Planning for Start Ups
Did you know that one half of all new businesses fail within the first 3 years of trading? But with sound planning, some business know-how and, most important of all, a great dream you can dramatically improve your chances of surviving, growing and succeeding.
Look to the long-term
The primary task in managing a business is deciding its long-term objectives. If you can imagine what you want your business to look like in 5 years time you have more chance of achieving your dreams.
The primary task in managing a business is deciding its long-term objectives. If you can imagine what you want your business to look like in 5 years time you have more chance of achieving your dreams.
Create your vision
You need to think about what products and services you will be offering and to what type of customer. Consider your future market position and competitive advantage. Do you envisage expanding and if so what turnover, outlets, staff and annual growth rate to you anticipate? Think big and dare your dreams to come true.
You need to think about what products and services you will be offering and to what type of customer. Consider your future market position and competitive advantage. Do you envisage expanding and if so what turnover, outlets, staff and annual growth rate to you anticipate? Think big and dare your dreams to come true.
Plan for success
On any long journey a map is essential. So take your dream and plan the main steps you will need to take to get from where you are now to where you want to be in 5 years. Then plan this in detail for the next 12 months. Include a cash flow projection, so you can be sure you don't run out of cash along the way. Review what you have achieved every 6 months and plan the next stage of development.
On any long journey a map is essential. So take your dream and plan the main steps you will need to take to get from where you are now to where you want to be in 5 years. Then plan this in detail for the next 12 months. Include a cash flow projection, so you can be sure you don't run out of cash along the way. Review what you have achieved every 6 months and plan the next stage of development.
Review your customer profile
Most businesses can identify future outgoings. Sales projections are more difficult. Market research helps here. Review the profile of typical customers and note any changes or gap.Look at your sales pattern. Has it changed dramatically? If so, how will you redress the balance? Are you overly dependent on any specific products or customers? Who are your most profitable customers? Do you look after them to ensure repeat business?
Most businesses can identify future outgoings. Sales projections are more difficult. Market research helps here. Review the profile of typical customers and note any changes or gap.Look at your sales pattern. Has it changed dramatically? If so, how will you redress the balance? Are you overly dependent on any specific products or customers? Who are your most profitable customers? Do you look after them to ensure repeat business?
Identify your most profitable products/services
Do you concentrate enough on these to maximise profits? Exactly how many enquiries do you get anyway? How many of these ask for quotations? How many go on to buy? What is stopping the others from going from one stage to the next?
Do you concentrate enough on these to maximise profits? Exactly how many enquiries do you get anyway? How many of these ask for quotations? How many go on to buy? What is stopping the others from going from one stage to the next?
Think about your image
How can you improve the image people have of your business? Why do clients buy? Why don't they? How important is price or quality when closing a sale?
How can you improve the image people have of your business? Why do clients buy? Why don't they? How important is price or quality when closing a sale?
Consider the competition
How do you compare with your competitors? Can you learn from them? Why do people buy from them, not you?
How do you compare with your competitors? Can you learn from them? Why do people buy from them, not you?
Managing price and margins
Pricing is a compromise between cost, quality, demand and competition. But when setting a price, remember to cover everything. A Rial free delivery service as a sales initiative still costs money to provide. Margins are very important. Often it is better to sell less at a higher margin.
Pricing is a compromise between cost, quality, demand and competition. But when setting a price, remember to cover everything. A Rial free delivery service as a sales initiative still costs money to provide. Margins are very important. Often it is better to sell less at a higher margin.
Managing discounts
Give discounts by all means but consider their real impact on profits. If you buy something for RO70 and sell it for RO100, you make RO30. If you offer a 10% discount, you give away one-third of your profit. So you have to sell 50% more to finish where you started.
Give discounts by all means but consider their real impact on profits. If you buy something for RO70 and sell it for RO100, you make RO30. If you offer a 10% discount, you give away one-third of your profit. So you have to sell 50% more to finish where you started.
Special promotional discounts
Quantity discounts soon become part of your customer's perception of your price structure. Special promotional discounts are better. Ideally set a time limit on them. This allows you to measure their real impact.
Quantity discounts soon become part of your customer's perception of your price structure. Special promotional discounts are better. Ideally set a time limit on them. This allows you to measure their real impact.
Manage cash flow
Your precious working capital should be funding your growth, not your customers'! Remember that customers cost you money until their invoice is settled. It is considered professional, not pushy, to ask customers to agree to your payment terms when taking an order. Get the invoice out the same day as delivery, clearly marking when payment is due. Give customers a credit limit, both in time and money. If they reach it, don't take new orders until the invoices are settled. Consider factoring your invoices to generate extra working capital.Give your bank confidence
Your precious working capital should be funding your growth, not your customers'! Remember that customers cost you money until their invoice is settled. It is considered professional, not pushy, to ask customers to agree to your payment terms when taking an order. Get the invoice out the same day as delivery, clearly marking when payment is due. Give customers a credit limit, both in time and money. If they reach it, don't take new orders until the invoices are settled. Consider factoring your invoices to generate extra working capital.Give your bank confidence
Your bank is there to help. To do this, they must have confidence in you. So even if you are not borrowing money, keep them informed. This is where your business plan comes into its own. It shows them the route map to your goal and they can use it to benchmark the stages in your journey. If you consistently reach the targets you set yourself, you will find it that much easier to raise finance when you need to fund growth in the future. Give your bank regular updates and provide accounts. Annual accounts show how you have managed the business historically. Regular management accounts will show where your business is today.
