Startup Checklist For Avoiding Business Fails
You have completed the business plan for your intended startup.
You have assembled the best partners in the world. You also have a supportive family and many encouraging friends. And a long list of potential clients.
Formula for success?
Theoretically. Or should I say, half-theoretically. Every startup business plan I've ever read focused on the plus side of things. You know, how "we would earn $ ... ... revenue per year" or "our projected sales is ... ... (million) units." Every aspiring entrepreneur I've ever spoken to also bragged about supportive friends, valuable business contacts. etc. What is hardly discussed, though, is the background work needed to facilitate successful business. In other words, the nitty-gritty, mundane, and boring stuff. This is tragic, because very often, the failure of these background processes is what leads to business doom. Yes, profitable business requires vision and foresight, but efficiency and organisation are also key ingredients for success. Lack of preparation for such proper backend work, any business plan is just speculation. A wild grasp for a high target, without the engine for it.
Here are 10 things startups must never ignore. For their own sake.
1. A Functioning Bookkeeping System
Bottom-line, business is about making money. Therefore, what can be more important than the system that manages your money? On the day you commence operations, you should at least have the bare skeleton in place. This should include:
- An efficient filing system for all your bills and forms.
- An invoicing system which includes delivery proofs, statements, etc.
- A scheduled and systematic process of paying your suppliers and staff.
- A recording system to keep tabs on who HAS NOT paid you.
Why must your bookkeeping system be functional the very day you commence operations? Because money is exceptionally precious to startup. You do not want and do not need the following to happen:
- Invoicing is delayed because you have yet to design your invoice template.
- It is wearisome for other businesses to pay you because you keep sending them incomplete invoices, multiple copies of the same invoice, etc.
- You lose the faith of your staff and suppliers because your payment to them is always slow.
- Good lord! You double/triple paid someone!
In short, ensure the flow of your money is systematic and easy to supervise. There is really no excuse not to do so. There are also lots of affordable software to make the task easier for you.
2. Your Bank Account
To begin with, I am aware that some entrepreneurs deem it unnecessary to have a business bank account immediately. I'm not going to debate that. I’d just say that in the course of operating my own company, I've encountered a good number of companies that are unwilling to pay to a supplier's personal bank account. Government agencies are particularly sensitive about this.
To put it in another way, it depends on your client pool. Because you begin any project, you should know what their requirements for payment are.
At the same time, whether you use a corporate bank account or your personal one, you should milk current technologies offered by it. Be it Internet Banking or Phone Banking, familiarise yourself with the ways to readily access and check your account. You could be doing this often, such as during trying months. While at this, consolidate all information relating to your account and put that on record too. This would not just be your account number and name, but also things like the bank code, branch code, and swift code. Life in a startup is hectic. You will never have enough time. You don't want to waste half an hour on the phone finding out your bank code, just so to receive a client's remittance.
Lastly, know your bank charges. Where I'm from, they tend to be quite tolerable, but business owners from other countries have told me bank charges in their countries could easily run into hundreds of dollars. You seriously do not want the case of a payment perpetually stalled, because the client is appalled by the bank fees involved. Neither do you want that shock at the end of your first year, when you discover you have paid $xxxx in bank fees. Always have the latest list of fees charged by your bank with you. Refer to it often.
3. Ready Your Corporate Identity
3. Ready Your Corporate Identity
I'm sure many entrepreneurs would consider this a breeze nowadays. One could even get a new logo designed online, within hours. What's the big deal?
Again, it is because your resources as a startup are so limited. Your time is your most valuable asset, and you want to devote that to building business relationships, getting that million dollar deal, not laying out a letterhead or waiting for a logo so that you could prepare a quote. In fact, it being so easy nowadays to create artwork, there’s really no reason at all for corporate identity not to be prepared before operations begin. To not do so is plain sloppiness.
One more thing. Do not lose those artwork files. To not be able to start on your proposal because you can't find your logo.jpg, or to have to pay the printer extra to redraw your logo each time you print something, that is seriously plain stupid.
4. Ready Your Marketing Collateral
This can be difficult, I know. A brand new startup, what is there to show? You have no testimonials. You have limited products or services, or samples. How would you be un-impressing your potential client by showing a brochure with barely fifty words?
Yet, you still need to show something.
Start by at least having a proper company profile. A sensibly written one that isn’t choked full of exaggerations and brags. Also prepare a standard list of your products and services, a functional one that you can update readily. If you wish to take it a step further, establish a schedule for churning out updated collateral too. Overall, what you want to avoid is that horrid situation of you staring at a potential client in the face, but unable to establish business contact because you have no means of introducing your services. Avoid that by preparing meticulously beforehand. Be empowered by everything you can realistically generate before entering business.
5. Staff Claims Procedure
I once had an unbelievable experience in my company. During an exit interview, a lady stated she's leaving because the company did not reimburse her taxi expenditures within twenty-four hours. Her expectation was to be immediately reimbursed in cash.
I have also heard from other business owners of how staff was caught pilfering from the petty cash pot. When confronted, those staff claimed they thought it was the way to be reimbursed for minor company expenditures.
To be it bluntly, people can be strange. They get weirder when money is involved. Having a proper staff claims procedure, with a form and the need for backing documents like receipts, saves you headaches in so many ways. It prevents skulduggery. It also gives your staff peace of mind by assuring them you do not expect them to spend on behalf of the company. Most of all, it reinforces the impression that you are a "legit" operation, to cite street parlance. Such an impression is crucial for your overall growth. It is also key to retaining high calibre staff.
6. Prepare Copies of Your Company Registration Documents
In my country, the most basic of these is a standard computer printout. For other countries, it might be more complicated, but my guess is that it wouldn't be anything more than a stack of papers.
Why should you have this on hand? Because everybody would be asking for it at the beginning. Banks, government bodies, trade organisations, etc. They are especially crucial if you are applying for government grants. Again, the underlying purpose here is time management. These things aren't hard to get copies of, the process just requires time. Sometimes, the process is also roundabout and tedious. Having spare copies of them around thus never hurts. That is, unless they are expensive to duplicate. In which case, you can still prepare yourself by at least knowing the procedure to request for copies.
7. Compile a List of (Potential) Suppliers
One of the most exasperating reasons for missing a project is to not be able to find a supplier. Or not to be able to find a supplier in time.
If you have a proper business plan, then you should be able to forecast the suppliers you require. Establish contact beforehand. Do not leave the searching or the contacting till you are actually quoting for a job. Take note though, I do not mean that you should go about requesting tens of quotations from strangers and filing these away religiously. That plummets goodwill towards you like nothing else could. Find a tactful way. A phone call, or an email. If these parties are comfortable, request for some sample prices. Might I add that while doing these, be humble. Do not act as if you are the next big guru of the business world. If these establishments are older than yours, chances are they have encountered loads of startups that fizzled. Always respect them as your potential partners. Nothing lesser.
8. Have Some Sort of Customer Management System
You could get very sophisticated with this. Or it could be nothing more than a simple system to keep track of existing clients and potential ones, inclusive of a schedule for regular contact. The latter being a festive greeting, a call-up, a mailed brochure, etc.
The short of it, you're not going to grow if you do not have repeat or recurring clients. You have to work towards that dream situation of clients returning to you by themselves, without excessive persuasion. The key to this is to be regular, to maintain light but consistent contact. Over time, such efforts add to your image too; you're not that person who only calls when you badly need business, you are also a “friend.” Work out an easy, functional method for you to maintain consistent contact. Something that wouldn't be too much of a hassle over time. Obviously, ensure that "consistent" doesn't slip into being persistent. You wouldn’t want to be labelled a pest.
9. Compile Templates of Business Letters, Contracts, Employment Agreements, Etc
Whatever the nature of your business, you would require all types of professional documents. Some of these could be expensive to produce. For example, those that require professionals to draft them.
Wait. Are most of these documents still costly? Aren’t the bulk of them free nowadays?
Thanks to the Internet, there are all sorts of free templates for you to download. A note here. Download, but have the common sense to customise. Ensure you fully understand the document too before you go about brandishing it. It is humiliating if your staff or supplier knows more about the document, and bluntly points out you are the one not reading the finer print. You might end up in legal trouble too when that happens. Expensive legal trouble.
Yes, you are ready to start a business. But are you ready to operate a business? To sustain a business? To grow a business?
A functional accounting/bookkeeping system, a perfect customer management software, all the documents and collateral you need prepared and waiting. But are you ready? Are you able to keep to your own systems? Your own schedules? Your own procedures?
Are you able to make the sacrifices in family life, social life, health and leisure to give your startup the attention it requires? Are you ready for the phenomenal amount of work necessary to keep your startup afloat, and to eventually make it profitable? Most of all, do you have the resilience for downturns, which are inevitable? Can you weather failure, humiliation and abandonment, in the long route towards business success?
Is your passion real? Or just a romantic notion for the moment.
To put it in another way, you are the one who needs the most preparation. The crucial one to check again and again, before business begins. Everything else is but the gear you’re carrying with you. You are the one who makes the actual journey.
© 2016 Kuan Leong Yong