s open. A little known fact is that many franchises are seen as being a great business model because people often appear to last longer in them than starting their own business, true BUT note that most are in contracts that have them paying fees for the duration of that contract. So instead of a business going ‘belly up’ after 12 months it looks like 3 or so years have passed and even then it may be just a transfer of ownership to the next person looking at a business opportunity. On paper it looks rosy, in reality it may not be. And that’s just the start…
For more information on Franchising click here.
Oct 12
Anything else to do with your business MUST therefore be about supporting the profit.
Before people go all money crazy though and start saying “business is all about taking and here’s another example.” I say if you are not making a profit you run a charity, and as this article is about business it’s therefore about profit. AND of course there are other ways to profit other than making money.(if your people advance their skills and are happy with that might be just one example.)
lets look at what I mean…
Marketing – This should be driving or directing people to your business, so they can buy and you make a profit from what you sell.
Management – Ensures things run well – so that your profit can be maximised. Sloppy management would mean unnecessary overheads, therefore wasting profits.
Operations – making sure things run smoothly here is vital, often this is the workings of the business and needs to be running well, imagine if stock levels ran low and demand went up… oh bad move.
Sales – No sales no $$ in, then you have an impact on your profit… not good!
Service – People vote with their feet, no service, they move on. Again not good for the profit.
Human resources – They provide (or at least should…) great people, great people systems, great training and elegant payroll options to ensure the people in your organisation are effective and efficient at what they do, if not they are eating into the organisations profit.
Wealth systems – Your profits go here to develop passive income options and leverage the $$ better. If this is not working your business may as well not make a profit… (hard words but true). Your team works hard to make the profit, now make the profit work hard for the business.
All of these impact on the profit, either the gaining of, or the use of it. To make sure you are having an impact on it take a deeper look at all of the above and get to work on those things that can make a positive difference to the profit. You might like to start with this.
Oct 9
You start the business and then… Well apart from working hard to make it sustainable…
A few things first, let’s make a list. Why did you get into business? Is it turning out how you wanted? Is there a profit? Is it providing a better life for you? If not when will it do that?
Note how I end up with the lifestyle side and start with the business side? That’s my focus in many of these articles, because I see people drop perfectly good jobs wth 4 weeks annual leave (here in Australia anyway) and in the most part security, for what? Hassles and more stress, more responsibility and the list goes on.
In buisness I figure you have to fight vigorously to make a profit (and sustain it, then celebrate the fact you got your goal.) So what’s next.
Does all that lead to a better life? I hope so. Then pursue that, make a plan, set a time line then do something radical, halve it! Not the quantity of the results but the time frame. Get the results in half the time… What would it take to do that? Is it possible, is it feasible, is it out side of your threshold? Push that thought around for a while and figure out just how to make things fit.
I suggest that if the goal is a really worthy one you will be in a poition to make it happen in the shorter time frame because you truly connect with it. If there is no connection then try another goal, keep searching until a truly compelling one hits you. then go for that.
Whatever the goal, make sure it’s one that gives you a better lifestyle. All work and no play makes for a dull person!
If you head up a franchise, what goals can you assist your Franchisees to set? What goals can they assist you to set too! Push the boundaries, go for gold, and if you come in second place the silver medal will still be quite valuable.
Oct 8
In franchising there are fees of all kinds, franchisees are contracted to pay. Marketing and Management fees are often the main ones.
The fees are used for a multitude of things and are vital for the main company’s day to day operation. The money is therefore a fee paid for the provision of some service, the right to use the brand etc. I would like to put forward an idea to make a positive difference to the franchises.
Many franchises offer successful business opportunities (that’s why most people buy a franchise), however research shows there is a fair bit of turnover in the industry as people discover that franchising may not be for them (for whatever reason and there are many).
To offer a start up incentive, lots of franchises also offer an income guarantee for a start up period and then the franchisee is out on their own and hopefully running the business very profitably by that point.
All seems well, until… something goes awry, and the franchisee wants to pull out… “No you can’t do that the contract says you keep on paying fees until the end of the contract period,” for some this is a burden they endure even though they are no longer in the franchise. The pain is felt on both sides
Suggestion, the management fee could include an amount that goes into a Franchisee debt reserve fund (it’s just a compulsory savings account really) and over time as it’s added to, it could build into a sizable amount. If for instance $50 per month was taken from the management fee to add to this fund the amount is not noticed (for most) and it compounds with interest on top of that.
At the end of the contract if the person pulls out they get their compulsory saving back (no more, no less) if they continue on they could be eligible to take just the bank interest on that amount out and use it how they wish. The advantage is they have a device that is growing for them, if they pull out altogether they get the basic amount, if they stay in it gets much bigger as it compounds.
I am not putting the idea forward as a complex device, in fact the simpler the better (one big account in trust) and separate balances each month.
The aim, to put forward the idea of wealth development, and then make sure they are doing it in their business by the Franchisor leading by example. In a complex business environment it’s of ten the simpler innovations that make the biggest difference.
Oct 7
No matter what sort of business you are in, it’s only as good as the next crisis is. Has that got you thinking? I hope so. You see many business people chip away at the coal face to get ahead, but do not stop to think about how to handle major challenges that might arise. Of course we do not want major challenges to arise but they can.
Example, imagine a franchised business, lets say it’s in an early phase of development and the main company has sold a few territories and is pushing to sell more. But the offering turns out to be a flop, (e.g. customers did not want a garden watering service…) so things start going downhill. When push comes to shove they end up with no more sales, no more fees in and it goes belly up.
Well apart from a poor business concept how well the main company does will also depend on what they do to develop their wealth.
Consider this. If the income stopped for the Head Office of this organisation, how long would it last? Answer, not very long (often it’s allegedly about 2 weeks for most). For the business owner/s this means their dream has gone up in smoke.
BUT, what if they had developed a “wealth creation program”, or a “debt reserve fund”. Often its as simple as a separate bank account where a % of funds from all income goes. Over time it compounds and provides a growing liquid asset. This is left alone to grow and provides the main company with a solid foundation to build on (The key is to never spend it.) When it builds, some of it can be put into other forms of investments that can be liquidated fast if need be (shares for example) to do this effectively I would suggest a % be agreed upon to retain cash in the reserve fund (cash is king…)
Although I have used a larger organisation as an example, it can be done (and in my view should be done) by all businesses.
The aim, to build a foundation that keeps the business solid and even if things go “down the tubes” the future has at least been allowed for, obviously the longer the business can run the stronger the foundation and if need be the security can be leveraged against to start another business (hopefully a MUCH better one than the first!)
For more articles on franchising…
Most (if not all) Franchises have a franchise fee, (it’s a monthly fee usually) designed to keep the head office “humming”. It’s generally separate from a marketing fee, but that might be on the same invoice you get per month. So what do you get for paying that? I guess the Franchisor will have an answer for you that “covers their butt” but in reality what do you get?
Look, some will suggest I have put on my cynical ‘hat’ and am talking sour grapes… Perhaps that has some truth to it. BUT it’s a great issue and one that all current and prospective Franchisees should be asking about sooner rather than later, and one that Franchisors have to be acutely aware of. Think of how many Franchisees are in a group and then look at how many franchises there are world wide, and growing! the amount would be staggering per month.
So you shell out a management fee per month?
The point. To find out where the money goes, it should be available to the franchisees as a graph, a pie chart or similar so they can know where the money goes, and so their Franchise Advisory Council can advise based on facts, not on here say and good will.
Is your Franchise group showing you the “money…” or are they showing you a chunk of “PR” that makes the “money” look good?
For more information on franchising.
In an age of competitive business activity its nice to know there are benefits to the end user from this competition and in the communications industry in Australia there are now about 40 different telco companies operating. This brings prices down for the end user and also means the companies have to find new ways to impress the customer.
As most telco’s offer web hosting and internet services these are areas ripe for development. For example if your business is relocating can they organise to have that done for you with less hassle, fuss and so on? Can you get unlimited emails and unlimited tech support.
Perhaps your business is bigger and requires multiple lines or a PABX (in house exchange) ask if they can do that too. Add that to the internet services like big download allowances, only your downloads counted on the service volume and you are starting to get the picture of how you can save money and be provided with great services.
But in business its important to have that all important edge… How about 1300 or 1800 number set up for a low monthly fee. That’s would be it for me, the finishing touch in a range of services that benefit your business.
How about lost time? Time is our most valuable asset these days, and the measure of a good supplier is often what they do when something goes wrong, not just when everything is going well. Recently a friend of mine had an interesting experience. When a new neighbour moved in, somehow his fax line ended up permanently “crossed†with the new neighbours main incoming line!
Luckily for him he uses an independent retailer for his telco needs. With a single phone call the situation was resolved by his personal account manager who saw the issue through from start to finish. A single point of contact that meant less time explaining what the issue was, and a lot less grief! Of course, the independent retailers still have to deal with the big “Tâ€, so we still can’t expect miracles…..
A lot of these advantages can happen by utilising an independent retailer with lots to offer, so haggle, ask lots of questions, find out more about ways to use the competitiveness to your advantage and you might just get more than you hoped for.
Oct 3
In the article I have linked to, Tom Peters has a good heads upon investing , investors and the gender difference, once again he’s on the ball showing all and sundry that differences count!
Of course there are differences, and the scope that this article alone provides is enormous, if you were selling investment products, would this article be of value to you? YES! If you were selling ANYTHING to females, might the profile insights be of use? YES!
Tom has been on this bandwagon for years and will not stop. Lets hope the message to sell to this target market continues…
Sep 26
In all the things that a business is, the number one thing should be viability. It’s great you have an idea to pursue, it’s great you have a mission and vision, it’s fantastic you have the skills to do it as well!
But…
How viable is it?
Let’s be perfectly honest, business is about profit, and your role in the scheme of things (having all the other traits), is to ensure it is a profitable operation. Okay there is probably a moot point about how much profit you make at the end of the day, but it is important to have one nonetheless.
Consider…
Will the business be seasonal? -It’s great to grow something and sell it but the in between time might make things tough.
Will there be a demand for it? – Your friends say so, but how will you really test it? We call it market research, go google that and find a checklist or system to do it.
Will you be able to hang on? – There is often a lag between start up and profit… Will you have enough cash at hand to handle that?
Can you do it? – It’s one thing to be trained to do something and entirely another to have the right attitude and emotional stability to do it as well.
How much work is involved? – Planning, permits, licenses the list can seem endless, please do your research thoroughly to save a lot of hassle, that way you will have some strength left when it really gets started.
If you put up cash, how long before you get it back? – Putting cash in is one thing, getting is back is another. Do some cash flow forecasts and figure out how long it might take, make sure you err on the side of low income! Better to be safe than sorry. Imagine projecting a return in five years only to have a lease run out in four… OOPS!
Sell it to experts… – Find some people to pitch your ideas to and see if the numbers you create for it REALLY stand up… this might be your accountant (Don’t have one yet? Hmm perhaps now is a good time…) This panel of experts should be people who have a real knowledge of business and can ask more the the right questions you need to focus on for viability.
These are teaser points to get you thinking about the viability of your idea, so if you are setting out on the glorious trail of business, consider using them to keep the trail sunny and warm, you will pareciate the views more that way.
For more info on getting started in business and understanding the profiles of business try this.
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