Start your business as you mean to go on
If you create good habits when starting a business, it will pay dividends in both financial and operational success. Similarly, bad habits will waste time, energy and decrease profitability to the extent that a business may fail.
It is important before setting out in business to have a plan which includes reference to the varied roles within the business.
Businesses usually contract for the provision of goods or services in exchange for payment. The manner in which these transactions are conducted is essential for its’ long term sustainability. All businesses are reliant on cash flow. A profitable business must ensure that it receives more income than it expends.
New businesses often concentrate exclusively on sales and do not pay attention to the other aspects of the business. This may include staff; premises; tax; regulatory involvement; accounting; service levels and more. This is understandable as most small businesses do not have the time or money to invest in such areas.
Start-up businesses often ‘survive’ the first year or two due to the value of the contracts that it services. Significant problems may then arise when such businesses grow. Therefore, the exposure to risk is increased with the size of the organisation and value of contracts. It is commonly the case that a reasonably successfully business can become insolvent following a failure via a customer on a large contract.
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Even if it may not seem essential at the time, it is good practice that you have the following, of this (non-exhaustive) list:
- Set of terms and conditions – which are given to customers and form the basis of the contract.
- For business premises: a clear lease or license agreement – which explains all obligations for rent, repair and any costs payable on termination.
- Employee contracts with job descriptions and a company handbook.
- Employers/Public liability insurance and any other regulatory insurance to cover negligence/malpractice – for instance, professional indemnity insurance.
- Letter headed paper with details of the company number, registered office and VAT registration details.
- A good invoicing and credit control procedure.
- Website and corporate branding.
- Accountancy package and/or a bookkeeper.
- Marketing strategy – where you clearly understand your target client and have branded and designed all marketing materials to target this prospect.
- Training Programme to keep standards high and current.
- Health and Safety including risk assessments and first aid.
- Contingency Plan for what happens should disaster strike – think illness, incapacitation, fire, theft, loss of telecoms, business interruption of any kind, etc.
- IT security – if you depend on IT as part of your business (even emails and accounts) then you MUST ensure you have files backed up and off site.
It may feel overwhelming to introduce such procedures at the start of a business, but to plan and implement the inclusion of these will help safe-guard your business for the future.
Problems in business are inevitable but prevention is better than cure. When problems arise, the process for resolving these issues will be more effective and prompt due to previous planning.