Business plan. Business model. All sound a bit complex? Tried asking your good friend Google for help but it was still too overwhelming? The trick is keeping it simple because, as we all know, failing to plan is planning to fail. It’s usually easier to start by deciding what you don’t want to do and then your business plan will become clear. What you don’t want to do is have no plan at all and follow one of these deadly paths which, in our experience, are common occurances within Aucklands business community:
- Default Business Plan – Buy a business
- Buy a business.
- Pay way too much for it. This normally happens if you, don’t get help from a good chartered accountant and, simply pay whatever the bank lends you. It usually involves an element of, what we call, Fantasy-Forecasting. This happens when you predict wild profits because you believe you’ll run the business so much better than the current owners.
- In reality, sales end up below your expectations and perhaps your relationship management skills aren’t quite as finely honed as you thought because you start losing key customers and staff.
- The downward trend doesn’t improve so you employ a business mentor and hope they’ll magically turn your business around without you having to change a thing.
- You hang in there way too long hoping things will get better. They don’t.
- You start falling behind on loan repayments.
- Fail. Lose everything.
- Default Business Plan – Copy your Boss
- Quit your job and start your own business by copying where you used to work. Fine if you had a really thorough understanding of the business model. Most employees don’t. They generally underestimate the skill of getting customers to part with cash.
- Typically, the business does really well initially.
- Everyone rejoices in your success and you start enjoying all the extra money.
- You might even start opening new businesses.
- However, without innovation, revenue inevitably starts to fade.
- This is a problem because you’ve committed to higher outgoings (like a fleet of new cars or an eight-year-lease on your business premises) so cash gets tight and you fall behind on tax. The IRD says nothing for approximately three years.
- Then, boom! The IRD hunts you down and you end up spending years trying to pay off your tax bill which has quadrupled with penalties and interest.
- Default Business Plan – Follow your Passion
- Take something you love (cooking, film making, interiors) and decide to make a business out of it.
- Invest heavily in the easy stuff like a website, business cards and advertising.
- Refuse to think about the business model because if you do, you might just realise that, even at full capacity, the most you’ll make out of your business is less than you’d earn in a job. If for example, you produce greeting cards you won’t want to know that you’re working for less than minimum wage if each card takes an hour to make and sells for $9.
- Hang in there pretending you have a valid business while perhaps your husband props up your business (and family) financially.
Need help with your business plan? We make it easy and can save you from failure.
Call us, Boutique Financial Chartered Accountants on +64 9 632 1137.
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