The start up phase of an enterprise can be a very exciting time – I love seeing clients turn their skills, passions and interests into a business scenario – the enthusiasm is infectious!
Of course there are risks associated with doing so and it is important to take the time needed to perform good quality planning and budgeting before entering into any business arrangement.
I consider start up enterprises to fall into one of two categories:
- A new business being established or;
- Purchasing an existing business
Each of these categories has different needs and requirements – we will take at look at some of these today:
1. A new business being established should consider the following in their planning and budget preparation:
- Product development and research or details of services to be provided
- Franchise fees if applicable
- Initial registrations and licences
- Sourcing property if required and entering into a lease arrangement (including security deposit)
- Plant and equipment requirements including software
- Marketing, logo and collateral
2. Purchasing an existing business requires attention to these items in their planning and budget preparation:
- Purchase price including adjustments for rent and staff entitlements
- Plant and equipment – retain or replace?
- Transfer of registrations and licences including assignment of property lease (and security deposit)
- Restraint of trade from Vendor
The above is not intended to be an exhaustive list, each situation should be considered on its own merits and you should seek professional advice before entering into either arrangement.
Keep an eye out for Part 2 where we will take a look at the general principles of budgeting that cover both categories.