By Mark Bouris
WE'VE heard a lot about Europe's debt, China's growth and the US's unemployment. It supposedly creates a poor picture of the global economy and the prospects for business owners.
So I was heartened this week to see such a good turnout to a business seminar I held in Parramatta.
It's interesting when you speak to a room filled with business owners or prospective business owners, because even with the best-planned presentation, it's the questions that come from the audience that really tell me what's happening in the economy. It also tells me about consumer and business confidence and how good people feel about what's happening out there on Main Street.
From the questions asked this past week, I can gauge that there is still quite a bit of hesitation. People are still confused with what's happening and are struggling to come to terms with how the global financial turbulence will affect their businesses in the future.
While I can't answer everyone's concerns specifically, I can offer a few thoughts for business owners who are looking for some resolve.
The first one sounds simple, but so many businesses go bust because they don't make it a priority. It's to have a plan. Lots of people who talk to me about business have an idea but what they really need is a plan. A plan can change and it can be improved as you move forward but without it you really don't have a sense of where you're trying to go.
What should a plan have in it?
Start with your goals. This should have a really clear sense of what you want from your business, financially, professionally and personally.
I have known people who have focused on only one of these, and they have become demotivated. You must define how much money you want to earn from this enterprise; you must have a clear goal about what kind of professional glory you are pursuing; and you should define personal happiness before starting a business.
A plan must also include marketing plans, key employees, financial and corporate structures, protections such as insurances and a really good system that tells you if you're succeeding.
This last one is something many first-time business owners ignore – they feel excited and stressed enough just starting or buying a business, let alone giving themselves a score card to go with it.
However, adopting key performance indicators and judging your business against them is crucial. It's actually the method by which you judge whether the plan is working.
I advise business owners to use an external expert to run the key performance indicators – most business owners allow their accountants to establish the KPIs and measure the business against them.
This is particularly important for those other aspects of your plan: shareholders, investors, partners and the exit strategy.
Many business owners will have shareholders who have to be bought out of the business as it grows, and these people will want to see KPIs, as will investors in the business.
Many professional service firms are started in partnership and they require constant adherence to KPIs and mutually agreed measurements such as gross revenue, margins and return on equity. I advise business owners to think carefully about who they take on as a partner - the right partner can be the best thing you ever do because the person becomes a mentor, a war buddy and someone with whom to share the pain and the wealth. You want a good partner, and you want to be a good partner, too.
And then there's the exit strategy. Anyone who has already owned a business will tell you it's worth thinking about your exit before you start a business. Many business ventures end in organised liquidation, trade sale or internal buyout. And how that works is dependent on the structure and decisions about shareholding and rights, and so forth.
It's worth discussing this with your accountant or solicitor before starting a business. And I always advise business owners to state in their plan to what value they want to build the business. That is to say, if a large business was to bid to buy your business, what price would you want and what kind of sale would you want?
Once you start planning for these goals, you realise that you have to make certain structural decisions before you start the business.
So I think very highly of planning. I've started, invested in and sold many businesses and I'll do it all again in the future. And I don't take any serious steps until I have a plan - a road map for success.
Last, let me give you a good template for a business owner's personality: work, play, fight, love, believe.
You must want to work, you must plan for downtime away from work, you must be prepared to fight for what's right and for your business, you must have a love and a drive for what you're doing, and you must arise each morning with a tonne of belief in its success. Good luck!
Mark Bouris is the executive chairman of Yellow Brick Road Wealth Management, ybr.com.au. Follow Mark on Twitter at @markbouris.