Docstoc

Entrepreneur sercura

Document Sample
Entrepreneur sercura Powered By Docstoc
					    BUSINESS




    Entrepreneur
    By Chris Riley, Managing Director, Sercura
                                                                                   101
    You’re tired of the corporate politics, you don't like your boss and you think the company might be downsizing
    again soon. This might be the time to grab a few customers and set yourself up in your own business.

    Compared                       to most Western countries, setting up a business in Hong           The business plan will tell you at which stage
    Kong is painless and swift. Taxation is clear and fair and the red tape is minimal. If there is   you should break even and how much cash
    any place in the world to take the entrepreneurial plunge it is here. Below are a few rules       you need to plug the gaps until revenue
    that have proven useful.                                                                          consistently exceeds overheads.


    Rule 1:      Never borrow money from the banks. They will gouge you on the interest. They         Rule 4:    Be conservative. If you think you
                 will try and influence your business and when you are at your most exposed                       will start making profit by the end
                 they will ask for the money back.                                                               of Year One then make sure you
                                                                                                                 have enough cash to carry you
    Rule 2:      When planning to set up a new business, make sure you have enough of                            through to the end of Year Two.
                 your own cash to get the project safely off the ground, through the clouds
                 and up to cruising altitude. A good rule of thumb is to have at least two            Rule 5:    If the start up capital required is beyond your savings, consider bringing in a
                 guaranteed customers where the revenue from one alone will cover your                           financial partner. In Hong Kong fortunately there are plenty of people with spare
                 monthly overheads. Count on customers not coming through with all                               money to invest. A common formula might be that if you need 1 million HKD for
                 their promises.                                                                                 your start-up but only have half a million of your own money a financial partner
                                                                                                                 would contribute the other half in exchange for 50% of the company's equity.
    Rule 3:      You should make a business plan in the form of a simple Profit & Loss                           You will need to choose your partner with care and have a good shareholders
                 projection. First list all the customers from whom you expect to receive money                  agreement in place but all parties will benefit from the success of the venture.
                 and break the expected revenue down by month for two years. Take into                           An ideal partner will contribute to strategy, revue finances monthly but not
                 account seasonality such as a possible drop in business at Chinese New                          interfere with daily operations.
                 Year or Christmas. Make sure you do enough research with your prospective
                 customers without getting yourself into trouble. A sad reality is that many          Rule 6:    Most new businesses fail because of bad cash management not for product
                 customers who trust you while you are working for an established corporation                    or service reasons. There is nothing more important than being paid on time
                 won't give you business when you are in a start-up situation. Once you gain                     and maintaining a healthy cash balance in the bank account. If possible
                 momentum they will be more comfortable to switch work to you.                                   develop schemes where you can be paid in advance such as that favourite
                                                                                                                 trick of fitness centres where people sign up for a package of twenty sessions
    Make two sets of projections: best case and worst case then take the median. Plug the                        in exchange for a discount. Another solution is to have customers pay online
    numbers into the top part of your business plan. Then work on the expenses. Staffing                         through mechanisms like Paypal.
    and office rental are the biggest expenses unless your business nature requires heavy
    equipment investment. Nowadays the costs of setting up computers and phone lines are              Have your accountant generate a weekly cash position statement and a weekly
    very reasonable. Try and trim these costs as low as possible by initially working from home       receivables list. Never wait until the end of the month. Don’t let your accountant chase
    or sharing an office. Avoid all marketing expenses except a decent website. Your other            unpaid invoices. Do it yourself or have your sales people do it. As a new business,
    biggest expense will be traveling to meet customers. If you have to fly, obviously it will be      customers will try and take advantage of you by demanding lower prices or longer
    economy class and stay with friends or in cheap hotels.                                           payment terms. Negotiate the most suitable terms so you get the work but don’t run
                                                                                                      out of cash.


                                                                                                      Rule 7:    You don’t need to invent a new product or service to be successful. Take an
                                                                                                                 established industry but find a new twist to providing better and more cost-
                                                                                                                 effective service. This may simply be how you hire and motivate your staff or how
                                                                                                                 you use modern technology in an innovative manner. Often that’s all it takes to
                                                                                                                 carve your own niche in and old industry.



                                                                                                      Christopher Riley is the owner of Sercura, a global quality and compliance solutions
                                                                                                      company providing consulting and other services to retailers and their suppliers
                                                                                                      manufacturing in Asia and beyond.
                                                                                                      www.sercura.com


6    w w w . b rit c h am .co m

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:9
posted:11/3/2012
language:English
pages:1