Planning ahead in business generally creates success and clarity of purpose. Finding the time to plan and think about your business much less be creative in your thinking and planning can be difficult. As many people agree, our time is our most precious asset. Planning is normally profitable in the long run. Frequently, I have the opportunity to speak with groups of business owners about planning for success and protecting themselves and their business. The following are a few recent tips and conversations we discussed.
- Read all contracts carefully: this advice is not new but is valuable. Knowing what the contract provides under certain circumstances generally will increase your profit as you make business decisions. I spoke with a client this morning and we discussed a contract with a vendor. Her comment was that “she was surprised to learn that this vendor charged so much” for a particular service. She then admitted that had she fully read the contract, she would have realized that the vendor had the contractual right to charge a percentage of the overall contract value for the particular service. Again, read the contract in full including any other documents which the contract references. Surprises should be for birthdays, not contracts!
- Adding business partners should be done with caution: many times we have clients who want to bring on others in their business as business owners or partners. When there is plenty of money, the business is humming, everyone is happy and getting along, this may seem like a good idea. Step back and make sure this is what you want to do. Ask yourself if the revenue drops in half, would you still want to add another owner. Ask yourself, would you want to invite this person to your home with your family for dinner? Can you discuss factual business challenges with this person without emotions getting in the way? These are not the only questions to ask but it might help you think about whether to add this person as a partner.
- Can it be that good forever? We often hear from clients after something bad has happened and the client says something like “I knew it was too good to be true…” Well, follow your intuition. When you see a business situation that is perfect, that is a great time to ask yourself how long will this last? How is the revenue generated? Is it too good to be true? Where are the possibilities for loss or liability? The more questions you ask, the more you learn which will hopefully generate more questions. That is where we all learn and build our wisdom
Hopefully these bullet points are helpful to you as you plan for your business success. If you have questions about your business planning please feel free to contact us.