Conception

What To Look For When Thinking of Starting A New Business

This information is taken from the Australian version of “The Business Legal Lifecycle Book” written by Jeremy Streten.
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Phase 1 – Conception

The initial phase in the Business Legal Lifecycle begins when you first have the idea for your business. Other business coaches may call this phase ‘Birth’ or ‘Courtship’. In essence, the Conception phase involves everything you need to consider before you actually start your business.

At this phase of your business, you are simply trying to breathe life into an idea. The phase is built on your enthusiasm and commitment to your idea for a new business, product or service. You need to satisfy a market need and determine if the new business, product or service is a viable offering. During this phase, funds are always at a premium and capital is scarce. You are often living day-to-day or week-to-week to make ends meet for your dream.

Important considerations when starting a new business are:

Dangerous ways of thinking when starting a new business are:

Successfully navigating through the Conception phase from a legal perspective requires business acumen and the right advice. Obtaining the right information and advice early can save you thousands of dollars in costs and taxes in the future.

During this phase, I will discuss a number of elements that are important to you as an entrepreneur. These include: putting together your initial team, setting business goals and creating the right business name and brand. I will also provide some examples where this phase has been successfully navigated by other business owners.

Your Initial Team

A trusted long-term client of mine once said to me that every business needs a good accountant to minimise your risk, a good solicitor to ensure that your business is legally compliant, a good financial planner to guide you through the complexities of your finances, and a good mortgage broker to ensure that you get the best deal for your loans.

This statement has always rung true for me. I have seen clients who have tried to obtain advice from as many people as possible or, worse yet, ‘barbecue advice’ from friends and relatives, resulting in disastrous consequences. There is no ‘one size fits all’ solution when it comes to advice for entrepreneurs and business owners. Each business and business owner is unique and it is critical that you obtain advice from a small, trusted group of professional advisors to ensure that your own situation is properly considered.

These sources should be sufficient to give you the advice that you need; however, they should be able to acknowledge when they have reached the limit of their usefulness and additional expert advisers are needed. It is essential, as a minimum, that you obtain advice from an accountant and a solicitor during the Conception phase of your business. If you do not, you are travelling blind through the opening phase of the Business Legal Lifecycle. I can assure you that a small investment of time and money during this phase will end up saving you thousands in the future.

Also keep in mind that you need the right third party consultant for the job. You need to interview the third party consultant, whether it be a lawyer, accountant or other consultant, and make sure that they know what they are doing. By all means take recommendations from friends and family, but ensure that the third party consultant that you engage meets your requirements in terms of what you need from that person for your business.

Goals for Your New Business

During this phase it is also a good idea to start considering your goals for the business. What do you hope to achieve in five years’ time? Where do you need to be at the three-year mark, the two-year mark, and the one-year mark to reach those goals? Setting clear, defined goals with manageable steps to reach them is a sure-fire way to ensure that your business will be a success.  If you do not have any idea about where you are going, you are never going to get there. Ideally, as part of this process, you should draft a business plan to establish what you will need to do to achieve your goals.

As a business owner, you should also consider key financial documents such as cash flow projections (depending on the type of business, you may want to do this for 13, 26 or 52 weeks) as well as a first full year budget. I know from personal experience that when you set yourself a goal, not only is it a great motivator to help you actually achieve your goal, it is also a wonderful feeling when you accomplish it. This is the simplest way to get the business that you want and ultimately to live the life that you want to live.

Choosing the Right Business Name

In the process of developing your business through the Conception phase, you also need to consider what you are going to call your new business, product or service. Ultimately, it is a matter for you and you should only use a name that you are comfortable with going forward. This is going to be the name by which all of your customers and clients will know your new business, product or service, and you need to ensure that it is catchy and memorable.

From the Case Files

I have seen a number of success stories where business owners put together the right team before they started their business. One such example was a client who bought a bicycle shop. This was an existing business that had been trading for a number of decades but the owner wanted to retire and get out of the game. The client was not an experienced business person but wanted to build a successful business. He came to us seeking advice before he entered into the contract to purchase the business and we ensured that he had accounting and business strategy advice 18 from the right team before he did anything else. This meant that from the outset, his business was set up correctly by having all of his consultants on the same page and the business could properly proceed to the next phase. It also potentially saved him thousands of dollars from going back and recreating what he should have done correctly right from the start. This client continues to operate a very successful business as a result of implementing the right steps at the Conception phase.

Summary of Important Things To Know Before Starting A Business

Unfortunately, the first three phases of the Business Legal Lifecycle (Conception, Start-Up and Initial Clients) are the phases that most business owners do not get right. The reason for this is a combination of trying to cut costs and save money, a lack of knowledge, and excitement about going into the market quickly.

Often business owners will only see their lawyer once they have started to employ staff to help with their business. Unfortunately, this is often too late and problems that could have been avoided have started to manifest.

Successfully navigating your way through the Conception phase of the Business Legal Lifecycle is critically important to the long-term success of your business. Once you have conceived your idea, you should seek advice from your lawyers, accountants, financial planners, business mentors and coaches to ensure that you
can successfully navigate your way through to the Start-Up phase.

Doing this ensures that you are on the right track to establish your own successful business by not rushing the crucial first steps and starting your business in the correct way.

Questions to ask before you progress to the next phase of starting a new business:

1

Do you have a clear understanding of your new business, product or
service?

2

Is the new business, product or service viable?

3

What is the market for the business, product or service?

4

Who are your ideal clients for the business?

5

Do you have the right team in place?

6

Who needs your service? What kind of client are you looking for?

7

How are you going to fund the Start-Up phase?

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