Startups by their very nature are breaking new ground. It’s perhaps ironic then that many are founded by entrepreneurs who have trodden this ground before, who know the ropes of setting up a business, driving customer acquisition and finding funding and bringing together positive teams.
But every serial entrepreneur had to start somewhere. Taking the first step into the world of running your own business can be daunting, not least because there are so many aspects to running a business that most prospective entrepreneurs will not have encountered before.
In the course of building businesses, entrepreneurs will face obstacles far more often than immediate successes. For many online businesses, generating traffic is a common challenge. For highstreet businesses, it’s footfall or gaining repeat customers. And for technology companies surviving the long ramp-up time required to develop products to sell in the first place can make or break some businesses.
All of these challenges can be anticipated by with good financial planning. If you can foresee the effect a challenge might have on your business, then you can plan ways to mitigate the financial impact of this challenge and ensure that your new business survives and flourishes. But good financial planning covers more than just anticipating challenges, it considers different challenges, opportunities and external circumstances which might affect the business.
Now, from the paragraph above, you might be thinking “that sounds horribly difficult”. And for a lot of entrepreneurs, financial planning is one of the challenges they face, as prior to running a business they have not had to think about these things. If you have never run a business before most of your experience with money is likely to be from managing your own personal finances, and your experience of employing people is likely to be drawn from your experience of being employed.
But, I believe the discipline of business planning is not all that alien if you have experience with personal financial planning. If you’re thinking about being an entrepreneur in the future, understanding your personal finances is likely to be an important factor in your decision-making process, to begin with. Despite the apparent differences, I argue there are plenty of similarities between personal planning and business planning.
So how much can everyday experience of money-matters inform business planning? I’ll be discussing this in next week’s article!