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Ten Greatest Ideas for Planning Your Business • 23

At this planning stage look at what your competitors do in terms of advertising,
and assess what it would cost to match them. Then decide whether that is a good
idea in your first year before adding it to the estimated profit and loss account that
comes later in the process.

Idea 13 - Make sure the price Is right

You must be well aware of the profit margins availablein your industry. Work out a
pricing policy that makes the best of this and is at the same time competitive. Look
at how your customers expect to pay. What credit terms will they want? What can
you offer that will be a trade off for getting better terms than usual? Remember that
new players have the leastflexibilityin waiting for money to come in - that is, they
are the most strapped for cash. So, if it is you that is new, be innovative in looking
for reasons why you should be paid early and at best up front.

Now look at the business process that you will need to have in place to chase
your debtors and make them pay as near to the agreed date as you can. Who will do
this chasing?

Finally think about the salespeople you are going to employ. These people are
key to your early success if you need more than you to do the selling. In the next
section on financing your business, I am going to suggest that you do not in the first
place use share options as a way of attracting and motivating people. It's your busi-
ness, so don't give it away. If you accept this advice you are almost certainly going to
have some sort of bonus scheme to get the salespeople selling what you want, when
you want it sold. This is crucial. If you make it a straight percentage of sales, you
could have problems with the price at which sales are made. Most salespeople will
happily accept ten per cent of £900 rather than work hard for the ten per cent of the
full price of £1000. Giving things away is much easier than selling them. You will
have to explain that giving away ten per cent of the selling price is actually giving