Page 6 - How To Avoid Going Bust In Business

When I was running a rental car business I just never seemed to have enough time
to deal with the traffic tickets incurred by the hirers. It was a time-consuming task
and there was just never enough hours in the day. As a result the infringements
became my responsibility and I ran up a huge fines bill. Like $90.000! That took
some working off.

The answer is dead simple: Find someone with clerical skills and give them the job.
There will be plenty of people who would love a bit of part-time work, especially if
they can do it at home. The costs are not that great, certainly a lot less than the
consequences of poor record keeping.

Such a person will also act as your minder. Or, more accurately your re-minder.

I had a wonderful secretary, Jenny, who bossed me mercilessly. I’m hopeless at
detail. Thus when cash was spent sometimes I couldn’t remember what it was for.
Sometimes I didn’t even write the payee’s name in the chequebook (in the days
when we used cheques) – too busy, see! – then later I had no idea who or what it
was for.

Jenny would grab the chequebook first thing each morning and scan it for “blank
butts” - the term used in the accounts to mean ”haven’t got a raving clue what this
was about”. With luck she would spot such omissions while they were still fresh
enough in my over-taxed brain for me to remember the details.

Get yourself a Jenny. It might be a retired person, a mother at home with young
children, someone who is disabled, someone “in between assignments”. You will be
amazed at the skills that such people can bring to your business and usually at very
modest cost.

An Australian business mentor suggests getting a “Virtual Assistant”, or VA as he
calls them. He recommends finding an appropriately qualified person in the
Philippines because their hourly rates are low and their time difference is minimal.

5: Under-capitalisation

Starting a business on a shoestring is fraught right from the get-set-go. Before you
set up your stall do a cash flow projection. Be honest, not hopeful. Work to a worst
case scenario. Or at least, work to a best case/worst case scenario.

This is especially important if the business you are contemplating is capital-intensive.
You will need a very clear picture of capital requirements for a long time ahead. I
would work on at least a two year horizon. Sure, it may be riddled with assumptions
but it’s better than launching with little more than hope and hard work.

Incidentally, you should very clearly spell out the assumptions you are making and
include them on any documents or spreadsheets. That way, as the business
develops, you can see whether those assumptions were realistic, hopefully long
before it becomes obvious in the worst possible way.