Starting a business is risky at best; but your chances of making it go will be better if you understand the problems you’ll meet and work out as many of them as you can before you start.

Here are some questions and work-sheets to help you think through what you need to know and do. Check each question if the answer is YES. Where the answer is NO, you have some work to do.

How About You?

• Are you the kind of person who can get a business started and make a go of it?
• Think about why you want to own your own business. Do you want to badly enough to keep you working long hours without knowing how much money you’ll end up with?
• Have you worked in a business like the one you want to start?
• Have you worked for someone else as a foreman or manager?
• Have you had any business training in school?
• Have you saved any money?

How About the Money?

• Do you know how much money you will need to get your business started?
• Have you counted up how much money of your own you can put into the business?
• Do you know how much credit you can get from your suppliers–the people you will buy from?
• Do you know where you can borrow the rest of the money you need to start your business?
• Have you worked out what net income per year you expect to get from the business? Count your salary and your profit on the money you put into the business.
• Can you live on less than this so that you can use some of it to help your business grow?
• Have you talked to your bank about your plans?
• How about a partner? If you need a partner with money or know-how that you don’t have, do you know someone who will fit – someone you can get along with?
• Do you know the good and bad points about going it alone, having a partner, and incorporating your business?
• Have you taken legal and accounting advice?

How About Your Customers?

• Do most businesses in your area seem to be doing well?
• Have you tried to find out whether businesses like the one you want to start are doing well in your area and in the rest of the country?
• Do you know what kind of people will want to buy what you plan to sell?
• Do people like to live in the area where you want to open your business?
• Do they need a businesslike yours? If not, have you thought about starting a different kind of business or going to another area?

Particularly when sales are down, you must be “hard-nosed” with people trying to sell you luxuries for your business. When business is booming, you undoubtedly will allow sales people to show you new models of equipment or a new line of supplies; but when your business is down, skip the entertaining frills and concentrate on the basics.

Great care must be taken however, to maintain courtesy and allow these sellers to consider you a friend and call back at another time.

Your company’s books should reflect your way of thinking, and whoever maintains them should generate information according to your policies.

Thus, you should hire an outside accountant or accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory. Such an audit or survey should focus in depth on any or every item within the financial statement that merits special attention.

In this way, you’ll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.

Many small companies set up advisory boards of outside professional people. These are sometimes known as Power Circles, and once in place, the business always benefits, especially in times of short operating capital.

Such an advisory board or power circle should include an attorney, a certified public accountant, civic club leaders, owners or managers of businesses similar to yours, and retired executives.

Setting up such an advisory board of directors is really quite easy, because most people you ask will be honored to serve. Once your board is set up, you should meet once a month and present material for review.

Each meeting should be a discussion of your business problems and an input from your advisers relative to possible solutions.

These members of your board of advisers should offer you advice as well as alternatives, and provide you with objectivity. No formal decisions need to be made either at your board meeting, or as a result of them, but you should be able to gain a great deal from the
suggestions you hear.

You will find that most of your customers have the money to pay at least some of what they owe you immediately.

To keep them current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they’re falling behind.

If you develop such a habit as part of your operating procedure,
you’ll find your invoices will magically be drawn to the front of their piles of bills to pay.

While maintaining a congenial and courteous attitude, don’t hesitant, or too much of a “nice guy” when it comes to collecting money.

Time really does equal money.  Ask yourself what the best use of your time really is because it is YOUR time that equals money. The health of your bottom line is directly affected by the way that you choose to allot your working hours.

Your job is to grow your business. Your job is to make those contacts that will make you money. Your job is to conceive ideas and bring them to fruition. Your job is to close that deal.

You probably aren’t qualified to be an event planner or a travel agent. When you decided to start your own business that did not automatically make you a ‘jack-of-all-trades’.

You can waste a lot of your valuable time on tasks that you are not very good at. You are the idea man/woman. It IS your job to make your business grow and you’ll be good at that provided that is where you use your time and direct your energies.

If you insist upon doing everything yourself, whether you are good at it or not, you will use up all of your thought and energy and have nothing left to do the things that only YOU can do to make your business grow.

Hire an accountant or a bookkeeping service: Every business must keep a record of its day to day financial transactions and even the smallest of transactions add up to big tax deductions over the period of a year.

You can’t simply file everything under ‘miscellaneous’ and you can’t spend an hour or so every day taking care of just mundane bookkeeping duties either. Bookkeepers and accountants only charge for the time that they actually spend working for you. Usually they have many clients.

If they spend one hour working on your records then you will only be charged for that one hour. YOU aren’t a bookkeeper or an accountant and you would have likely spent three or four hours doing the same tasks and then with questionable results. Hire an accountant or a bookkeeping service!

There are only just so many hours in a day and you can only spend just so many of those hours working at making your online business successful. There IS still life outside of business.

You have friends and family that do require some measure of your time. That makes it even more vital that you use your time to make your business grow and not waste your time by spending doing the everyday tasks that can take so much of your valuable time.

Something else that’s a very good business practice, but which few business owners do is to methodically build a credit rating with their local banks.

Particularly when you have a good cash flow, consider borrowing £100 to £500 from your banks every 90 days or so. Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month or so before it’s due.

By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice.

This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable.

By all means, join your industry’s trade associations. Most of these organizations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends.

If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall. Customers like to see such “seals of approval” and feel additional confidence in your business when they see them.

Long before the cash flow in a business, large or small, starts to tighten up, the money management of that business has to be run as a “tight ship.” Some of the things you can and should do include protecting yourself from expenditures made on sudden impulse.

We’ve all bought merchandise or services we really didn’t need simply because we were in the mood, or perhaps in response to the flam-boyancy of the advertising or the persuasiveness of the salesperson.

Then we sort of “wake up” a couple of days later and find that we’ve committed hundreds of pounds of business funds for something that’s not essential to the success of our own business, when really pressing items had been eagerly waiting for those pounds.

If you are incorporated, you can eliminate these “impulse purchases” by including in your by-laws a clause that states: “All purchasing decisions over (a certain amount) are contingent upon approval by the board of directors.”

This will force you to consider any “impulse purchases” of serious cost, and may even be a reminder in the case of smaller purchases.

If your business is a partnership, you can state, when faced with a buying decision, that all purchases are contingent upon the approval of a third party. In reality, the third party can be your partner, one of your department heads, or even one of your suppliers.

If your business is a sole proprietorship, you don’t have much to worry about really, because as an individual you have three days to think about your purchase, and then to nullify that purchase if you think you don’t really need it or can’t afford it.

While you may think you cannot afford it, be sure that you don’t “short-change” yourself on professional services. This would apply especially during a time of emergency.

Anytime you commit yourself and move ahead without completely
investigating all the angles, and preparing yourself for all the contingencies that may arise, you’re skating on thin ice.

Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you.