Start Up Businesses

Start Up Businesses need to make sure that the preparation and planning stage is not rushed or skipped in some cases! Two key ingredients are a very good accountant and and excellent business expert. Before you do that have a look at these questions to test yourself you are in the right place in the first place!

Top Ten Questions to ask yourself when starting up a new business

Top Ten Questions to ask yourself when starting up a new business…..

1. What kind of person makes a business successful?
Research of successful entrepreneurs has documented that successful small business people have certain common characteristics. This checklist can not predict success, but it can give you an idea of whether you will have a head start or a handicap with which to work. How do you measure up? Ask yourself these questions:

  • Can I persevere through tough times?
  • Do I have a strong desire to be my own boss?
  • Do the judgments I make in life regularly turn out well?
  • Do I have an ability to conceptualize the whole of a business?
  • Do I possess the high level of energy, sustainable over long hours, to make a business successful?
  • Do I have significant specialized business experience?

While not every successful business owner starts with a “yes” answer to all these questions, three or four “no’s” and undecided answers should make you think twice about going it alone right now. But, don’t be discouraged. A business coach can help you focus on the goals that are right for you.

2. What qualities do I need to start up a new business?
Small business owners have many things in common. Below are some of the qualities you will need to be successful.

  • Willingness to sacrifice—If you enjoy working 9-5, do not go into business for yourself. Entrepreneurship often requires many more hours beyond the forty-hour work week.
  • Interpersonal skills—You will be required to interact with a host of people other than customers: lawyers, employees, salespeople. If you do not like talking to people you do not know, better keep your day job.
  • Leadership ability—You will be the one everyone turns to for the answers. Are you ready to call the shots?
  • Optimism—Being able to hang in there when business gets tough is an important quality in small business owners.

Compare your skills and expertise with others who are successful in similar businesses. Can you duplicate and surpass the capability of other successful businesses? What unique skills, or “edge,” can you provide to obtain a sufficient share of total market? Search the internet, review business journals, trade magazines and other comparative studies that identify the requirements to operate the business. From that information, derive a formula for the skills and traits you plan to incorporate into the business operation.

3. Is a business plan important and who should write it?
A business plan is important because it summarizes both your vision for the company and your blueprint for the company’s operating success. The business plan is a written guide that details the start-up and the future direction of your company.Who should write the plan? You, the entrepreneur. No one else knows your business idea and goals better. However getting help to write it will prepare you for the future and ensure it is fit for purpose.Although there’s no set format, a good business plan typically includes:

  • Cover page—Identifies your business
  • Table of contents—Organizes information for the reader
  • Executive summary—Provides a “big picture” view of the plan, highlighting the factors that will lead to success
  • Business background—If it is a brand-new business, include your background and skills
  • Marketing plan—Relates the business’s marketing strategy
  • Action plan—Summarizes how you will create and deliver your product or service
  • Financial statements and projections—Illustrates how the business will perform financially based on the plan’s assumptions
  • Appendix—Includes statistical analyses, marketing materials, résumés.

4. I dont need a bank loan, do I still need a business plan?
The fact that a bank or lending institution requires a well-executed business plan is a secondary consideration. The primary purpose of the business plan is to guide the owner or manager in successfully operating the business. Preparing the plan forces the writer to consider all aspects of the business and to confront any problems the plan highlights.For example, a monthly compilation of all known costs, over time, will indicate the revenue necessary to support these costs, plus a profit. This leads to the question of whether or not this revenue number is reasonable. If not, it may cast doubt on the viability of the venture itself.The business plan is a vital management tool that enables the manager to anticipate situations before they become problems-or worse yet emergencies. You need to know your goal very well indeed to ensure you get there and make new goals along the way to success.

5. How can I calculate my start-up costs and other expenses?
It is wise to find out what start-up costs you will incur before starting the business. Many a budding entrepreneur takes his or her life savings, or will borrow on the equity on their home before figuring these financial factors, only to find that they don’t have enough money. There are many web sites and other resources that provide guidelines and worksheets to help determine costs for your business.Each item on your proposed budget sheet should be researched. Closely estimated costs can be obtained from utility companies, trade associations, shopping and networking with other business people who may have already gone through this experience. Do not start buying until the investigation shows this venture is viable and you have all the information needed.

6. What do I need to know about financial statements?
First, you need to know which financial statements are important. They are:

  • Balance Sheet—shows the financial conditions of your business at a point in time
  • Statement of Operations (Profit and Loss Statement)—shows whether you made a profit during a specific period of time
  • Cash Flow Statement—shows what happened to your cash position during a specific period of time

You should have a basic understanding of each of these statements. When compared with statements from prior periods, you can determine whether something is happening in your business that needs your special attention.


Your accountant can prepare these statements for you from the business data that you supply. There are also a number of computer software programs that will help you generate these statements from your input of regular transactions—such as sales, deliveries, purchases, payments and payroll.

7. Is it important to do a monthly cash flow analysis?
Your businesses cash-flow cycle may differ substantially from the income statement projections. Even if the projected income statement shows a profit, it is possible that the cash flow for the same period is actually negative.The analysis of monthly cash flow can indicate whether your business will collect sufficient cash to pay operating expenses. It will point out specific months during the year when the business may experience operating cash shortfalls and, therefore, either require additional capital or excess cash reserves for payment of expenses. It will also show when you may be able to make debt reductions and when there is excess cash to make major purchases or expand operations.By developing a monthly cash flow projection, you can time cash needs and quantify the amount needed. The cash flow projection is an important management tool and must be developed with very realistic expectations. Sufficient cash is critical for a business to pay its expenses and to enable it to expand. If your monthly cash flow projections indicate frequent cash shortfalls, you should review the type of products and services that you offer, the mix of sales, the pricing and terms of the sale and your short-term borrowing needs.

8. How can I obtain cash to maintain and grow my business?
Develop a positive business relationshipwith your bank. Seek your banker’s advice even at times where you are not seeking funds. You may find that every time you go to your bank you speak to a different loan officer, so you should know them all.When the loan officer gets a promotion, you must start all over again with another person. If you want the bank to take an interest in your business, then you have to take an interest in theirs. How?

  • Know your banker—Take an interest in your banker as a person. Ask your banker to hold on to your account if he/she is promoted. When you go to see your banker, have your business plan and financial papers ready. Make it easy for your banker to see what you want and why. The bank wants to minimize its risk with regard to you and your business. This is where you have to sell yourself.
  • Know your bank—Know and understand your bank’s annual report. Know your bank’s business direction and plan. Know the bank’s lines of authority. Get on the bank’s mailing list. It’s an easy way to keep up with bank news.

9. Why is location one of the most important aspect of my business?
A good location can make the difference between a profitable and a bankrupt business. There are many questions to consider when choosing a business site. Use the questions below as a checklist for potential locations and then compare several sites.

  • Are there parking facilities?
  • Is transportation available and convenient?
  • Is the quality of police and fire service adequate?
  • Will it be a quality site for the future—five, 10, 25 years from now?
  • Is nearby housing readily available for management and employees?
  • Is there nearby competition? Are those sites better or worse than yours?
  • What is the general business climate in the area? Is this a prosperous market?
  • Are merchandise and raw materials available? Are your suppliers easily accessible?
  • How is the traffic flow—can your customers reach you quickly and inexpensively?
  • Is your building suitable to your kind of business—will it need any major renovations?
  • Is there an adequate community infrastructure for utilities (sewer, water, power, gas, etc.)?
  • What is the tax burden—town, city, county, county? Will this impede your business and growth?
  • What are the costs of operation in this location—will it be too high to offer you an adequate profit?

10. Why is competition important?

No business operates without direct competition. There also may be indirect competition, which has a significant impact on customer’s buying decisions in your market.Direct and non-direct competitors try to convince customers to buy their products or services instead of yours. It is in your best interest to learn more about the companies that are trying to reduce your take-home pay. List the strengths and weaknesses of each competitor. Talk with friends, visit your competition, call for information about their products and analyze how they advertise.Next, take a sheet of paper and list the major competitors. Give each a rating, on a scale of one to 10, for product quality, process, advertising, price and customer satisfaction. You can add other ratings that you feel are important.Your business can become more profitable by adopting practices you admire in competitor operations and by avoiding their mistakes. Some of your competitors have been in business successfully for many years. Certainly, as a new or relatively new business, you can learn a lot from them.Do a S.W.O.T Analysis of your business and your competitors.

If you need help with any area of your business, talk to Derbyshire Business Help

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