3. Preparing to Manage
Managing your business includes finding the right premises, finance, equipment and employees, as well as organising internal bookkeeping and managing your cashflow.
Your business premises
What size and location would best suit you? Your business type may dictate the type of premises you require.
Consider the potential advantages of running your business from home: convenience, reduced overheads, less risk. However, there may be local authority restrictions to take into account, as well as tax and insurance issues.
Getting equipped
Youfll probably need a computer and transport to get started. There are five finance choices available: buy, borrow, rent or lease, hire purchase and contract hire. Analyse the pros and cons of each before you select a particular method.
Getting help
Business Link, Enterprise Agencies, Local Government, Chambers Of Commerce and local professionals such as accountants, solicitors, surveyors and other property specialists will be of help.
Talking to people who are already in business can provide an insight into potential mistakes and pitfalls. Your local chamber of commerce, local authority or enterprise agency may run business clubs and training sessions and many invite guest speakers to talk about topical issues.
Your business and the Internet
The Internet can provide many opportunities including:
Marketing your product or service.
Buying and selling online.
Financing your business
Inadequate financing, particularly of working capital, is one of the most common causes of business failure. A Business cannot survive without sufficient capital resources to help it launch and develop over time. It could be a year or more before your business starts to make a profit, a crucial period that must be properly funded. Most businesses are funded by a combination of the following methods :
Self-finance - Using your own money or personal equity.
Debt-finance - You borrow the money required. This may be via traditional bank loan or overdraft, Also , for a business without a track record available or unable to provide security, the small firms loan guarantee scheme may be available.
Your finance proposal - To convince any potential lenders to invest in your business, a business plan is fundamental. Although lending policies vary, you need to address the criteria shared by all when a borrowing proposal is considered:
Managing your finances - Regular reviews and an understanding of your financial position is key to your business success.
Keeping records, introducing accounting procedures and working to a financial planning strategy are the best ways of monitoring the performance of your business. There are many specialist computer programmes which are easy to use and designed and developed for small business. Whichever system you use, an accountant can tell you if the method you have chosen will give you the right information, and help you complete your tax returns!
Stock management
To make a reasonable profit, you need to find the right stock levels, ensuring that you can meet customer demand without having too much capital tied up in stock.
Costs involved include storage, insurance and tax liabilities. To help you achieve the right balance:
Avoid the increased financial risks associated with high stock levels.
Keep products in stock with fast turnovers and keep good relations with several suppliers.
Make the most of bulk buying offers, but make sure youfre not eover-stockedf.
The importance of pricing
You need to find the right price for your product/service to maximise revenue whilst remaining competitive.
The following factors will help you to determine what this is:
The amount of your overheads and costs.
The salary you require to take.
Are your products exclusive, budget or somewhere in the middle? Pricing is important in terms of image too!
What are your competitors charging?
How much are your products worth to your customers eg. what will they be prepared to pay?
Other factors to consider
You also need to ensure that you have the financial resources available to meet your personal and business tax obligations when they fall due.