The Covid-19 pandemic left a lot of workers without a job and, with the good old Kiwi can-do attitude, some are managing to start a business and create a new income stream for themselves and their families.
The success of these individuals will be based on forming a business plan and looking at what skills and experience they can bring to a business – as well as a lot of hard work.
If Covid-19 has affected your ability to earn an income and you are thinking of starting a business, first of course you must identify what kind of business opportunities you could pursue. Look at the types of businesses that you think suit you, compare your skills to each type and review whether you can start and run the business immediately or whether a training period would be required.
Look at the costs associated with starting each business and the cashflow needed to keep the business afloat until revenue starts to flow to the bank account. You would need to calculate (or estimate) the costs and expenses you will incur until you start receiving income and allow cashflow to cover those costs. These costs will vary from business to business of course. At this stage it’s a good idea to discuss your plans with an accountant or tax agent to ensure that you are progressing the right way and they will be able to help you with these estimates.
The next stage is to set up a business plan detailing how you expect the business to run. This needs to cover what cashflow requirements and assets you will need and, most importantly, a projection of how you feel the business will progress for the next two to three years. This allows you to ensure that you are ready for any additional costs when you require them (such as employing staff).
The business plan should be reviewed with an accountant to ensure accuracy and so that they can add any items you may have missed.
It is used when approaching the bank for funds for the business. Note that, with the changes to banking rules, you may be asked to prepare cashflow projections to show the bank how, and when, you will bring in income – and your ability to repay any loans.
Lastly it is important to have an accounting programme that helps you run your business and have day to day information on the profitability of the business so you can make changes when you see that things may not be working as you expected. If you don’t have a programme, by the time you find you have a problem it may be too late to make changes that could save the business.