Cash Handouts To Help Unemployed Into Business Pain?
An Auckland chartered accounting firm is pouring cold water on political noises from both the Government and the opposition that encourages Covid-19 unemployed to go into business because, for most, it's likely to end in disaster.
"Like many things, there's the romance of becoming your own boss, and then there's reality," says BetterCo Business Advisors and Chartered Accounting firm director Peter Prema, who has seen more than his fair share of broken dreams. "The World Bank says New Zealand is one of the easiest places in the world to start a business. But it is probably one of the hardest places to succeed.
"Unfortunately, I've seen too many business start-ups launched with high hopes and expectations and no business plan which, in a tough market like New Zealand, most probably won’t end well. New Zealand is also characterised by its high rate of business failures – many SMEs just cease trading.”
In February, Prime Minister Jacinda Ardern announced a significant expansion to the Government's Flexi-wage initiative, which includes a $30 million self-employment component to deliver training and mentoring for those out of work wishing to start their own business.
Last year, National Party leader Judith Collins wanted to give cash to people who want to start a business.
Prema is concerned that few – including politicians and would-be entrepreneurs – have given enough consideration to the nuts and bolts.
"Politicians wanting to help incentivise entrepreneurship is to be applauded, but the money that is being talked about is nowhere near enough for any start-up of significance. We're talking about self-employment, and in an already small but very competitive market, it is unlikely to end well.
"There have been people who have lost their jobs and gone on to start something awesome, and I'm not saying don't do it. However, if you want to start a business because you need to eat, you're already on the back foot," Prema says.
"When we are in survival mode, it is tempting to skip things like market research, business planning and cash flow forecasts. If you're too busy focusing on what's in front of you and not what's ahead of you, how can you succeed?"
Have a plan
Entrepreneurs, and even business owners three or four years into their journey, will plateau if they don't have a plan.
"Having a business plan is waking up in the morning knowing what you need to do on the business. Entrepreneurs fail because they are so focussed on doing the work – working in the business – that it becomes repetitive, and both they and the business start to stagnate.
"Business plan sets a path for you and your employees, and that shared knowledge of working towards a common goal will increase productivity."
Put systems in place
"A business plan enables you to predict and adapt and set a path to what you want to achieve," says Prema.
"Put things in place, like systems and technology, that allow you to continue when something happens so that no matter where you find yourself, in lockdown or out, you can push work out, push forward and outsource."
Keep it short
"Our business pages are two pages long," says Prema. "While you may need a twenty-page business plan for the bank, I can guarantee that you will never look at it again."
The business plan should contain your vision, financial targets, SWOT analysis, elevator pitch, sales tactics, a one-year goal and a three-month action plan.
"Get buy-in from your staff and refer to the plan almost daily. Once you have your goals and your operations sorted out, you will begin to see opportunities. They will appear as if by magic, but it's the things you are putting in place through the business plan that is giving rise to the growth."
For more information: https://www.betterco.nz