STARTING A BUSINESS

First an idea. Then a plan. Next a place. Fourthly personnel. A little advertising and we're ready to go, right?

Wrong. We've left out market research. A minimum amount is necessary, more often desirable. It may vary from asking if your new muffins taste good, to finding out which way the traffic goes past your prospective donut shop in the morning. If everybody in town gets seasick, don't open a travel agency specializing in cruises.

We also left out money. If you need to acquire financing , you will need a business plan. A business plan will force you to think out your concept and to make practical financial projections. Circulating a business plan will also give you feedback on your idea. I like to include a brief summary at the beginning, a description of the business and how it will position itself in the market place, a resume of key management as well as realistic financial projections. A good business plan will come across as a well thought out soft sell.

In raising financing, you will need to guard your cash flow. The lender/equity participant may want more of your equity than you're prepared to concede but a small portion of an operating business may be worth more than a large piece of nothing. Make sure you'll be able to buy back equity later.

Your business will need a name and this will need to be registered. You may need licences from various levels of government. Should you incorporate? This is an added expense but it may save you money later.

It is often a good idea to draft a comprehensive Business Plan.  This is both an internal guide and a tool for the raising of capital.  The essentials components are the work to be done, who is going to do it, how much money is needed and the projected profits.  Each item must be rationally backed up.

If your business is at the idea stage, it is most fragile.  Its limitless upscale potential is balanced by the numerous ways it may fail.  Carefully check the pitfalls and then proceed with confidence.  I wish you well, but never bet the farm on an unproven idea..

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