Page 8 - How To Avoid Going Bust In Business

always be this good. Grim example: The Covid-19 pandemic. For too many
businesses the utes, boats and flash houses will be sold by liquidators. A few years
spent building a solid balance sheet, a healthy layer of financial fat, might have
avoided that.

7: Lack of communication between owners/directors

You should schedule regular meetings with your partners, shareholders, backers or
other stake-holders. That way there’s a regular health check on the enterprise. It
also means you will be meeting your obligation as a director of the company.

There’s a woman serving three years in the Big House right now because she was
the director of a company that went through owing millions. Her defence in court
was that she had no knowledge of the dirty deals done dirt cheap by her husband
and fellow director. It didn’t get her off the hook. As a director it was her duty to
know.

Starting Out: How To Get Set Up To Succeed

One important step in avoiding a financial train-wreck is to start as you mean to go
on.

Have you thought it through properly? Have you nutted out a business plan?

In the old days – my time – it would have been called a feasibility study. All same
elephant.

Most advisers on preparing a business plan seem to think it’s for someone else to
read.

Wrong.

The most important reader of the thing is you. Why? Because this should be your
guiding compass.

Think of it like a flight plan for an airliner.
Before your flight takes off the flight deck crew have been poring over weather
charts, air traffic situations and a whole lot of other stuff I don’t begin – or need – to
understand. The result is a flight plan which they lodge with the air traffic officials.

It is, literally, a description of what will happen once the aircraft is wheels-up.

Your business plan is the same.
It should describe what is to be done, by whom, and what the expected outcomes
are.

It should be on your desk at all times. You should refer to it constantly to check that
you are on track.