Page 3 - How To Avoid Going Bust In Business

There are two parts to this book –

1: How to avoid getting into financial difficulties in the first place

I’ll give you a simple test that you can carry out every month so that you can
detect headwinds before they hit.

2: If you are already in dire straits, how to get the best chance of staving off a
total train wreck.

These techniques are drawn in part from my own experience and from the advice
given to me by professional accountants, lawyers and company liquidators.

To research for this book I talked to some of the top corporate receivers in major
international accountancy and business consultancies – the kind of heavy hitters that
charge $1000 an hour for their work..

Take heed and they won’t come calling at your door. Or change the locks on it.

Why do businesses fail?

The appalling statistics are that one in ten businesses will not make it to the end of
their first year. After five years fewer than a third of start-ups will still be going . . .
and some of those shouldn’t be.

So what are the main reasons for all this heartbreak and financial destruction?

1: A fundamentally flawed business proposition

If you decide to open a little café restaurant in an area that already has a couple of
top-notch cafes, is it a smart idea? Do you have the culinary skills to compete? Is
there enough local traffic to support another start-up?

Is there a demand for the product or service you are going to provide? I once
decided that there were home-delivery pizzas and other meals – why not home
delivery pasta? Fasta Pasta was conceived. Once I had done the projections on it I
just couldn’t see it making enough money to be worth the effort. Have you done that
sort of exercise on your bright idea?

In other words is it a viable, profitable idea in the first place?

You have to do some solid due diligence before you start. Write out your business
plan. Set out a budget. Then get an old business head to cast an eye over it.

If you have a friend or relative who has had a successful business career, talk to
them. Buy them a beer or glass of wine and run your idea past them. Many local