Last week I hosted a business seminar that allowed me to speak to people on Main Street and see the current environment through their eyes. There is understandably quite a bit of confusion and hesitation amongst business owners looking to grow and manage their business effectively, so I thought I’d go back to basics and talk a bit about strategies and setting up for success.
Firstly, have a plan: A plan can change and it can be improved as you move forward but without it you really don’t have a sense of where you’re trying to go. You need a plan.
A plan should start with your goals. This should include a clear sense of what you want from your business, financially, professionally and personally. I have known people who have focused on simply one of these, and they’ve become demotivated. You must define how much money you want to earn from this enterprise; you must have a clear goal about what kind of professional glory you are pursuing; and you should define personal happiness before starting a business.
A plan must also include marketing plans, key employees, financial and corporate structures, protections such as insurances and a really good system that tells you if you’re succeeding.
This last one is something that many first-time business owners ignore. However, adopting key performance indicators and judging your business against them is crucial. It’s the method by which you judge whether the plan is working.
Your plan should also delineate shareholders, investors, partners and the exit strategy.
I advise business owners to think carefully about who they take on as a partner or investor – the right partner can be the best thing you ever did because they’re a mentor, a war buddy and someone to share the pain and the wealth with. You want a good partner, but you want to be a good partner too. The same goes for investors – the best one may not be the one with the most money, but the best contacts and the most experience.
And then there’s exit strategy. Anyone who’s already owned a business will tell you that it’s worth thinking about your exit before you start a business. Many business ventures end in organised liquidation, trade sale or internal buy-out. And how that works is dependent on the structure and decisions about shareholding and rights etc.
It’s worth discussing this with your accountant or solicitor before starting a business. And I always advise business owners to state in their plan what value they want to build the business to. That is to say, if a large business was to bid to buy your business, what price would you want and what kind of sale would you want?
Once you start planning for these goals, you realise that you have to make certain structural decisions before you start the business.
So I think very highly of planning. I’ve started, invested in and sold many businesses and I’ll do it all again in the future. And I don’t take any serious steps until I have a plan – a road map for success.
Lastly, let me give you a good template for a business owner’s personality: Work, Play, Fight, Love, Believe.
You must want to work, you must plan for downtime away from work, you must be prepared to fight for what’s right and for your business, you must have a love or a passion for what you’re doing, and you must arise each morning with a ton of belief in what you’re doing and where you’re going. Good luck!
* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on any queries you may have.