When you are trying to start up a new venture and successfully implement your business plan, you will probably encounter a few hurdles that need jumping over; I have tried to identify a few of the common situations that you may be able to avoid with some carefully constructed contingency plans.
THE UNCERTAIN ECONOMY
With interest rates and inflation rising whilst house prices and consumer spending continues to fall, this may affect your business in a number of ways, and not necessarily in a bad. If you provide a low price / value product or service, then you may see customers going up, but sales of more luxurious products and services may start to fall, so it is worth considering what you have on offer to customers.
The rough patch scenario also applies in a different way, when constructing a cash flow forecast you may identify, from research, that particulars months are less busy that other so it could be worth putting aside more cash in the busier months to help get through the quieter months. Having a ‘rainy day fund’ may help to avoid problems when your general cash balance is low and you have bills that need paying, or equipment that needs buying.
COMPETITION
Simply; keep an eye on them! You should always be aware of what your competitors are offering and how that compares to what you are offering, and you should take action if necessary by lowering prices or by introducing a special offer to attract the customers of your competitors. You shouldn’t get complacent, even if your product is great; remember that if there is a more attractive or less expensive alternative available to customers, your sales will suffer.
ENVIROMENTAL CONCERNS
If you can recycle or save energy, do it! Customers are becoming more and more aware of the environment and how it should be cared for, and as a result, they expect suppliers to be implementing and maintaining environmental responsibility policies. It is a good idea to have this going from the start so that you can avoid any difficult conversations with customers, and you can proudly state that you recycle and reuse which may generate a little more business and earn you a few more pounds.
ETHICAL AND MORAL RESPONSIBILITY
If you operate your business in a way which is not moral or not ethical, customers may not like it and may take their business elsewhere, a few examples may be;
1. The plumber who creates additional problems that were not an issue before, just to earn some more money
2. The local Chinese takeaway that uses out of date chicken in its food
MONEY TROUBLE
You may be relying on a big investment from a source such as a bank loan or venture capitalist, but this isn’t necessarily guaranteed. It is good for potential investors to see that you are able to develop logical and realistic contingency plans, and a financial one is a great place to start. When looking into how you will finance your new business you should be looking at more than one possibility and have them all in a structured written plan, in order of preference and possibility.
This also applies in an ongoing sense; you should have a plan to cope if your cash flow starts to fall or if you need to buy a new piece of equipment that you don’t have the capital for. You may be thinking; ‘how will I know what my options are if a need a new machine in three years?’ which is why you should review and update any plans on a regular basis to ensure that they remain relevant and realistic.
YOU CANT ESCAPE THE LONG ARMS OF THE LAW
Regardless of what your business does or its size, you will have to obey the laws of the land. There are many laws and regulations which affect businesses on a day to day basis, particularly if your business is incorporated as a limited company, in which case you will have a number of obligations to file statutory documents.
You will have to ensure that certain Legal Acts are adhered to, the common ones that should be researched further are;
1. Health and Safety Acts
2. Employment Acts
3. Company Acts
4. Trade Description & Supply of Goods Acts
Top Tips
1. Consider the state of the economy when setting your price
2. Build up a ‘rainy day fund’
3. Keep an eye on the competition
4. Go Green and stay green
5. Be ethical
6. Have contingency plans
7. Stay legal
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