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Start Your Business Right by Minding the Details

As published in the June 2013 issue of The Greater Lansing Business Monthly.

You just had a great idea. Customers will love it. You want to start a business or lead your organization down a new path. Now what? The path is like a bridge over a deep canyon. You’re on one side — your goal on the other. The canyon represents all the obstacles that stand in your way. As the architect of success, it is up to you to transform your grand vision into a blueprint. And since the bridge will be only as strong as its weakest link, you need to mind the details. No flying by the seat of your pants. Design it right. Construct the pieces. When you are done, your bridge will not only be safe and sustainable, but one that your customers will want to cross. Right now your enthusiasm is tempting you to jump across the canyon. Those around you are so excited that they want you to jump as well. Slow down. Do it right. Avoid being a crumpled pile at the bottom of the canyon. Take a deep breath and let’s just focus on how to get started.

Create the architectural plan. This is your business plan. What is your strategy? Will your business look like a solid cantilever bridge, a flexible suspension bridge or temporary pontoon bridge? What do your customers really want? Instead of a bridge, maybe they want a helicopter to fly them over the canyon. Be specific about the qualities that will make your business successful. Is your plan written? Is it clear enough for others to understand and implement? Is your project timeline realistic? Don’t assume anything and don’t try to be all things to all people. The US Small Business Administration (http://www.sba.gov) has an online tool for crafting business plans and can be a helpful starting point.

Build the supporting structure. The bridge is supported by marketing, production, sales, management, personnel, accounting, financing, technology and other features unique to your plan. These are anything but commodities because their quality is driven by individuals performing to specific expectations. You already know this, but sometimes egos get in the way of implementing these processes in a new venture. Here are some qualitative things to remember.

People. Know your personal strengths and weaknesses. You’re not perfect. Find others who excel in areas where you do not. Cheerleaders for your ideas are great, but right now you need trusted confidants who can be honest sounding boards. Surround yourself with good listeners and critical thinkers. Listen to them, but take charge of making the final call.

Risks. As great as your idea is, don’t take the risks for granted. It’s tempting to underestimate the risks when the idea sounds so good. The US Small Business Administration reports that only 7 out of 10 new employer firms survive at least two years and only about half survive at least five years. Put the odds in your favor by identifying all the relevant external and internal risks and determine how you want to manage those risks. Use your trusted confidants to help you with this process.

Finance and budgets. Assume that your venture will cost more than expected, take longer to get off the ground, and that cash flow will be tight. Plan for this by preparing four different projections: income and expense, cash flow, balance sheet and breakeven analysis. Spreadsheets are an ideal tool for this and you can create different columns to project amounts under various sets of assumptions. Resist the urge to show only optimistic assumptions. Look at all the scenarios that might reasonably occur.

With your plan and infrastructure in place, you can shift toward operating the roadway and running the day-to-day business. You might even paint the bridge and add some lights. Your dream deserves exploring. Just remember to start with the blueprint and then follow it. Enjoy the trip.

Duane Reyhl, CPA, CGMA, is the Director of Consulting at Andrews Hooper Pavlik PLC. He has more than 25 years of audit, financial reporting, and consulting experience, including six years as the technical director for the Peer Review Program of the California Society of CPAs. He leads consulting, attestation, investigatory, and peer review engagements for a variety of industries, including education, governmental entities, non-profit organizations, and employee benefit plans. Duane also serves as a SOAR Corporate Body Scan consultant.