“If you fail to plan, then you plan to fail”

This saying has never been so true for a business start up. Many businesses fail because of problems that could and should have been foreseen at the initial planning stage. When developing a business plan, it is best to do as much of it as you can yourself. If you get help with any element of it, make sure you understand every word and figure used, as the buck always stops with you when its your business.

As the Wexford Enterprise Centre is a hub for business start ups and entrepreneurs we have garnered a lot of experience on what it takes to move from the light bulb moment to incubation or start up mode and we would like to share these with you. As every need varies this section is intended as a guideline of the areas to be considered before you commit your first euro to flighting your idea. Often the easiest element is having that eureka moment, however turning it into viable business can be a lot less straight forward.

The first step is check if you have what it takes to get a new idea off the ground.

  • Commitment
  • Determination
  • Self confidence
  • Action and Success orientation
  • Measured risk taker
  • Responsive to suggestions & criticism
  • Enjoy challenges
  • Enjoy interaction with people
  • If you have ticked most or all of these you are half way there!

The second step is to assess if your idea is viable, to do this you will need to ask yourself questions like these:

  • What does success look like to you?
  • What resources will  you require to start and operate the business?
  • What are the key challenges you will need to address?
  • Where you are going to find sufficient customers, indeed who are these customers?
  • Where the finance is going to come from?
  • What profit can you achieve and in what time frame?
  • When exactly will you need money available to meet your financial commitments?
  • Who can you form alliances with, or get support from, to increase your chances of your success?

Financial Matters

Cash flow is the flow of money in and out of your business.  The efficient management of this area is critically important, as a business must ensure it has sufficient funds available to meet its financial commitments when they fall due. Remember cash flow is not profit. Profitable businesses can and do fail because of lack of attention to cash flow. In fact it is estimated more businesses fail because of cash flow difficulties than for any other reason.

Typical causes of cash flow problems

  • Underestimating your initial start up costs and investment needs.
  • Underestimating overhead requirements and costs.
  • Failing to or incorrectly estimating what level of drawings or salary you need to withdraw from the business and when.
  • Over optimistic sales targets.
  • Underestimating purchases requirements.
  • Underestimating credit terms from suppliers.
  • Overtrading i.e. undertaking more sales than your business can realistically finance and process.
  • Bad work scheduling.
  • Insufficient attention to Tax deadlines.
  • Not allowing for peaks and valleys in trading periods.
  • Overstocking raw materials or finished goods.
  • Others.

If your business involves giving credit, for instance while a service is being provided – or for a period after the sale of product(s) or service(s), then you need to consider a credit control management strategy.

For example:

  • Is the sale by credit really necessary?
  • Carry out a credit check on the customer and set a credit limit if possible.
  • State clearly at quotation/pre-commencement stage what payment and credit terms apply.
  • Can you minimise your credit exposure by use of deposit payment or a stage payment system?
  • Establish clearly what payment terms are stated in the debtors/customers purchase order.
  • Strictly apply your credit terms. (Don’t encourage “slippage” by inaction)
  • Be prepared to use legal resources for debt recovery if necessary.

Depending on the type of business structure you intend using, the following are the types of taxation you may encounter:

Sole Trader & Partnership:

  • Income Tax (including PRSI/USC)
  • VAT
  • PAYE/PRSI/USC – for your employees only, not the promoter(s)

Private Limited Company:

  • Corporation Tax
  • VAT
  • PAYE/PRSI/USC for your employees and for you as an “employee” of the company.

Just as in your private life, your business life will involve your business entering into various relationships with others eg. regulatory authorities, Revenue Commissioners, banks, company advisors, customers, suppliers, staff, etc. These relationships will involve legal obligations as well as good business practices.

Legal obligations can include:

  1. Meeting all regulatory authorities’ requirements
  2. Meeting all Revenue Commissioners’ requirements
  3. Honouring all contractual obligations (sales and purchases) you enter into
  4. Provide goods and/or services that meet at least minimum legal requirements, ref Sale of Goods and Supply of Services Act 1980
  5. Meeting all employment legislation requirements for employees, eg.
  • Registering employees with Revenue Commissioners
  •  Complying with Safety, Health and Welfare at Work Act 2005
  • Terms and Conditions of Employment Contract of Employment
  • Dismissal Legislation
  • Working Time Act
  • Organisation of working time (records)
  • Maternity/Paternity/Adoptive and Parental Leave
  • Redundancy
  • Equality
  • Holiday Entitlements
  • Part Time/ Temporary, Fixed Term and Contract Working
  • Minimum Wage
  • Employment of Young People

Every business needs to examine its insurance requirements to reduce potential financial exposure in the event of fire and theft, accidents and to fulfil legal obligations such as motor insurance and employers liability.

Business insurance can include cover for:

  • Fire
  • All Risk
  • Public Liability
  • Motor Insurance
  • Employers Liability Insurance
  • Product Liability
  • Key Man Insurance
  • Shareholder Protection

Many Insurance companies (and brokers) can provide business packages, which include some or all of these items and others, which may be relevant to your business. Your own personal insurance needs should be re-examined in light of starting a business.

Marketing at its simplest, can be defined as satisfying customer needs and wants at a profit. The principles of marketing can be summarised using the 7 Ps otherwise known as the Marketing Mix:

  • Product– what is the product or service you are selling?
  • Price– what price will deliver you a profit but at the same time provide value to the customer?
  • Place– where will you sell your product/service, what are your channels of distribution?
  • Promotion– how will people hear about your product
  • People – who are the people do you need to work with you? What sort of culture do you envisage for your business?
  • Physical Evidence– using testimonials to give credibility to your product or service
  • Process– how will you deliver your product, how will you manage customer complaints?

In addition to the 7P’s, consider these questions when preparing your marketing plan:

  • What market research have you undertaken?
  • Who is the target market(s) you plan to serve?
  • Who are your competitors and what makes you different from them?
  • How do you plan to market and promote your business?
  • What is your pricing structure?
  • What makes your product/service unique – what is your unique selling point (USP) ?
  • Where will the business be located?
  • Who can you collaborate with to deliver your marketing strategy?