Work that business plan
Everyone has that friend, or perhaps client, who flies by the seat of their pants. These people power forward with less haste, more speed, preferring to skip steps A, B and C and go straight to what they think is step Z. Elon Musk and Mark Zuckerberg are good examples. After all, entrepreneurship is about doing, not planning. Some of the most successful business feats have indeed been pulled off with not much else other than elbow grease. Until it comes time to secure funding, of course.
Now, being the start of a new year, is as good a time as any to gently prompt these clients (perhaps even these friends!) to get their ducks in a row. If they have less money than Musk and enough sense, they should have a current business plan.
It may have been sometime between classes, so let’s take a quick refresher course. Moula’s Business Plan Template is a good place to start, with the Product-Market Matrix a useful complement.
What is the Matrix? The answer is here
It may not blow your mind quite like the movie The Matrix, however, wait for it, this Matrix arguably goes one better, possessing the potential to change the trajectory of one’s business. Also known as the Ansoff Matrix, the Product-Market Matrix has legions of fans in business circles.
The Product-Market Matrix can help businesses identify ways to grow through market penetration, product development, market development and diversification. It’s prudent for SMEs to know which direction they want to grow before applying for a loan.
For a new business or one with cash flow problems, a market penetration strategy is probably lower risk. Maturing businesses with access to funding are probably more inclined to look at the Matrix in a different light. These are the businesses that have greater access to finance, perhaps setting their sights on developing products and/ or markets.
Unlike the movie, this Matrix may help your clients put things in perspective. For example, as the Product-Market Matrix shows, diversification in business is associated with moving up the risk curve, whereas diversification in other contexts, such as investing, is often associated with moving down the risk curve.
One last (first) thing
Because we know you’re such a quick learner, we did skip over a couple of lessons in this business refresher course.
According to the Australian Small Business and Family Enterprise Ombudsman, up to 45 per cent of small businesses don’t use accounting software to maintain accurate and up-to-date financial records. If your clients are in that bucket, you may want to gently remind them it’s time to start using accounting software and updating their records on a regular basis.
Good accounting is worth its weight in gold. And perhaps worth even more when seeking a business loan.
These are just a couple of Moula’s good business ideas for 2020. We wouldn’t want to shortchange you through a shortage of good tips. If you’re interested in learning more, check out 20 Business Ideas for 2020.