What you must do before any new business initiative

What you must do before any new business initiative

Success can be dangerous, especially when that business success is dramatic. It can lull you into a false sense of security, even a degree of complacency. That is unwise because trading risks are ever-present. A business owner must always be vigilant, ready to act.

Decision-making is especially important when considering a new capital investment. For most private businesses, capital investment will be undertaken with the aim of near-term generation of an additional stream of profitable revenue.

When a business is new, and capital is in very short supply, all investment decisions are taken with a degree of fear and caution. That approach can be advantageous when assessing the required revenue stream, the project duration, and the return on money invested. However, once a business is established and successful some owners progressively reduce their survival paranoia. Some planned capital investments are then not assessed with that same degree of rigor because the business owner has experienced some degree of success and allows accumulated experience to make assumptions and short-cut the appraisal process.

‘Only The Paranoid Survive’, by Andy Grove, describes a mental state that is still appropriate for most business owners.

ad+ Chartered Accountants can help you to reallyexamine any proposed capital expenditure and help you to determine whether the proposed project merits the investment risk and time commitment. Our analysis will look at a range of outcomes for trading conditions, income and expenditure, project management, and finance charges. This will test the project’s viability under real-world scenarios which will range from rosy to challenging. Thinking about what can go right or wrong will help to prepare you for the actual trading conditions. You are then certain to be quicker to respond and more likely to make sensible measured decisions, than you would be if you do not undertake this type of pre-planning and budgeting.

Because we have been advising business owners throughout Glasgow and Lanarkshire for over 25 years, we can share insights about the circumstances and events which do crop up, and we can give practical advice on how the limit the potential damage that could be caused. Our clients cover sectors ranging from construction and building services, all forms of property investment and management, to business services. The size of business has ranged from a sole trader working from home, to a family business with a few employees, up to large partnerships, and groups of companies.

Irrespective of whether you are using own funds or the bank’s borrowed money, the future success of your business could be determined by how well this pre-project analysis and planning is completed.

Your project analysis could be a stand-alone detailed financial projection, including sensitivity testing (checking what extremes events could derail your business). Some business owners want ad+ to coordinate production of the entire business and marketing plan, which will include the detailed financial projection.

ad+ can help you with budgeting and business plans without ever taking over the producing of your annual accounts and tax returns. Naturally, we would be happy to discuss that possibility, but it is not a requirement.

Get in touch with David Charles to arrange your initial discussion with one of our Chartered Accountants to learn how we could help you.

E: dcharles@adplus.co.uk
T: 0141 643 9200

Share this post

Comments (0)

Leave a comment

Your email address will not be published.