Every New Year brings new possibilities – including the start of a new business that may one day grow to become a business empire, People’s Choice Credit Union spokesperson Stuart Symons says.
Very few businesses start with cash flowing in from day one, so the reality is that an alternative source of income will be needed in the early days to seed your empire – usually your wages, or those of your partner.
But there are five ways you can put yourself in the best position to convince a financial institution that your New Year’s Resolution deserves more than lip service – it deserves attention and support as an exciting investment.
1. Have a plan
“Your vision for the business is going to drive you and your staff, so it has to be clear and easy to articulate. It’s also going to save you a lot of grief – it can help you distinguish what is important and what is not when you’re trying to juggle everything,” Mr Symons said.
“Having a clear vision will also help you be clear about your market: who they are, what they want, how you will meet their needs, and the challenges you may face. If you can do these things, then your financier will have confidence that there is a path you are following to build something. They will share your understanding and feel they can help you achieve it,” he said.
2. Back it up
“Your vision will only take you so far. As a business banker, People’s Choice will want to see how that vision translates into a plan,” Mr Symons said.
“Business financiers are more than a source of cash; they are business partners. We will want to know where you see the business heading, and the data behind your business assumptions. This is a healthy way of testing your model, but it also leads to confidence if things don’t go to plan. As a business partner, we’re more likely to support you and work closely to build your business when we can understand where the bumps come from,” he said.
3. Mind the pieces
“We like to see good governance and records from the start. If you’re looking for support through a short-term extension to an overdraft, then a financier would like to reassure themselves that the business records are telling the whole story,” Mr Symons said.
“Paying attention to the basics provides excellent confidence to a business partner like your financier,” he said.
4. Mind the gap (plug your expertise gaps)
“You may have built the business from scratch, from your kernel of an idea through to an established business, but at some point you may have to realise that you may not be the expert at every aspect of your business,” Mr Symons said.
“A business financier will be more confident when a business owner embraces this reality. It shows you are focused on your vision and looking to build something that requires expertise, but also that you have identified those skill gaps and the people who can support you,” he said.
“It’s not something to be scared of; it’s something to embrace.”
5. Back up your future
“If a business owner is too scared to step away from the business for one day, we would be likely to question the strength of the business. But even a strong business can have challenges if its primary promoter is incapacitated for a period,” Mr Symons said.
“Business owners are encouraged to have Income Protection Insurance behind them. It supports you, it supports your business. At the very least, it’s peace of mind,” he said.
Want to know more? Read our tips on how to start or buy a business here.