First and foremost you have to believe in your own business and know what you really want.
You need to be able to visualise yourself in that position and, with that passion, the rest will follow. However, proper planning is essential if you’re to make a go of it and have no nasty surprises or regrets later.
1 THE BUSINESS PLAN
This is your golden egg. It’s how to execute your vision and how you intend generating income. Your plan should include a description of your company, your customer, your competitors and collaborators. It will detail existing sources of income that will need to be converted and/or new sources of generating income. This plan needs to be as detailed as possible and, as your business develops, will be revisited and updated regularly.
2 PERSONAL INCOME PROVISION
You need to consider what your net monthly living costs are and keep a six-month income provision in a money market account or access bond. This will give you the freedom to concentrate on making your vision a reality.
3 PERSONAL BENEFITS
If you’re currently employed, you will likely have medical aid and a pension or provident fund. You’ll be saving towards your retirement as well as enjoying life and disability cover. These benefits need to be replaced in your personal capacity.
> Medical aid: negotiate individual membership with your existing scheme or join another.
> Pension/provident fund benefit: either preserve what has accumulated in your existing fund so as to avoid paying tax, or make provision to continue saving towards retirement on a tax-efficient basis.
> Life and disability cover: some schemes allow you to continue with your existing cover at your own cost. Where this is not available or is too costly, it is strongly advisable to replace your current cover on an individual basis, especially a monthly income disability benefit. This will provide an income for you and your family if you are unable to work due to illness or disability.
4 BUSINESS OPERATING COSTS
You need to understand and detail what your set up/ capital costs and your ongoing monthly operating costs will be. Make provision for both capital costs and six months’ worth of monthly operating costs. If you need to obtain financing for these costs, take judicious note of finance charges and repayment terms.
5 LEGAL/TAX IMPLICATIONS
> Consider what legal entity is most appropriate for your type of business: a sole trader, partnership, closed corporation, private or public company. Each of these has legal, accounting and tax implications. It is imperative that you seek professional advice in this regard.
> If you intend employing staff, get professional advice on correct administration and human resource procedures, as well as employee benefit schemes.
> Depending on the nature of your business, it may be necessary to register with an industry board and follow certain regulations at installation and on an ongoing basis.
6 BUSINESS INFRASTRUCTURE
These are all of the administrative and practical considerations that need to be taken into account and prepared for in advance so that, once you embark on your business venture, you are able to generate an income as soon as possible. They include: premises, telephone/computer network installation, stationery, purchasing/ leasing necessary equipment, hiring of staff, setting up operating systems and legal registration. Lastly, have fun!
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