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THERE is an old saying which goes along the lines of "if you fail to plan, you plan to fail".
While there is some degree of truth to this, many entrepreneurs will tell you that things very rarely go according to plan. Therefore, it is not really worth spending too much time planning when there are so many factors you can't control.
One area where I do see entrepreneurs getting burnt on a regular basis is around the scenario where everything goes pear-shaped and the business ends up being sunk. The problem is that when this happens, you end up being taken down in your personal capacity as well.
Of course, when you start a business you want to feel that nothing can go wrong. The problem with this thinking is that statistically you will fail - the question is whether or not you can actually bounce back, and how long it is going to take you.
For example, if you start a business and run into a so-called cash flow crunch and start tapping into your credit card, how long is it going to take you to repay that? What happens if the business doesn't recover and you are left with a maxed-out credit card and no cash coming in to support that problem as well?
What is the impact if you blow your credit record sinking a business, and then go back to a nice secure corporate job but can't get retail lending facilities such as car and home loans because you sank yourself trying to shore up a business?
Winging it is not the wisest way
A situation I have seen twice in the last few weeks is where one business partner wants to soldier on, while another partner has tossed in the towel because it's just too difficult to keep on fighting.
The problem is they can't decide what to do with the business assets, debt, trade names, future potential revenue or even how much and who they can sell shares to.
When two partners who start with a bucketload of enthusiasm find their dreams shattered and end up pointing fingers and resenting the people they have gone into business with, it is a very disappointing situation.
How much thought has your small business given to these kinds of scenarios?
Many of these situations can be avoided upfront if some kind of plan is defined. What are the goals of the business? What are the members prepared to put in? What if one decides to bail out?
Often when you talk to entrepreneurs they will tell you about their "loose" management style, where things are done on the fly and they don't need formal board meetings.
These are often the same entrepreneurs who are scrabbling around looking for documentation when the South African Revenue Service comes knocking on the door, or end up in legal or financial tussles where they can't prove anything because they can't find critical pieces of paper.
You can't run an entrepreneurial business by a scorecard approach.
If you fly by the seat of your pants, you must remember that if you get grounded, the consequences could be with you for a very long time.
- Fin24
While there is some degree of truth to this, many entrepreneurs will tell you that things very rarely go according to plan. Therefore, it is not really worth spending too much time planning when there are so many factors you can't control.
One area where I do see entrepreneurs getting burnt on a regular basis is around the scenario where everything goes pear-shaped and the business ends up being sunk. The problem is that when this happens, you end up being taken down in your personal capacity as well.
Of course, when you start a business you want to feel that nothing can go wrong. The problem with this thinking is that statistically you will fail - the question is whether or not you can actually bounce back, and how long it is going to take you.
For example, if you start a business and run into a so-called cash flow crunch and start tapping into your credit card, how long is it going to take you to repay that? What happens if the business doesn't recover and you are left with a maxed-out credit card and no cash coming in to support that problem as well?
What is the impact if you blow your credit record sinking a business, and then go back to a nice secure corporate job but can't get retail lending facilities such as car and home loans because you sank yourself trying to shore up a business?
Winging it is not the wisest way
A situation I have seen twice in the last few weeks is where one business partner wants to soldier on, while another partner has tossed in the towel because it's just too difficult to keep on fighting.
The problem is they can't decide what to do with the business assets, debt, trade names, future potential revenue or even how much and who they can sell shares to.
When two partners who start with a bucketload of enthusiasm find their dreams shattered and end up pointing fingers and resenting the people they have gone into business with, it is a very disappointing situation.
How much thought has your small business given to these kinds of scenarios?
Many of these situations can be avoided upfront if some kind of plan is defined. What are the goals of the business? What are the members prepared to put in? What if one decides to bail out?
Often when you talk to entrepreneurs they will tell you about their "loose" management style, where things are done on the fly and they don't need formal board meetings.
These are often the same entrepreneurs who are scrabbling around looking for documentation when the South African Revenue Service comes knocking on the door, or end up in legal or financial tussles where they can't prove anything because they can't find critical pieces of paper.
You can't run an entrepreneurial business by a scorecard approach.
If you fly by the seat of your pants, you must remember that if you get grounded, the consequences could be with you for a very long time.
- Fin24
