Business Planning – Minimize Financial Risks

In the current economic climate it is more important than ever to take steps to minimize your financial risks in business. A number of key areas to address follows:

• Prepare a business plan detailing: the business case; start up funding needs; and ongoing cash flow requirements. Don’t forget to allow for VAT in the cash flow forecast.

• Make sure you do detailed market research to verify that there is a market for your products / services

• Don’t take on a business partner unless you are sure they add value to the business.

• Operate your business from a home office for as long as practicable. You can meet clients at their premises, at a good hotel, or at an office rented on hourly basis. Technology and outsourcing will allow many operations to function remotely from your office

• If you have to take premises negotiate the shortest lease period or break clauses as possible.

• Wherever possible obtain payment for goods and services up front, or at least a deposit. Do not offer extended credit terms

• Make sure sales invoices are issued immediately on work completion. Lack of cash flow causes many business failures so consistently follow up until payment is received

• Continuously measure staff performance and be prepared the lay them off if they do not achieve the required return on investment. After one year in employment (including the notice period) it is potentially much more difficult to make staff redundant

• Continuously evaluate and improve business processes, with the mindset to add value ready to sell the business.

The above is not an exhaustive list however if implemented will go a long way towards assuring the long term survival of the business.