Entrepreneurship is a foundational pillar of the American economy. Starting or expanding a business allows many the opportunity to pursue their dreams while simultaneously fulfilling a need in their community. Many aspiring entrepreneurs have a successful endgame in mind, but they may have trouble knowing where to begin. These tips from Ameris Bank Regional President and Florida State Head Brian Parks could help you turn your business dreams into reality.
Start with Your Team of Advisors
According to Parks, the best partners to enlist as you develop a business plan include an accountant, attorney, banker, financial advisor and insurance advisor. This team can give you the full picture of your investment and help you avoid falling victim to a blind spot before your business has a chance to get off the ground.
Have a Solid Cashflow Forecast
It is vital to have not only a good cashflow understanding, but also a good cashflow forecast. Some businesses grow but unfortunately run out of cash, consuming it through accounts receivable, inventory and payroll.
“It’s hard to forecast too far into the future, but some of the best business plans have a nicely-built cashflow model that helps the business owner and advisor see where they’re trying to take the business,” Parks said. “A lot of good plans have best-case and worst-case scenarios built in and ask, ‘What are my contingencies if things don’t go exactly as planned?’”
For larger projects, a feasibility and/or market study is appropriate. It will provide the business owner (and their financing partners) tremendous insights into the market and the likelihood of success. While these can be expensive, the cost is small compared to the overall investment in a larger project.
Understand Your Breakeven Analysis
It’s important to calculate your breakeven analysis, or the point at which you sell enough product or service to cover your costs.
“It’s about making sure your business makes money as you grow,” Parks said. “If I own a veterinary clinic and want to open a second office, what does that take? I will need to either buy or rent a location, hire staff and incur all expenses for my new location. I need to consider how many customers I need to cover my costs. Are there enough customers in the area? How will I attract these customers?”
Articulate Your Unique Value Proposition
One question to ask when creating or expanding a business is, “What problem am I solving?” Every company needs to have a competitive advantage. If your company goes away, will customers be able to go “next door” and get a similar product or service?
As you build your business plan, make sure to articulate your unique value proposition and differentiators. This will be important as you communicate to prospects and establish a marketing strategy.
Take advantage of readily available information. Your local chamber of commerce likely has data on other businesses in your market. For example, if you are opening an auto care business and another auto care company is doing the same thing a half-mile up the road, that could impact your cash flow.
Know Your Financing Options
Along the way, you may need financing for new equipment or other needs as you grow. It’s important to know your options to receive a loan quickly. Ameris Bank gives businesses an easy way to apply for loans online and in some cases receive same-day funding. As you begin formulating a plan to start your next venture, Ameris Bank is with you each step of the way.*
Published January 2022
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.
*All loans subject to approval.