Starting a new business? 12 things every business owner should think about first.

Starting a new business? 12 things every business owner should think about first.

Do you have a great business idea or opportunity and want to start your own business? Read our 12 top tips from experienced professionals on what to think about before you begin.

1. Your Vision

Before starting or buying a business take some time to work out your own personal vision. What’s important for you and why?  Then look at the business and decide what the vision for that would be too.  Then ask yourself these questions.

  • Are both visions aligned?
  • Will my business get in the way of me achieving my personal vision?
  • Does the business have the capability to achieve what I need it to financially? 
  • Will I love what I do in this business?
  • Am I excited about the future when I look at my business?

If everything lines up then start detailed due diligence.  

If things don’t align, maybe it’s not for you and it’s time to look for a better idea or opportunity.

Wayne Baird, Director – The Alternative Board Hawke’s Bay, Gisborne, Taupo

2. Key Things

The five key things you should think about before launching a business-:

  1. WHY – are you launching the business?
  2. PLAN – what does a three year plan look like?
  3. FINANCE – understand the financial implications of the business plan and ensure sufficient funding is in place.
  4. SYSTEMS AND PROCESSES – stay ahead of systems and process requirements.
  5. EXIT STRATEGY – always  operate with an end game in mind whether that is sale, stepping back, or selling down a shareholding.

Steve Wilkinson, Director – The Alternative Board Christchurch & North Canterbury

3. Strategic Plan

Always start with what you want from your life (personal vision) and how the vision of your new business will help deliver your personal vision. If the two are not aligned, don’t do it. If they are aligned, create a strategic plan of where you want to be in 12 months, 3-5 years, and 10 years. Write it down – it becomes more real when you have to record it. List your goals, your strategy for achieving them, and the activities you need to do to succeed.

Mike Tyson said, “everyone has a plan until they get hit”. That doesn’t mean you shouldn’t plan, but you should be nimble enough to adjust your strategy and activities so you can still reach your goals no matter what you come up against. The strategic plan is a living document, not a detailed roadmap.

Peter Mayall, Director – The Alternative Board Hamilton Waikato

4. Questions to Ask Yourself

Can you answer these questions?

  1. Are you building a recurring revenue model, and what is your cost of acquisition of each new customer?
  2. Do you have enough cash to bridge the valley of death to commercialisation?
  3. What re-engineering to your USP will be needed for different channels?

Gordon Stuart, Director – The Alternative Board Auckland Central

5. Future Plans

Take a good, honest look at where you want to be personally in three, five and ten years’ time and ask yourself is this business the vehicle to get you there?

Russell Eastwood, Director – The Alternative Board Auckland North

6. Resilience

Most of us start a new business because we know that we can do what we do better than our current employer.

And while that may be true, in terms of your current knowledge and skill set – there is one question you need to ask yourself before launching – that none of the text books will tell you. And this is: do you have the personal resilience to weather the storms that will inevitably arise?

Being a business owner is a roller coaster. One day everything is going well, and the next you are plummeting head first down to the bottom – when your best client or best employee leaves, or a project fails – sometimes through no fault of your own. The ability to get back up and start again – to find a new best employee, or client, or project IS what those who survive – and thrive do. While those who close their doors, don’t.

Karen Van Eden, Director – The Alternative Board Auckland West

7. Roller-Coaster Ride

Be ready for a roller-coaster ride! You will have hard times and good times but know that with resilience and support you will survive and emerge with a sense of achievement and pride at what you have achieved.

Stephen James, Facilitator – The Alternative Board Auckland North

8. Things to Think About

Some things for business owners to think about before launching a new business

  • What do you want the business to look like in one year, three years and five years?
  • Who is your target market, and how will you reach them?
  • Why will customers buy from you (what are your point(s) of difference)?
  • How will you supply the goods/services to these customers?
  • What price point and volume will ensure you are competitive but will also ensure there is sufficient margin to make a profit?
  • How will you fund the business, particularly as you start, and then as you (hopefully) grow?

Scott Morris, Director – The Alternative Board Auckland East

9. Right Step – or Not

Think seriously about what you want to achieve personally, and how the business will help you in reaching these goals. If the business takes you further away from your ultimate vision, then maybe it’s not the right step.

Chris Wallace, Director – The Alternative Board Christchurch & South Canterbury

10. Challenge Yourself

What do you want out of your business and how will the business achieve that?  I suggest speaking to other business owners and advisers to challenge your answer.

Mike Kelliher, Facilitator – The Alternative Board Auckland South

11. Working Capital

Do you have access to the required working capital to get the business from startup to cashflow positive? Almost every new business severely underestimates this and subsequently puts huge stress on the business and the business owner.

Daryl Narain, Director – The Alternative Board Wellington

12. Start and Operating Capital

While it’s great to have a vision for a business, it is important to understand how you are going to fund your business.  What capital is needed to start the business, what operating capital is needed to operate the business and what margins are needed to ensure the business is viable?  It’s also important to understand what cash reserves will be required to cover the ‘lag’ period that inevitably exists between starting a business and growing it to a level that is sustainable. In other words how long can you survive in the business with minimal income?    It’s important to remember that most businesses will need 12 to 18 months to reach profitability.

Chris Deere, Director – The Alternative Board Auckland South

There is a lot to think about before starting your own business and it can seem overwhelming.  Talking to experienced and like-minded professionals can make a big difference.  Contact The Alternative Board today to learn more about peer-to-peer advisory groups that bring together business owners in confidential group settings.

Call us on 0800 822 929 or email [email protected]

Activate Auckland

Activate Auckland

Activate Tāmaki Makaurau, the agency established to implement the Government’s support package for Auckland businesses, is now up and running.  The $60 million package designed to assist Auckland businesses through this Covid transition period enables businesses to apply for up to $3,000 for business advisory and planning support and $4,000 for the implementation and execution of that advice.

Your business can access expert advice and support in the following areas: 

  • Business Planning, Strategy and Continuity (e.g. workforce planning, risk management, new products, new markets, new opportunities, operational improvements) 
  • Financial Planning and Cashflow Management (e.g. budgeting, forecasting, scenario planning) 
  • HR and Employee Relations and Legal (e.g. people leadership, advice about attracting and retaining staff, contract law, legal requirements, COVID-19 framework guidelines) 
  • Business Hibernation or Exit (e.g. liquidation plan and succession planning advice) 
  • Marketing Advice (e.g.  marketing strategies, value proposition development) 
  • Digital Marketing (e.g. digital marketing strategy, website strategy) 
  • Digital Enablement (e.g. digital productivity, client interaction strategy, operational digitisation, cyber security)  
  • Health and Safety Advice (e.g. working within COVID-19 framework guidelines) 
  • Health and Wellbeing Advice for your business to support your workforce (e.g. to develop plans to support wellbeing and build resilience of your employees) 

To get started visit Activate Tāmaki Makaurau here.

It’s been a long, hard road for many Auckland businesses.  If your business is one of those adversely affected by the events of 2021 we’d love to assist you to get your business moving again. The Alternative Board is registered to provide both advisory and planning support and the implementation and execution of that advice under the following categories:

  • Business Planning, Strategy and Continuity
  • Financial Planning and Cashflow Management
  • Business Hibernation or Exit
  • Marketing Advice

You can contact our Auckland Facilitator/Coaches here.

Formalising Business Systems

Formalising Business Systems

If as a business owner you think you’re working too hard for fewer rewards it might be time to invest in documenting your processes.  Founder and Process Architect at Bedrock, Rachel Brunel, recently joined our Tuesday Talk to outline the benefits of doing just that!

You can download a copy of Rachel’s presentation below.

Unlocking New Zealand with Cameron Bagrie

Unlocking New Zealand with Cameron Bagrie

Economist Cameron Bagrie provided members with some keen insights into current operating conditions at our recent Tuesday Team Talk. Cameron’s theme was ‘Unlocking New Zealand’ and key takeaways included:

  • Auckland’s lockdown will disrupt usual seasonal cash flow patterns for businesses with pressure building as lockdown continues.
  • A move away from housing as a source of wealth creation is required in favour of the productive (business) sector. This change is hard to imagine at present but inevitable with housing testing economic and social boundaries.
  • With Covid’s impact constraining the supply of products and labour, expect annual inflation in NZ to remain sticky around 3% and become the new normal.
  • Credit conditions are at their lowest point ever with banks favouring housing loans.
  • Education is one of the keys to NZ’s future. Declining school achievement is a real concern.

Members had the chance to quiz Cameron on some of the points and discuss how, as business owners, they’ll be tackling some of the issues.

Small businesses look beyond COVID-19 with confidence

Small businesses look beyond COVID-19 with confidence

For the third month in a row, small-to-medium size businesses outside the hard-hit sectors of retail, tourism and hospitality are proving confident, optimistic and actively planning for their future beyond COVID-19.

Our September Pulse Check shows exceptional levels of confidence and optimism with business levels booming or the same as last year, relatively unchanged levels of employment and sustained sales.

More than 80% of you are confident you’ll make it through, more than half report sustained or improved business levels, nearly two-thirds are optimistic about the next twelve months and 65% are already working on future strategies and getting business plans in place.

On the downside, 2020 has taken a toll with business owners feeling exhausted and that’s a real concern. Government support and business advisors have helped get through the difficult days of 2020 but despite weathering exhaustion, lockdowns, alert level changes and varying levels of uncertainty, you’re not giving up and have your head down, planning your way to the future.

For some, the forthcoming election, mainstream media stories and government policy are reducing confidence, while for others, their own resilience drawn from past experience, government policy, and the thought of open borders is a confidence booster.

Stephen James observed: “Our members are, for the most part, outside the sectors acutely affected, such as retail, tourism and hospitality. It may seem that member confidence levels and optimism are at odds with other commentary but our small business owners are efficient and resilient because they have to be. Small business owners regard their employees as family, do their utmost to retain them and are able to adapt and evolve business practices swiftly with the right support, even among those hardest hit.

“It’s heartening – and speaks volumes for business owners – that so many have got through with relatively unchanged levels of employment, due in part to the government support people have  turned to and a willingness to change where necessary.

“One of our priorities will be to help business owners cope with the high levels of exhaustion they’ve reported. We see this as a danger area as, no matter how resilient they may be, working through an ongoing crisis is hard and it is draining. Supporting our business owners helps them to help their business, so developing strategies and solutions to what we know will be an ongoing challenge is an area we will be working on with our boards and through our coaching sessions”.

The September Pulse Check surveyed 266 of our members and associates between September 18 – 27 with a confidence level of 90% and a 5% margin of error. You can download a copy of the results in full here.

The Alternative Board conducted the September Pulse Check survey of 266 of its members and associates between September 18 – 27 with a confidence level of 90% and a 5% margin of error.

Author: The Alternative Board