Welcome to yet another in our series on Great business management tools for SMEs. This is where we provide you with a practical tool kit of useful information to help your small-to-medium enterprise grow and prosper, particularly in the early years. This article is, in fact, primarily aimed at start-up businesses.
The Business Plan
Every new business should set up a Business Plan right at the outset. This is not only necessary to attract Angel investors or financial partners as they will need this to assess your merit based on your financial projections, but it is a blueprint for the construction, management and growth path of your new enterprise.
There can be quite a lot to this and if you are not sure how to construct a Business Plan it is probably best to get advice from a Business Coach or Financial Advisor. In essence, it involves a few primary facets which are…
- Setting both short and long-term goals – Clearly illustrating what you hope to achieve with the business and with whom you plan to do business or to whom you will sell your products. This includes an ‘Executive summary’ – a five-minute elevator pitch that summarises the value and aspirations of your business – and your ‘Business description,’ explaining what you are selling and how you will go about creating it.
- Your Market research and strategy – Describe your marketing plans, target market, the demographics of your customers and your strategic plan to reach this market.
- A Management and personnel description – including bios of your company executives and managers and your proposed workforce. An explanation of how your team will work together to create a stable, profitable business and illustrating the depth of your experience will assist you to attain investors.
- Your financial set-up, documentation and plans – You should describe exactly how you will achieve every facet of your Business Plan. This should include current and future projections of your profit and loss statements and balance sheet and cash flow statements for the next three years.
Ensure that your cash flow is consistent
Following on from the last point, a vital part of every business plan is of course to ensure your finances are handled by professionals and be very wary of the cash flow trap. Particularly for businesses like manufacturers who have to spend a lot of money up-front to create and deliver their products and then find themselves waiting for anything from 30 to 90 days for payment.
Your start-up capital should include seeing you through this period initially, but as you grow you may find this to become more and more of an issue and this has been the cause of the demise of many new SMEs.
The good news is that there are expert invoice factoring businesses that pay you a large portion of your invoices immediately (at a very affordable fee) and even collect the payment on those invoices on your behalf. They call this ‘Invoice factoring’ and part of your business plan should include utilising this for the times that you may experience cash flow issues.
Finrock Capital has the solution
Finrock Capital assists start-ups and SMEs and many larger companies too to operate seamlessly with the right cash flow, without having to worry about the tedious business of invoicing, credit assessment and collecting your invoices.
We also provide you with vital business management tools – all as part of our service. Our value-added services include things like a full credit assessment and management service; sending out statements; chasing up, obtaining confirmation of and allocating payments to the relevant invoices etc.
Start creating your Business Plan right now and talk to us today to ensure cash flow will never be an issue. Also, watch this space for more Great business management tools for SMEs!