Our expert takes you through the essential dos and don'ts of corporate start-up, from the initial idea and hiring of staff to strategies for expansion and legal considerations. Sandi Saksena a member of the Million Dollar Round Table advides on deploying and growing personal funds
Are you at a crossroads in your life? Hate your job? Want to take time off? Dealing with stress? Want some social entrepreneurship? Contemplating starting a business after retirement?
If your answer to any of these questions is yes, this is the time for a bit of self-analysis. Think about the types of things that you love to do whether at work, at home or in the community. List these things briefly. And do not worry if some topics are starting to show again in each section; that just means you have some really focused ideas about what you want in life.
Experts believe the foundation for your entire business begins with your life plan. If you can create a business that fits in perfectly with what you want out of life, you are much more likely to work harder at it and be successful.
List the abilities, experience and strengths you can build on to attain that ideal life. Do not restrict yourself to skills from your professional life list skills developed in your personal life as well. It may be a combination of skills that leads you to a start-up that's best suited to your needs.
Examine your track record what you have experience in doing. List those accomplishments in your professional and personal life of which you are most proud. Pay close attention to successes you have had that would be helpful in starting a business and managing it successfully.
Next put down your business idea. Yes, I mean write it down (I myself thought this was all hogwash, but when I started following this advice the results were amazing).
Keep a notebook and pen by your bedside or even in the loo and build on that by answering these questions:
What is your business idea? How does your idea address a need? What model suits you best? What is so different about what you offer? How big is the market and how big can you grow? What will your role be? Who is on your team? Where is the start-up money coming from? How much money do you need? How much will you make? How will you measure your success? What are the key mile stones? How will customers buy from you, and how much will they pay?
You cannot construct a building without the drawings; similarly, you cannot create the edifice of your business without a solid business plan. Include the following:
Financials
Distills your strategies and assumptions into how much they'll cost and how much money they'll make you in the course of your new business.
The financials section should map out your first few years of business and contain:
A written narrative of key business assumptions Income statement Balance sheet Statement of cash flow Cash management report To forecast and manage the financial sides of your startup business, create a cash management report. This looks at how cash moves in and out of your business on a monthly basis. By preparing a cash management report before the launch of your business, you'll be able to determine if you'll need to raise outside capital, when you'll need it, and how much will be required.
Personnel
Describes the management team (existing or future) and any other key personnel who will be instrumental to the success of your business.
Includes the role and responsibilities of each team member, as well as any background information that illustrates why they are qualified for the position they hold.
Staff
If you are planning to employ other staff now or in the future, employment screening is especially important when you are starting because you do not have ongoing revenues to offset mistakes.
Many start-ups skip screening because they are unfamiliar with it or do not know how to have it done at a reasonable cost. This can open you up to resumé fraud.
As we always say: plan your life first, and then plan your business. Some of the most successful and happy people I have come across are entrepreneurs who created a business that is in complete synchronicity with what they want out of life.
Exit strategy
Puts into words what you see as the ultimate destiny of the company, especially as it may affect those who finance your new business, as well as other equity holders in the start-up.
Professional can help
This is my favourite part. Most start-ups, at least in this region, cut corners and turn professional overnight. People don't take the advice of a lawyer or an accountant simply because it seems like an unnecessary expense at the time. The attitude is: when business picks up, such services will be useful.
Wrong. Lawyers and accountants are not magicians and cannot make your problems go away with a sweep of the proverbial wand.
Do you know the laws that may affect you? There are many laws that are applicable to owners of small businesses. It is best to consult with professionals to determine which laws will be applicable to you, what permits you will need to start a business and what to do to comply with the various rules.
Your professionals can also be of significant assistance in helping formulate your business plan by advising on the appropriate form of organisation, including the roles of each partner - such as the control of each party, the areas in which each will have primary responsibility and the ownership of each party. If you are acquiring an existing business, they can advise on good and bad terms of the proposed deal and help negotiate with the seller and his or her lawyer.
Finally, they can advise on your need for capital, both at the inception of the business and what additional capital will be needed if the business is successful and you decide to expand.
Your lawyer should draw up your partnership agreement or form your corporation. He or she will help advise on the best form of ownership, assist in negotiations to buy an existing business and review documents if you are buying a franchise. He or she will also advise on buy-sell agreements and draft appropriate documents.
If your business requires renting an office, store or factory, your attorney should review and approve your lease document. A lease obligation can become your biggest liability, and your attorney can help negotiate fair and protective terms. For example, if you anticipate growth, your lease should include a provision for how expansion requirements will be handled.
Your new business may require specialised legal advice to establish and protect your intellectual property rights. Intellectual property includes your ownership rights to your business name, trademarks, copyrights and patents. Intellectual property law is a specialised field, and you may need a lawyer who specialises in these matters.
Your accountant can be an important advisor in start-up decisions, such as deciding the appropriate division of the capital you contribute to a corporation between stock and loans. He or she can determine the best form of ownership; help set up the books and records of the business; advise on computer needs for accounting purposes; advise on compensation of owners; prepare financial statements; forecast cash needs, including whether to expand or add employees; and determine profitability and whether you are really making money in your business venture.
Do I need a partner?
The most common reason for joining with another person to start a business is the concept of safety in numbers. In the words of Solomon: "Two can accomplish more than twice as much as one.
If one fails, the other pulls him up; but if a man falls when he is alone, he's in trouble. And one standing alone can be attacked and defeated, but two can stand backto-back and conquer. Three is even better, for a triple-braided cord is not easily broken." You will not need to be at work at all times. You will have someone else who will share the load and permit you to take a holiday and have quality family time.
You will also have a motivated co-worker, not just someone who is earning a salary. Partners can also be advantageous when they have complementary skills. It may be necessary to have a partner to contribute capital and share the risk. The other side of the coin is you will have to share the rewards if the business is successful. You will not have total control over the business, particularly if you and your partner have difficulty in making joint decisions.
You will have to share the recognition if the business is successful. A partner can be a disaster if they have poor judgement. Also consider: are your work habits compatible and are your strong points similar or complementary
© Emirates Today 2007
