16-08-2006
How to make your business dream a reality
A business starts with an idea. And that idea must be watertight before investing precious time and money into attempting to make it a money-making reality.
The first step is to bounce the idea off as many people as possible, looking for candid and insightful thoughts, rather than diplomatic praise. The former can mould and progress the concept, the latter will only plaster over any cracks.
Seek people with expertise in the appropriate marketplace and sell it to them as if they were prospective investors, continually sharpening your pitch. You need to be able to enthusiastically describe an idea in order to sell it.
Choosing appropriate business partners is even more important than asking the right people about the initial thought. Friends and family may find it harder to criticise, while management stress can shatter the bonds of friendship.
After joining forces with a suitable team, it is vital to outline a viable business plan setting out targets and markets, the attributes of the key product, as well as to compile revenue projections and competitive differentiators.
Once the firm has a creative and catchy name, a good start-up lawyer is recommended to establish the key legal corporate structures that will assure prospective investors.
Long-suffering friends and family are often the first financial recourse for a new business owner, however to save potential strain on your relationships there are a variety of other options.
When approaching a bank for a loan, bear in mind that their decision will be based on your business plan, so ensure that this is thoroughly researched.
If the company has no assets, the debt may need to be secured against personal property, making it a 'personal loan for business purposes'.
Should you decide to secure debt against extant company assets in a debenture, bear in mind that the provider could force the company into insolvency in order to retrieve the funds.
Angel investors or venture capitalists are another potential source of initial company funding, but will typically take a stake in the firm in the region of between five and ten per cent.
Finally, one of the cheapest ways to get a business off the ground is to lease equipment, machinery or office space with which to churn out prototypes and pilot projects. As well as lowering overheads, this technique can also offer tax benefits.
© Adfero Ltd 2006
